Entering a new year and with a majority Conservative government now in place, it appears, for the first time in a while, that the UK will actually leave the EU at the end of this month.
The element of ‘Will we? Won’t we’ has been removed and a level of certainty now exists. Of course, the detail that follows from here on remains to be realised and will be the result of many months, if not years, of negotiation and debate. However, with certain elements of the future now known, what do those working within the local leisure and hospitality need to consider in order to thrive moving forward? Here, Charlotte Nutting, head of FBC Manby Bowdler’s specialist leisure & hospitality team, outlines the potential impact of Brexit on the sector.
The first thing to consider, is that the leisure and hospitality sector is people-based. Many companies (across all sectors) in the UK rely on easy access to a pool of workers from the EU-27, and whilst in our region the overall percentage is just 5%, the local importance of the leisure and hospitality sector (as well as seasonal workers in agriculture), means that the impact here could be quite pronounced. That doesn’t need to be scary though; employers simply need to be prepared.
The specifics of new immigration rules will emerge over time, certainly after a transition period, but first and foremost employers, in all sectors, need to ensure that any EU nation employees have registered for settled status by December 31 2020. Whilst responsibility for this lies with the individual, the employer is responsible for making sure that they actually do. Failure to do so, could result in a £20,000 fine and that’s unlikely to be welcome news to any employer.
Looking further to the future, employers may wish to consider how Brexit will impact on their access to new sources of labour. Currently, EU employees account for 15% of all leisure and hospitality workers here in the UK so restrictions accessing this pool could certainly create some challenges. Most notable, of course, would be the increased cost of greater reliance on home-grown talent. With this in mind, taking steps to retain existing employees now, could pay dividends over the longer term. Alongside this however, it’s likely that rules relating to Tier 2 visas will be relaxed which could ease access to talent from elsewhere.
Something else that the leisure and hospitality sector will need to consider and be prepared for is potentially higher costs on imported goods. If World Trade Organisation rules kick in, then tariffs could mean higher costs on imported food and alcohol. Of course, a feature of many of our local operators in the sector is such that they actively support and patronise other local and regional suppliers. This could mitigate some of the impact of increased import costs.
Another concern that is often mooted is the impact that Brexit will have on levels of EU tourism into the UK. Naturally, any drop in this respect would have a detrimental effect on the leisure and tourism sector, not least of all because 67% of all visitors to the UK come from EU nations.
With this in mind, expert opinion tends to point towards an inclination on the British side to make travel by EU nationals to the UK as easy as possible. And let’s not forget that the UK remains popular with visitors from much further afield which, when coupled with the increasing popularity of the ‘staycation’ for the British themselves and the relative weakness of the pound, means that future visitor levels are not currently a cause for major concern.
All of this aside, business owners in the leisure and hospitality sector, like those in all other UK business sectors, will be exposed to changes to VAT and other taxation structures; changes to data protection legislation; changes in employment legislation and the enforceability of contracts; as well as changes to UK legislation through the EU Withdrawal Act – much of which remains unknown.
Businesses should generally be taking a balanced approach to their exposure to Brexit. The key to navigating Brexit successfully is informed analysis, accurate forecasting and practical contingency planning. Remaining aware, informed and on top of updates provided through professional networks and advisors is vital. The team at FBC Manby Bowdler has the combination of political, policy and legal know-how to provide this level of Brexit advice, whether you’re in the leisure and hospitality sector, or elsewhere.