Brexit is a bit like cricket for the uninitiated – the more you try to work out what’s going on the less you really know. The general thrust is that by March 2019 – or at some point at least – we will know the content of the deal and have a better understanding on how our lives will be framed following the vote to leave the European Union.
Or at least that’s the plan and no doubt many businesses are fed up with the uncertainty and mishandling of the delivery of Brexit.
But we felt it was important to gauge the opinion of of those in the know, before the close of the year.
Katrina McWhinnie is a lawyer and Brexit strategist. She is working with many business owners to prepare them for the various scenarios that could be played out, following the March deadline.
Regarding how businesses feel government have handled negotiations, it’s no surprise they’re generally not impressed says Katrina.
She explains: “Understandably, businesses have voiced their concerns about how badly the Government has handled the negotiation process. There has been a lack of government support for UK businesses preparing for Brexit. Enterprise Ireland is offering ‘Be prepared’ grants up to €5,000 to help them plan their response to Brexit.
“This covers investigating the feasibility of entering new markets, investment in innovation and improvement in operational competitiveness. The UK government advice has been less than adequate and too late.
“Most Brexit focus seems to consider SMEs as less important than a large enterprise. They are the vulnerable sector of business, however with ample planning small businesses can adapt and gain a competitive advantage.”
Lack of engagement
Worryingly too, Katrina says that most business owners don’t feel they’re invested in the process. She comments: “A significant proportion of businesses do not consider Brexit will impact them as they do not trade with Europe or recruit European staff.
“Few are actually engaging with the Brexit process to adopt steps to mitigate their exposure. The Federation for Small Business (FSB) reported 86% of small businesses have not started their Brexit preparations. Brexit has the potential to impact on all aspects of business.”
When it comes to the likely outcome, at the time of writing negotiations have reached a stalemate on the Irish Border issue, with Donald Tusk suggesting that a deal is further away from happening than people think.
Katrina says: “It seems increasingly likely there will be a fudge deal on Brexit serving as a political function purely to secure an implementation period, enabling the nation time to adapt. This will allow us to muddle on allowing customs borders to be adapted during the transition period. It’s in everyone’s interest that this does not happen, as a bad deal truly is worse than no deal at all.”
Talking further on what impact the respective deals would have on the UK economy, she elaborates: “Under a Chequers deal the EU would have undue influence in our economic dealings with the rest of the world. If there is one thing that has been very apparent over the course of the Brexit negotiations is that the EU are inflexible, uncompromising and put the interests of their member states second. What hope does the UK have of achieving economic success in the face of such barriers?
“A no-deal scenario would mean no transition period allowing businesses and public bodies time to adapt. This would mean the UK would fall on WTO rules, imposing tariffs on our imports. The result would be a significant increase in the cost of imported goods, delays at borders and shortage of goods. Few businesses are geared up for a no deal Brexit. I would urge all businesses to contingency plan for a no-deal Brexit to cover all bases and ensure their business is Brexit ready.”
Brexit has undoubtedly forced those that import or export – or have supply chains linked to trading abroad – to put their business under the microscope.
There have been some calls to start fundamentally re-structuring their supply chains to survive a no-deal Brexit.
SCALA – which is a supply chain consultancy – says that uncertainty surrounding currency exchange rates, possible new trade tariffs as well as the likelihood of major border delays, caused by additional customs processes and checks, could severely impact businesses that source products or components from the EU, and/or export to the EU.
John Perry, managing director of SCALA, said: “Over the years, company supply chains have been continuously improved and developed to meet the demands of the consumer as cost effectively as possible.
“As part of this, UK businesses have become increasingly reliant on sourcing from the EU, driven by the supply chain benefits of quick lead-times, manufacturing rationalisation and faster response times to changes in demand.
“However, in the event of a no-deal Brexit, this is all set to drastically change.
“Companies will need to determine the impact of new trading laws and tariffs, as well as the potential costs and duration of new supply chain routes. Borders will be more complicated, so supplier relationships will need to be re-evaluated, and alternative options considered such as stockpiling in UK warehousing.”
John continues: “This is a complex process and these changes can’t be made overnight. For some companies this will involve a major reset. The more complex the supply chain network, the more extensive and lengthier the process is likely to be.
“Even for proactive businesses that start preparing now, the ramifications of Brexit are major, and it is not a quick process for companies to re-optimise their supply chains.
“Some companies may just tweak elements or try and make-do for short term survival, but for long term competitiveness the supply chain needs to be properly re-assessed and optimised.”