How to get your business Brexit ready
With March 29th 2019 fast approaching, Glandore member companies and businesses across Ireland are bracing themselves for an unknown future with our largest trading partner. According to the CSO, exports to Northern Ireland stood at 1.9 billion euro in 2017 while exports to the UK mainland reached over 14 billion last year.
Understanding that Brexit won’t be a temporary storm, it will be a permanent trading change, and preparing for change is the best practice businesses can take. Political negotiations will only limit the impact so much and businesses exposed to the UK market need to examine their exposure. Here is the Glandore guide to getting your business Brexit ready.
Supply Chain Management
For those that export and import with the UK, the Getting Ireland Brexit Ready Seminar organised by the Irish Government states it is best to prepare for the worst case scenario. Many Irish businesses solely export/import to and from the UK and for these businesses the introduction of customs will be a first, and will come at a cost. This will mean that the UK will now become a third country for trading purposes. If, according to the Irish Government, it is the worst case scenario and there is no deal, WTO custom rules and EU Third country custom rates will come into play.
There has been suggestion that the UK will be given a similar free trade agreement, such as the one that the EU has with Canada. The simplified VAT structure for intra-country trade will also cease meaning that even a small VAT change could have a huge impact on some businesses. We advise businesses not only to examine your own suppliers, but take into consideration the suppliers of your suppliers.
Product Compliance
While tariffs and customs are naturally of concern for many businesses, those that import from the UK may find issues with compliance. The UK has agreed to maintain to a 2 year transition with no regulatory change. Some have suspected that Britain may not uphold certain standards that the EU has put in place, such as environmental, animal welfare and fire safety, or that they may not uphold the standards the EU may put in place in the future.
For Irish exporters, a concern is whether the UK may be willing to accept reduced standards in order to reduce the cost of living. Irish exporters may need to ask are whether exports to the UK are safe. Another is to examine whether it’s time to consider if the UK reduces import standards, would this put Irish product at risk and make their product too expensive for the UK market?
Employment
While existing EU employees in the UK will retain their residency rights, there will be a cut off period introduced that could mean recently employed EU staff may be unable to apply for residency. Irish citizens will continue to have residency rights in the UK due to the Common Travel Area, an agreement which was reached by the UK and Ireland prior to becoming members of the EU. In order for businesses who have employees in the UK to get Brexit ready, it is a good idea for HR departments to be aware of the nationality of all staff in the UK, especially new staff and when they came to work in the UK, to ensure you are compliant with future residency requirements.
Financial Forecasting
The uncertainty around Brexit has seen the Sterling drop in value, but continued uncertainly could have a knock-on impact to numerous other global currencies, including the Euro. It is important when drawing up your proposals for 2019 and 2020 that you examine your exposure to foreign currencies and factor in a reduction or increase in Sterling and Euro value, and the impact it could have a significant on your sales or purchases.
Key Questions
Allowing contingency planning for all possible scenarios is essential to prepare for Brexit and get your business ready. Some key questions businesses may not have considered include:
- Who are your competitors internationally that could now have easier access to the UK?
- What impact could cheaper imports from LATAM or APAC have on your product or service in the UK?
- Should you repatriate profits from your UK subsidiaries prior to Brexit?
- Do you currently transfer staff or customer data such as bank details or tax numbers between Ireland and UK?
- What impact does currency exchange and forex movement have on your business and is it possible to mitigate on-going currency volatility?
- Are there new markets you can explore prior to Brexit?
What Government supports are there to help get your business Brexit ready?
Enterprise Ireland’s Prepare for Brexit initiative is a great place to start, and contains a Brexit Scorecard which allows you assess your Brexit exposure. So far over 3,000 Irish firms have used the scorecard. The Irish Government also has a number of supports to help business prepare for Brexit. InterTrade Ireland offers 100% financial support up to £2000/€2250 to secure expert advice around Brexit matters. As well as this, the Strategic Banking Corporation of Ireland have launched a low interest Brexit loan scheme, offered to fund innovation, changes or adaptation of a business in order to mitigate the impact of Brexit.