While the impact of Brexit will be different for every organisation, planning across the three areas of (i) trade, (ii) people and talent, and (iii) finance and operations, will help identify the steps that may be taken to minimise potential risks and seize opportunities – whatever the outcome. In the first of our Brexit mini-series, we consider the wide reaching trade implications of Brexit for local businesses.
While the UK Government has stated its ambition to deliver a comprehensive free trade agreement with the EU, what this will look like and mean remains uncertain. Despite this uncertainty, businesses should understand their own interactions with the EU and seek to mitigate supply chain risk by developing contingency plans and exploring alternative procurement options.
Leaving the Single Market and Customs Union will have implications on goods and services crossing between the UK and EU. It will also impact trade outside the EU. At present, the UK has access to more than 50 free trade agreements with countries around the world, however these are EU agreements and therefore the terms of these deals and current access to those markets are likely to change.
New Customs Duty and import VAT might also be payable, not to mention the additional administrative cost arising from the need to process import and export declarations and instruct handling agents where necessary. To measure exposure and mitigate risk, businesses should take steps now to review their customs compliance processes, understand the impact that World Trade Organisations (‘WTO’) duties would have on the business (as a ‘worst-case scenario’) and explore Authorised Economic Operator (AEO) accreditation options to enable goods to be cleared faster.
However, with change comes opportunity. We have already seen how the depreciation in sterling combined with the continued full membership of the EU presents a unique opportunity for businesses to maximise their export growth during the negotiations. Furthermore, future trade deals with new and emerging markets could offer local businesses the chance to expand their international footprint further. The UK Government have already stated their eagerness to agree quick deals with China, Brazil, the Gulf States, Australia, New Zealand, India and the United States.
While much uncertainty exists, it is important for businesses to take steps now to develop contingency plans, assess the possible risks and harness the opportunities. Rather worryingly, much complacency still exists, with the most recent Business Monitor results released by Intertrade Ireland for Q1 of 2018 indicating that 92% of businesses surveyed, with cross border sales, still had no plans in place for Brexit. With less than 12 months until the office leave date businesses should utilise all available support. As an accredited Intertrade Ireland advisor, business can also even claim financial support of up to £2,000/€2,000 towards professional advice provided by our Brexit specialists.