It’s difficult to know for sure what the full impact of Brexit will be — depending on the type of business and industry you’re in, your company may hardly be affected. Regardless, it’s important to plan for potential changes or disruptions so that your company isn’t caught unawares.
©Shutterstock/ZGPhotographyIf you were around in the late 1990s, you might remember talk of the “millennium bug.” We were all told our computers would stop working as the new millennium dawned, that public services would grind to a halt and planes would fall out of the sky.
None of it came to pass. So, although it’s not a good idea to downplay very real Brexit concerns, it’s important to maintain a level head and approach Brexit as you would any period of business change, evolution, or uncertainty.
Keep reading to discover the economic impact of Brexit and assess some of the key business activities that may be affected.
The effects of Brexit for trading across borders
If your UK business trades with customers in the EU, you may need to consider things like the following:- Whatever happens, trade between the UK and the EU will continue, but it may be subject to tariffs on goods, increased paperwork, and customs checks. The processes for customs duties and value-added tax (VAT) payments on imports from the EU may also change.
- If the UK exits the EU with a withdrawal deal, then UK–EU trade will continue as normal for the duration of any agreed-upon transition period. During the transition period, both sides will start to negotiate a longer-term trade agreement.
- However, if the UK exits the EU without a withdrawal deal, or if the UK and the EU can’t come to an agreement on future trade arrangements, then the UK will trade with the EU under World Trade Organization (WTO) rules.
- The picture for services companies selling their services in Europe may be slightly more complicated, since the trading of services tends to rely on close regulatory compliance. So, the ability of UK service companies to easily do business in the EU will depend on what the UK and EU agree on as part of their trade negotiations.
The impact of Brexit on logistics challenges
Increased paperwork. Customs checks at the border. Customs payments. All of these potential developments will inevitably lead to higher costs and logistics challenges for businesses. Some of the key logistics considerations include the following:- Goods may be subject to increased customs checks as they cross a UK–EU border.
- We may see delays at UK ports (especially at busy, high-volume crossing points like Dover), which will mean it will take longer to transport goods in and out of the UK.
- Warehousing is in higher demand as businesses look to stockpile goods in case of disruption.
- Even if the UK exits with a withdrawal agreement and swiftly secures a free-trade agreement with the EU, it’s still likely that border controls may change in one way or another.
- What’s more, there are still likely to be some teething problems as the UK and the EU adjust to their new relationship, so it’s wise to prepare for some level of disruption to your supply chain.
The impact of Brexit on employees and access to labor
Brexit will prompt a change in UK immigration rules, because one of Theresa May’s “red lines” in the negotiations was the desire to end free movement between the UK and the EU. For those businesses that employ EU nationals or are dependent on short-term labor from Europe, this could cause problems. You may need to consider things like the following:- Your EU national employees will need to obtain settled status if they want to remain in the UK indefinitely after Brexit. Settled status is the name given to the government scheme that provides security for EU nationals living in the UK, allowing them to stay on indefinitely.
- The UK government plans to allow unskilled workers from “low-risk countries” (likely to include all of the EU) to be allowed to come and work in the UK for up to 12 months without needing a visa.
- However, in light of the devalued pound and uncertainty around Brexit, many European workers are choosing to earn their money elsewhere in Europe, leading some industries to voice concerns about access to labor in the future.
- It’s vital that you support your employees through any period of business uncertainty or disruption.
Other considerations for the business impact of Brexit
There are all sorts of other business considerations that don’t fall under the headings of people, logistics, and trade, but are nonetheless important for businesses. These include the following:- Potential impact on EU-based subsidiaries or branches
- What happens to intellectual property after Brexit
- What happens to environmental standards, product safety standards, and other legal or regulatory requirements that your business complies with
- The need to take steps to retain any .eu domain names that your business has
- The impact of Brexit on your General Data Protection Regulation (GDPR) practices
- The need to review and update your business contracts
A quick checklist for managing the effects of Brexit
Clearly, there are lots of things to think about when it comes to preparing your business for Brexit. Here’s a checklist of items to consider as we approach Brexit:- Will Brexit affect your company structure in any way? This is particularly relevant if you have overseas subsidiary businesses.
- Do you need to change your company registration at Companies House?
- Is it worth establishing formal relationships with EU-based companies to eliminate your own need to have a subsidiary business in the EU?
- Are there any opportunities to expand your business by acquiring subsidiaries of EU-based companies that no longer want to operate in the UK?
- Have you taken precautions to protect your copyright, brand names, logos, patents, and other intellectual property?
- Is your UK-based insurance still valid within the EU post-Brexit?
- Have you made plans to revise your contracts where necessary, including where they refer to EU law?
- How will legal disputes be resolved post-Brexit?
- Have you reviewed the potential regulatory changes that may impact your business?
- Do you need to update your internal policies and procedures?
- Are you in touch with your trade association for general advice?
- Have you signed up for government alerts on Brexit?
Make sure you have a contingency plan for Brexit
Contingency planning is all about making sure your business can cope with the changes or disruptions that may come your way after Brexit, whether these are short-term blips or long-term changes.You may well need expert help to prepare detailed contingency plans or assess industry-specific implications for your business.
To help get your business in good shape for Brexit, check out the following tools:
- Business Brexit Checklist from the British Chambers of Commerce
- Official government tool to help businesses prepare for Brexit
Looking to life after Brexit
Nothing good comes from scaremongering or fueling fears that business will grind to a halt after Brexit. Quite the opposite. Brexit, like any period of change, has the potential to lead businesses to new market opportunities, fresh ways of thinking, and better ways of doing business.However you feel about Brexit, it’s not going away anytime soon. Considering future trade talks between the UK and the EU, Brexit may dominate the news for some time to come. For this reason, it’s vital that UK businesses stay focused on, well, doing business.