No Breathing Space for Brexit
No Breathing Space for Brexit
The UK left the EU on 31 January 2020 and, shortly after, the country became preoccupied with coronavirus. Businesses went into lockdown, employees were furloughed and shortages of PPE and deaths from COVID-19 dominated the news.
The UK is in a transition period until 31 December 2020 during which time it is still largely aligned with the EU. After that, either the UK will have a suitable trade deal or it will move to WTO terms. This focus on more pressing matters means there has not been much progress on negotiating the trade deal. The UK government has said it does not intend to extend the transition period. Prime Minister Boris Johnson has stated he doesn't think the two sides are far apart. He has pledged, in his inimitable style to put a "tiger in the tank" in the negotiations to reach a deal in time. That deal will be of much interest to all businesses.
Whether or not the UK gets a good deal, there are going to be some key differences:
Staff - depending on what visa requirements are agreed, it might be more difficult to find the right staff. Many EU citizens have already returned home because of anti-EU sentiment and the lockdown, and they might not want to or be able to return. You should think about staffing.
Tariffs - goods and even services might be subject to new tariffs. That will likely make imports and exports more expensive. You should consider how this will affect your arrangements with customers and suppliers.
Data flows - the UK has indicated it will continue to comply with GDPR but, unless it strikes a deal, the UK will become a "third country". Until the EU Commission issues a declaration that the UK protects data properly, such transfers will have to be under robust data transfer agreements. Some businesses are already adopting these in preparation.
Exchange rates - sterling has already been badly affected since the decision in 2016 to leave the EU. If the deal is weak, it might fall further. If the deal is strong, it might rise. You should factor in exchange rate fluctuations.
Even this close, it's still too early to predict with certainty what the outcome will be. You need to plan now. You should also consider adding a clause to your agreements which allows you to adjust the terms should Brexit not be favourable to your business. Maybe you should set up an office nearer the customer either in the EU-27 or in the UK.
The contents of this email are intended for general information only and do not constitute legal advice. Wallace LLP cannot accept responsibility for any loss arising from the use of the content in this email. This information was prepared on 23 June 2020.
