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Countdown to Brexit: six months from today

Tom Rathborn Tom Rathborn

With all that's happened this year, it's easy to forget that the Brexit transition period is set to end six months from today on 31 December 2020. Tom Rathborn looks at what you need to be ready.

With all that's happened this year, it's easy to forget that the Brexit transition period is set to end six months from today on 31 December 2020. Tom Rathborn looks at what you need to be ready.

Another key milestone has been passed in the ongoing saga that is Brexit.

The government stood by its decision not to apply for an extension to the Brexit negotiations, which it had to do by 1 July. As such, the UK now has just six months to agree and ratify a trade deal with the EU or leave without one.

As organisations turn their attention from COVID-19 responses to look ahead to 2021, it's hardly surprising that Brexit is rapidly rising up the business agenda.

With six months to prepare: what are businesses saying, what happens next in negotiations, and what can they do to mitigate any risks and seize potential opportunities?

What are we hearing from clients about Brexit?

Confusion over Brexit tariff schedules

In preparation for previous no-deal Brexit deadlines, the UK government announced temporary tariff schedules that would come into force should the UK leave the EU without a deal. Many organisations had run forecasting and modelling exercises to understand the impact these would have.

Earlier this year, however, the government announced new schedules to replace these. Many organisations have missed this news. There also remains confusion over what existing trade deals will be rolled over and what the Brexit arrangements in Northern Ireland will be.

Supply chains both a critical risk and an opportunity

Linked to the point above, many organisations are taking another look at their supply chains and aiming to make them as resilient as possible. While coronavirus has already tested this, identifying strengths and weaknesses, Brexit will bring different challenges.

Clients who procure products Delivered Duty Paid (DDP) are keen to establish whether this can continue after Brexit, or whether terms will change. Others want to be sure their international suppliers are prepared for any new regulatory barriers and are busy exploring domestic alternatives.

Change, however, brings opportunities and many businesses are working through the UK’s new tariff schedule and rolled-over trade deals to understand if they can identify new suppliers and lower costs for after Brexit.

Questions over available government support and information

Ahead of previous deadlines, the UK government produced technical papers, provided funding for preparations, including running the Get ready for Brexit campaign and planned to utilise emergency measures to ease trade difficulties. This time there is much less activity. Many technical notices have been removed, funding streams reduced (though some customs training support remains) and there are currently no plans for similar government led activities to support businesses in their preparation. Organisations are, therefore, concerned that plans based on old technical notices may no longer be valid.

What comes next?

Both the UK and the EU are banking on big Brexit progress in the next quarter:

The UK has set an informal deadline to agree a deal for the end of September, while the EU has said a deal must be agreed by at least November to enable enough time for ratification. Things are going to have to move fast to meet these.

The EU council meeting scheduled for the 15 October is likely to be a key barometer as to whether a deal can be reached.

If the Brexit withdrawal agreement represents any kind of precedent, we can expect a lot of movement to be made at the last minute. This may all come down to the 11th hour…again.

What can you do?

Prepare for a no-trade-deal Brexit

The UK exiting transition with no deal in place represents the worst-case scenario for many. Preparing for this will ensure, whatever happens, you are as ready as you can be.

Dust off old Brexit plans

Make sure any existing preparations are still valid.

Key things to consider include:

  • Have there been any personnel changes?

  • Were your assumptions correct (eg, tariffs)?

  • How has the pandemic impacted your plans (eg, forced you to change supplier)?

Don't forget the opportunities

It is very easy to lose sight of the possible opportunities when we focus so much on the potential risks.

It's been a tough year for most businesses, but steps taken to prepare for Brexit may have helped.

Readying for the transition period meant some businesses had already reduced costs and had more available cash than they might have otherwise. Likewise, lockdown has put many organisations in crisis mode, which may help them deal with the impact of Brexit at the end of the year.

Use preparing for Brexit as an opportunity to make your business more resilient and agile – improving your business regardless of the outcome.

One thing is certain, after four years, Brexit continues to demand your attention and engagement.

NAVIGATING BREXIT
Need practical advice on navigating Brexit? Read our guidance

Need practical advice on navigating Brexit?

Our guidance covers a range of factors that will affect your business and how to address them.

Read our guidance