Brexit will have an impact far beyond Britain. What preparations should you be considering to limit its effect on your business?
The countdown is on. In March 2019, the UK formally exits the European Union (EU). A “hard” border may be established that would separate the UK from the European single market. UK companies and foreign subsidiaries located there are readying themselves for a major change.
But this isn’t just an issue for Britain — global businesses trading with UK-EU partners will also be affected. Given the strong trade links between the UK and the EU, the likely change in this relationship will have fundamental impacts on European businesses.
The UK is one of the top-three export markets for 10 EU members, including Denmark, Germany, Ireland, Italy, Netherlands, Spain and Sweden, according to Brexit — the Voices of European Business, a 2017 report from the Council of British Chambers of Commerce in Europe and Hogan Lovells.
Upcoming trade challenges
The challenge for non-UK businesses, especially those in Europe, will be to make trade with the UK as easy as possible, and to look at other markets that may become relatively more competitive. That’s because Brexit-related changes could alter existing business models, with possible disruptions to supply chains, longer lines at the border, additional required documentation and higher customs duties.
While some may have held out hopes for a Brexit reversal, recent developments indicate the UK withdrawal will proceed as planned and businesses on both sides of the English Channel are preparing for change. Brexit implementation took a big step forward in early December with the UK-EU announcement that the two sides had reached a deal in which the UK will pay the EU between €40 billion and €60 billion to settle previous long-term commitments. That clears the path for talks on trade terms between the two entities.
“Brexit is becoming more real to people and businesses in Europe, and they are finally starting to think about what they should do,” says Walter de Wit, a senior member of our Global Trade practice.
Compliments of EY
To access original story, click here.