As Brexit Deadline Day approaches, the possibility of a ‘no deal’ looks increasingly likely. But what are the ramifications of this for SMEs and businesses? David Hearne, researcher at Birmingham City University’s Centre for Brexit Studies (CBS), outlines the potential challenges and how businesses can try to prepare for them.
Whether the UK leaves the EU with or without a withdrawal agreement remains to be seen. While businesses are uncertain about the effects of Brexit in the long term, in the immediate future there are ways they can try to prepare for October 31.
How can businesses and SMEs prepare for Brexit?
One piece of advice that has endured is to know your suppliers. As a business, you may not have any obvious links with Europe from a trade point of view, but that doesn’t mean your supply chain is free of dependence on the EU. It’s one thing to know who supplies you, but do you know who supplies them (and in turn, whose supply chain are you in)? Knowing your environment and how it will be affected is the best way to minimise any negative impacts.
Make sure your paperwork is in order, particularly if you are involved in import/export. Be aware of what you are likely to have to do (customs declarations, meeting the rules of origin requirements) and get on top of this immediately. One scenario you don’t want to face is your drivers arriving at a border, only to be told their paperwork is incorrect. This will cause delays in distribution, potentially spoiled produce and greater fuel costs.
It is also important to be aware of what legislation applies to you. If you know what position you are in now, you’ll have a better idea of how that legislation may change. If you’re using services across the EU, make sure you know how you are going to demonstrate ongoing compliance in terms of EU regulations where necessary. This may be different from what you are used to at present.
How will a ‘no deal’ affect businesses and SMEs?
If we leave without a deal on October 31, there will be huge ramifications for businesses. Firstly, you are going to have to swot up on how to sell into the Customs Union from the outside. Some sectors are going to be more affected than others, but overall you are going to have to be much more on the ball when it comes to European legislation and all the paperwork that goes with that. Every business is different, but many sectors face common challenges.
Secondly, Brexit is a process rather than an event, so we will see a gradual escalation of impact over time. For example, the EU has agreed that community licenses will continue to be valid until the end of the year, which is great news in the short-term if you are involved in haulage, but what is going to happen come January 2020? Even if you are not directly involved, this could have an impact on your business receiving or sending parts.
There will also be changes in regulations over time. The mitigating controls the EU have put in place can be taken away, or extended, at any time, and businesses will need to be aware of exactly what is applicable and when. Furthermore, even if the UK mirrors EU regulations in a number of areas, you will still need to demonstrate compliance – this means there is likely to be a lot of duplication, as you will have to show your compliance for both the UK and the EU, even if the rules are the same.
What are the common concerns for businesses?
At the CBS, we frequently advise businesses on the potential implications Brexit could have on their business. One regular concern that arises is to do with human resources. Businesses are losing skilled and hard-working employees, particularly from Eastern Europe – one business I spoke to informed me that during their recent summer break, five percent of their European staff didn’t come back. These are workers with considerable skills that are hard to replace, particularly if your business doesn’t have the time and money to invest in a training a replacement.
Want to find out more about how Brexit could impact your business? Sign up for our free Brexit Breakfast on Friday 6 September.