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Brexit: preparing for ‘no deal’

Brexit:-preparing-for-‘no-deal’

The UK government has published more than 100 technical notices advising businesses and the public on preparing for a ‘no deal’ Brexit.

While the government states that “a scenario in which the UK leaves the EU without agreement (a ‘no deal’ scenario) remains unlikely”, it has been busy preparing guidance to minimise disruption and ensure a smooth and orderly exit in all scenarios.

Covering a wide range of topics, these papers represent a massive body of work, and while they won’t all be relevant to all businesses, risk managers would be well-advised to take a lateral point of view when deciding which papers to delve into.

For example, the impact of ‘no deal’ on import/export will be of key significance to businesses trading with countries outside the UK, but supply chain risk should be considered by all UK companies, whether they trade internationally or not, as those further up or down the supply chain may be affected.

Issues for business

The technical notices not only alert businesses to potential impacts to plan for, they also outline where the government will act to provide continuity for a temporary period if there is ‘no deal’. For instance, the EU Withdrawal Act 2018 ensures that no matter what happens, the same rules and laws will apply in the UK the day before and after exit.

The technical notices have been grouped into sections, some of which are more obviously applicable to businesses of all shapes and sizes, while others are more specialised. The government is clear that the notices are for guidance only, and companies should make their own decisions on whether they need professional advice before making specific preparations. Certainly risk managers should get involved in advising senior management and boards on both the risks and opportunities.

International trade

Among the technical notices are 15 on importing and exporting, with a paper on existing free trade agreements in the most recent batch. As a member of the EU, the UK participates in around 40 free trade agreements with more than 70 countries, and in 2017 ONS data showed that trade under these agreements accounted for around 12 per cent of the UK’s total trade.

In the event of a ‘no deal’, EU trade agreements will cease to apply to the UK and, while the government is planning new bilateral agreements to replace the EU agreements, this may have an impact on those businesses currently trading with other countries. According to The Guardian, “import and export declarations will be needed on all goods going across the border and separate safety and security declarations will need to be made by Eurotunnel, airlines and shippers. Importers will have to register as ‘economic operators’, learn how to classify their goods in relation to World Trade Organisation tariffs and consider whether to hire staff and services of customs brokers or freight experts.”

Farming and fishing

The Guardian report also highlights one of the potential issues covered in the technical papers on farming and fishing specifically, claiming that UK exporters of organic food could face a nine-month block to sales if there is no Brexit deal, because UK organic certification bodies will have to be approved by the EU, but they cannot apply for such certification before the UK leaves the EU.

Issues around export and farming were also raised in September by John Allan, President of the Confederation of British Industry (CBI), who said in a speech to business leaders: “Last year, the UK exported over £208 million worth of chickens to the EU. But the CBI has heard … from poultry farmers … just how severe a no-deal scenario would be. Without a deal with the EU guaranteeing a common rule book for goods, checks could take days. But it’s not just farming. We’ve heard from companies up and down the UK about Brexit contingency plans which are already costing businesses money.”

Regulation of business

During September and October, 11 notices were published on meeting business regulations. This is an area risk managers will really want to get their teeth into as it covers a wide range of issues including accessing public sector contracts, copyright, patents and trademarks, structure of cross border operations and accounting and audit.

For example, when it comes to public sector contracts, contract notices will need to be published on a new UK e-notification service, and the government has said that there will be more engagement about how to deal with ongoing procurement procedures in the handover period between the two systems nearer the time.

Preparations are needed across the board

The technical notices cover such a wide range of aspects of business that it’s impossible to cover them all in one round-up. However, a plethora of opinions can be found online that risk managers can draw on – from discussion of the initial 25 papers in The Insider and The Conversation, to statements from official bodies such as BECTU, the UK’s media and entertainment trade union. One way or another, when it comes to Brexit, there’s a great deal to prepare for – and it’s worth investing the time for some reading.