Even businesses that do not import or export will be impacted by Brexit.
The trade implications of Brexit will be wide reaching. In the short term, currency fluctuations are creating opportunities and risks for trade and supply chains. Looking further ahead customs duties, administrative approvals and compliance processes, rights of establishment and recognition of standards may change.
Leaving the EU affects not only the UK's trading relationship with it, but also the rest of the world, as at present all the UK's trade deals with third countries are EU agreements. The countries the UK currently enjoys trade deals with and the terms of those deals will change.
However, with change comes opportunity. UK trade deals with new and emerging markets will offer chances to those businesses looking to expand their international footprint.
What do we know?
Theresa May has stated her ambition to deliver a comprehensive Free-Trade-Agreement with the EU to replace our current membership, with talk of potential transitional arrangements for certain sectors. There remains uncertainty as to the scope of this trade deal and whether it can be negotiated in parallel with Article 50 talks. With this mind, organisations should plan with the understanding that:
- the UK will leave the EU Single Market
- the UK will leave the EU Customs Union.
Things to consider
The impact on your supply chain
While you should understand your own organisation's interactions with the EU, it is just as important to be aware of your supply chain's exposure, thinking about issues such as:
- which customers and suppliers might be affected by short term volatility?
- how will EU manufacturers review their supply chain, looking at alternatives to UK suppliers?
- what are your intra- and inter- company arrangements within Europe and outside Europe?
The referendum result is already having an impact on businesses' international supply chain, with increased costs and clients postponing, renewing or signing up to new projects. You should review your supply chain to:
- put together contingency plans and review procurement options
- take the opportunity to future proof supply chains
- assess indirect tax position and exposure
- identify risks and opportunities
- optimise customs compliance and supply chain structure.
Reviewing your international growth strategy
With doubts over the UK's existing trade agreements with the EU27 and third countries, organisations should be testing and, where necessary, updating their current growth strategies. You should be are aware of how changes will affect you by:
- understanding how Brexit will change access to current markets
- reviewing the robustness of your international growth strategy.
Maximise short-term export growth
The depreciation in the pound, combined with the continued full membership of the EU, presents a unique opportunity for businesses to maximise their export growth over the next two years.
Enter new markets
As the UK gains the ability to negotiate trade agreements independently of the EU, there will be new markets for UK businesses to explore. Government has already stated its eagerness to agree quick deals with China, Brazil, the Gulf States, Australia, New Zealand, India and the United States. There will be a first mover advantage as new markets open up and businesses should think ahead by:
- exploring potential new markets and ensuring they are suitable
- taking advantage of government support.