As the chance of the UK leaving the EU without an agreement remains and the deadline of 30th March 2019 looming, it is essential for businesses to prepare for the consequences in the event of a No-deal Brexit.
The EU issued their ‘70 notices of preparedness’ earlier in the year, which was later summarised into one report. There is a wide range of points to be aware of, but to highlight, the consequences for businesses consist of:
- The UK becomes a third country, with no preferential deal for customs purposes or for VAT
- Licenses and approvals issued by the UK are no longer recognised by the EU
- Companies based in the UK can no longer operate in the EU as a member state and need to either move business or establish a representative in an EU country
- The UK is no longer an approved destination for some EU business (e.g. ship recycling, some waste management)
- UK professional qualifications are not recognised by the EU
- The UK stops being part of EU systems – like the aviation area or the energy market
Source – Institute for Government
Some of these consequences could be severely disruptive, which makes preparing for a No-deal Brexit all the more important. For example, agriculture would be affected by the implications of the EU’s border inspection regime, including tariffs. Also, businesses who provide services to EU countries would have to apply for licenses and change business operations in order to continue.
In a recent survey by the Federation of Small Businesses (FSB) it was revealed that:
- Just 14% of small businesses have started planning for a No-deal Brexit.
- 41% believe a No-deal Brexit will impact their business but have not yet started planning.
- 10% believe a No-deal Brexit will have a positive impact on their ability to do business
- 48% believe a No deal Brexit will have a negative effect on their ability to do business. This figure rises sharply to 66% for those small firms that trade with the EU and to 61% for those that employ a staff member from the EU.
The UK Government have provided a collection of guidance on how to prepare if the UK leaves the EU with no deal. Make sure to read any advice relating to your industry. You can find all the guidance documents on the GOV UK website.