With the UK’s scheduled departure from the European Union just around the corner, the time for businesses to act is now. Although the outcome of withdrawal is currently unclear, the odds that the trading environment between the UK, EU, and any third-party countries will change in March is now considerable.
If you’re a business in the UK that trades with the EU, or vice versa, or a business based in a non-EU country that relies on UK-EU trade networks, then there is still time to take steps to protect your business. Here are the essential steps exporters should be taking to prepare for Brexit.
Prepare for all outcomes
The first thing businesses should keep in mind is that the outcome of Brexit, despite being so close, is far from certain. While the government’s plan is for their Withdrawal Agreement to go into effect on March 31st, this was voted down by Parliament and there is little sign of it passing anytime soon.
There are several potential Brexit outcomes. According to the latest and most up-to-date Brexit odds, the chances of the Prime Minister’s “deal” passing or Brexit being cancelled altogether both stand at around 1/4, while the odds of a no-deal Brexit stand at around 5/2. All of these outcomes mean very different things for businesses, so try and prepare for every eventuality.
Review your supply chain
For exporters, the most vulnerable aspect of their business is their supply chain. Even if your business is based, say, in the US, your supply chain may involve the delivery of vital parts or products through the EU and via the UK.
Therefore, it is essential that you review your entire supply chain and determine which areas are most threatened by a severing of trading activity between the UK and EU. Where possible, switch suppliers to ones that are less vulnerable to UK-EU trade flows.
Ensure regulatory compliance
If you’re working in any of the so-called “highly regulated sectors“, which include pharmaceuticals, transport, and banking, you’ll need to make sure your business is compliant with EU standards in the event of a no-deal Brexit.
The EU has an agreed set of standards, which include licensing, documentation, and qualifications necessary for these businesses to operate within the EU. The UK will no longer be a party to these standards in the event of a no-deal Brexit, which is why certain UK businesses have already set up a base in Europe and acquired all of the necessary documents.
Even if a less chaotic version of Brexit does occur, disruptions to exports and supply chains are almost inevitable. While the warnings from the UK government about stockpiling medicine may seem dramatic, it is vital that you prepare your business for any shock by stockpiling any supplies and parts you need to operate.
This, in turn, means that you may have to acquire additional storage space. It is also highly recommended that all businesses that may be affected by Brexit stockpile as much liquid capital as possible, as these reserves will help see your business through any short-term disruption that may occur in March.
While the Brexit process may currently feel out of our control, there are things you can do to protect your business interests. As exporters, take these steps immediately to ensure as little disruption as possible, whatever happens.