How has the UK been affected by Brexit?
At present, it’s proving particularly hard to gauge the economic impact of Brexit in the UK, with the fallout from the coronavirus pandemic having clouded the data produced so far.
However, a report from the independent Office for Budget Responsibility (OBR) suggests that Brexit would ultimately cut UK GDP by around 4% over time, while coronavirus impacts would diminish output by a further 2%.
But what are the key effects of Brexit on UK businesses, and how can individual companies cope with these impacts.
Positive and negative effects on UK firms
Let’s start by appraising some of the broader economic effects of Brexit, starting with UK exports.
Certainly, leaving the EU has meant removing the UK from the single market and the customs union, and in the absence of a bespoke trade agreement for goods and services, would have resulted in increased bureaucracy and the introduction of selected EU tariffs.
While the UK agreed a basic free trade deal to avoid such consequences, the rules for exports are now different than they once were, with all outbound goods now having to qualify for tariff-free status or preferential treatment under the terms of the TCA.
Firms must also apply for an Economic Operator Registration and Identification number (EORI), in order to continue trading and exporting to Europe.
Brexit has also caused and exacerbated global supply chain issues, with the flow of both imports and exports having been disrupted through 2020 and 2021.
Most firms have been impacted by this, with many having been compelled to review their existing supplier relationships and make appropriate and proactive changes where necessary.
Another key impact revolves around the UK workforce, with the freedom of movement between Britain and the EU having ended on January 1st, 2021.
This meant that employees who were already living and working in the UK prior to this date were compelled to apply for settled or pre-settled status, otherwise face the risk of deportation and workplace disruption in the future.
Of course, some campaigners have argued the benefits of leaving the single bloc, namely the removal of EU regulations and standards and the ability to pursue opportunities further afield in nations such as Brazil, China or South Africa.
How to cope with these challenges
Despite these perceived benefits, there’s no doubt that Brexit is posing challenges to businesses (particularly as we continue to transition and face up to the impact of the coronavirus).
So, you’ll have to negate the challenges referenced above as a business owner, initially by adopting a proactive approach towards managing exports and adjusting your supply time to optimise speed and efficiency.
From the perspective of finance and payments, you may also want to embrace technology that simplifies the process of doing business across borders. Remember, UK firms will face more restrictions and tariffs when completing overseas transactions in the wake of Brexit, so integrating an open banking platform that can reduce fees and optimise efficiency.
Other than this, it’s important to remain up-to-date and follow legislative changes as they’re introduced, particularly as the relationship between the UK and their EU neighbours continues to change.