With further uncertainty on the horizon regarding the UK’s departure from the EU, it remains extremely difficult to tell whether Brexit will be completed with or without a deal.
With the focus of our media and politicians recently seeing a substantial shift towards “no deal”, it’s important to understand what this possible eventuality may mean for UK business owners.
Getting to grips with how “no deal” could affect your business will help you to prepare successfully for any challenges that are thrown your way. Here, I’ll explain a little more about what may happen to UK companies after Brexit, with a focus on the effects of “no deal”.
The Stock Market and Currency Fluctuation
Uncertainty regarding the outcome of Brexit is having a profound effect on a number of vital financial matters affecting UK business. With every twist in the road, the pound is rising and falling against the Euro and dollar, so the value of your goods and services abroad will fluctuate alongside.
Due to the same lack of certainty, investors are more likely to be tentative and refuse to take risks when it comes to trading in stocks and shares.
While the pound falling may be taken as a positive factor when it comes to exports, the cost of importing is likely to rise and the effect on inflation may be profound. You may also find that exports become a little more costly, with changes in tariffs being applied. I will explain a little more about this later on.
Editor’s note – see also this guide from HULT Private Capital about Investing in Start-Up Businesses.
Trading with EU Countries
If your company currently relies on importing and exporting goods to and from European Union member states – or if you offer services such as haulage across the whole continent – a no deal Brexit will see you or your clients experiencing rising import costs and a significant increase of paperwork.
As things currently stand, UK businesses are not required to undergo checks at customs, nor do they pay extra duties or taxes – however, once we leave the EU, we will be required to pay the same rates and undertake the same administrative duties as the rest of the world.
You will need to ensure that all drivers and delivery specialists are able to provide the correct documents when both importing and exporting products, as these specifications will have changed.
It’s also possible that there will be significant delays when the products you import or export – or goods that you are awaiting to complete a project – are transported through Dover. This would be the result of additional checks when arriving in France, and may cause a lengthy bottleneck.
The government has drafted a series of adjustments to traffic flow – entitled “Operation Brock” – to deal with these delays.
Fuel
Issues with the movement of goods will not just affect shipments heading to and from EU member states and the rest of the world, but will also impact transport within the UK.
A shortage of petrol is a possible result of a “no-deal” Brexit due to the potential closures of refineries (resulting in the possible loss of 2,000 jobs), and those who panic-buy fuel are likely to exacerbate any shortage.
Other Shortages and Delays
Imports and exports of food, beverages and animal products will require further approval before they are exported to the EU – with a particular impact on organic goods. This is likely to negatively impact the UK’s farmers and fisheries.
There is also the possibility that issues with supply chains resulting from a no-deal Brexit will cause certain food provisions to run short; a major problem if your company produces foodstuffs, or if you work in the restaurant business.
According to Operation Yellowhammer – the contingency plan for a “no deal” Brexit coined by the UK government, “no deal” “will reduce availability and choice and increase the price” of food. Furthermore, “there is a risk that panic buying will disrupt food supplies”. A “failure in the chemicals supply chain” may also affect some access to clean water.
Issues With Suppliers and Business Partners
Brexit is already having a strong effect on the decisions some companies are making regarding their location. Many businesses have already moved overseas as a result of trade-related fears – so you may find that you can’t do business with the same suppliers or partners in a financially viable way.
It’s also possible that some suppliers will cease to trade as a result of Brexit, and this may cause significant delays while a new arrangement is made that will allow you to keep trading. The knock on effect of this will have an impact on your clients, and this ripple will continue down the chain.
International Legislation Conformity
There will be changes to the administration you will need to undertake to ensure that you are abiding by the law after a “no deal” Brexit.
You’ll need to carefully research the correct process of conforming to legislation surrounding:
- Copyright and patenting
- The legal processes involved in EU/UK company mergers and setting up new overseas trading partners or contracts
- The labelling of certain products
- The transport of medicine and medical equipment
- Registering as an approved food establishment to export food to the EU
- Obtaining the correct approval for selling vehicles and vehicle parts to EU countries and the rest of the world
…and plenty more besides. See gov.uk’s specialist advice pages for further information.
Staffing
It is possible that a “no deal” Brexit’s effect on EU emigration to the UK will reduce the size of the available workforce, and may lead to a severe reduction in certain skills. The hardest hit areas will be construction, academia, agriculture, healthcare and seasonal employment.
You may be required to ensure that all of your employees have suitable residency status and current employment Visas in order to comply with the law.
Data Sharing
The sharing of information between the UK and other EU countries is currently restricted and policed by EU law, including GDPR, but this may no longer be in effect following a “no deal” Brexit. This may somewhat compromise your company’s cybersecurity approaches and could mean that you’ll need to rethink your protection.
The exact implications of any changes to data protection law following Brexit are yet to be confirmed.
While there is still a great deal of uncertainty surrounding the exact impact of a “no deal” Brexit, changes to the above matters – currency fluctuation, inflation and the stock market, supply chains and overseas partnerships, trading with the EU and the rest of the world, fuel and food supplies, international legislation conformity, staffing and data sharing – are highly likely and very pressing.
Gov.uk has developed a thorough series of checks that you may undergo in order to ensure that your company is prepared for any form of Brexit, and provides in-depth advice to ensure that you understand exactly what will be required of you moving forward.
This guest post was written by Shahid Miah, a director from DPP Business & Tax. Over the years he has acted for a number of high profile individuals in defending them against the most serious of high-value fraud charges and investigations.
Image via Flickr (Creative Commons Licence)
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