Bank of England Governor, Mark Carney, has recently pointed out that should the UK leave the EU in March 2019 without a deal in place, there would be serious consequences for both the UK and EU.
Whilst the governor says the UK’s financial system is robust enough to withstand any post-Brexit shocks, this may not necessarily be the case for some UK businesses that have substantial dealings with the EU.
A recent survey of 800 businesses by the Institute of Directors found that fewer than a third of them have carried out any Brexit contingency planning.
It has become clear over the last few weeks that there is an increasing possibility that the UK could leave the EU on 29 March 2019 without a firm agreement on its future trading arrangements with the EU.
Whilst many businesses may not be affected at all, there will be many others who will be, such as in the food and drink industry. A no-deal Brexit could mean lorry queues building up at ports as the previously smooth import and export of goods disappears to be replaced by new customs checks. Goods that are meant to arrive just in time at their destination, or are perishable, could then be delayed, affecting stocks and production and ultimately sales.
As well as the non-tariff hold ups, new taxes could be imposed at the borders, making goods more expensive. In the absence of a deal, the World Trade Organisation sets maximum duty rates that can be imposed between countries.
For all UK businesses, especially those which trade in goods with the EU, it is now time to start considering the impact of this on your business. Although it may still not happen, the effects of a no-deal Brexit, should it occur, are far-reaching and any planning which can be done in advance will help mitigate or reduce any adverse consequences.
Bishop Fleming has already been helping businesses with contingency planning, and some of the key issues which we have come across that businesses need to urgently review include:
There are steps which can be put into place now which may reduce the impact of some of these issues, but it is very important to start planning as soon as possible.
The ICAEW has published a handy guide to the trade implications of Brexit, which can be downloaded from its website.
Bishop Fleming has assembled a team of experts that can help you with your business planning ahead of March 2019. If you would like to discuss the implications for your business of Brexit, please contact a member of our team.