Making our position clear on Brexit

By now everyone is aware that the EU has approved Teresa May’s Brexit Withdrawal Plan. This doesn’t mean that the deal is set in stone, this was just the first hurdle. The PM needs to get the deal signed off by the UK Parliament and there are rumblings afoot that it might not get passed.

By the 12th December we’ll know where we stand but either way, it isn’t clear how Brexit is going to affect businesses.

May has warned that a no deal will bring “division and uncertainty” but you could argue that we are currently in a position of division and uncertainty.

Some say the deal May has put in place hampers the UK’s ability to strike trade deals with other countries, whereas our PM believes this deal allows us to leave without hurting the economy.

So who do we believe? With the constant uncertainty, businesses are becoming more resistant in the decision-making process because they are unable to make accurate forecasts for the year. This is stopping them from moving forward and progressing.

On one hand, if we do agree a deal, Brexit isn’t instant, and we will enter a transition period for 18 months. This means no major changes will take place to start with and businesses have until 31st December 2020 to understand Brexit, what it means for them and how to adapt to the new terms. On the other hand, if a deal isn’t made, it doesn’t mean we just won’t leave. It means we will leave instantly, with no settling period and no knowledge of where it leaves the UK in terms of regulations and trade agreements.

Unfortunately, the Withdrawal Deal only outlines how the UK will leave the EU, not what will happen afterward. But at least it gives some flexibility for businesses to adapt. The Political Declaration has given an outline into what the future relationship could look like, but that’s not set in stone, which brings us back to our position of uncertainty.

Trade seems to be covered currently, with the deal aiming to ensure the UK can trade in goods without a tariff or quantitative restrictions, but a no deal will enforce a “backstop”. That would keep the UK in a ‘single customers territory’ which means no tariffs on trade between the UK and the EU and the UK will be unable to set tariffs on trade from third countries that are lower than the EU’s.

The approach businesses need to take, rather than worrying about who to believe, should be to start planning for the year ahead. Many Finance Directors and Finance Controllers will be busy for the next couple of months, identifying where businesses can save money, finding alternatives to their current providers if they’re EU based and setting out a contingency plan.

Good finance professionals will be keeping their ear to the ground regarding Brexit and will know what’s happening from day-to-day so that they can adapt, make changes and update plans so that the business sees as little impact as possible, leaving business owners free to run their business.

Concerned about the impact of Brexit on your business, looking for financial business support or would like a confidential discussion? Call 0844 589 3912 or email: anita.tweats@thefinancepeopleuk.com