Brexit is happening and on January 31, 2020, Britain will formally leave the European Union.
Here, FBC Manby Bowdler Brexit Director Peter Wilding, takes a look at the herculean task which now lies ahead to ensure UK businesses can prosper
Now that Brexit will be done, the fact is, it will have only just begun. Boris Johnson’s government starts from a position of weakness. The manifesto commitment to get a free trade deal done by New Year’s Eve 2020 gives it precious little time to negotiate.
In February both sides will publish their respective mandates and by September a deal must be done to give time for all 27 member state parliaments plus – would you believe – regional parliaments to ratify the deal by years end. That’s five months to agree the type of deal that typically takes five years.
This is a tall order. By acting in haste, the government risks business repenting at leisure. The search for a quick deal will either mean the UK signing up to the EU’s terms – with all the tariff and regulatory burdens that would entail – or rejecting them and facing even harder tariff and regulatory burdens under the WTO regime.
However, if the last three years have taught us anything, commercial imperatives will always take second place to politics. The central dilemma is how to reconcile two contradictory, ideological objectives.
The first is that, for many in the Conservative Party, Brexit will not be Brexit unless the UK is entirely free to set its own taxes, tariffs, rules and regulation unfettered by European law. The second is that, to achieve this, business – and the jobs dependent on it – will face possibly ruinous barriers to trade from January 1, 2021.
Equally, the EU are unlikely to do the UK any favours. They fear the UK becoming a bargain-basement economic and political competitor and have all the time in the world plus the collective weight to impose much of the European model on an anxious UK. Moreover, they will try to retain their privileged access to such things as fishing rights whilst denying the UK retained access to such things as the services market.
Which is why the political imperative for the government will be to silence Brexit.
Expect the government to ensure that the legitimate concerns of manufacturers, farmers and service providers are relegated to the business pages.
The only time you’ll see Brexit on the front pages is when No10 tries to enrage its newly acquired voter base with lurid anti-Brussels headlines as the power differential between the two sides reveals itself during the negotiations.
In the meantime, 2020 will be business as usual. The transitional period keeps single market access and thus current supply chains intact. The only difference is that, under the radar, the government will be reshaping the country’s economic order. Given that this cannot happen until it has made up its mind as to what trade deal it wants, business now must make up the government’s mind for it.
Contracts and Compliance
I have always said that, because business has other things to think about on a daily basis, the two low-hanging-fruit imperatives to focus on are:
1. To ensure that all the legal terms and conditions by which you operate are watertight regarding the costs and liabilities which may result from the economic upheaval that is coming; and
2. To ensure that all the regulatory and financial compliance requirements previously not needed as members of the single market are now considered and put in place.
I have visited many companies whose contracts and compliance procedures haven’t been considered for decades. This will need to change and we are here to ensure that you are protected from surprises.
Finally, you need to know how the government intends to deal with your sector in the negotiations.
Will it understand your requirements and fight to protect you from adverse consequences or will your sector suffer in the inevitable trade-offs and compromises that will emerge?
That will require you to do something unusual for most businesses: influence decision-makers.
As some MP’s once told me – for them the benefit of Brexit is that they will have new powers previously devolved to Brussels. They will now be required to serve their constituents by ensuring that their business communities are not sold down the river.
As a former lobbyist I know how this works and we, at FBC, can ensure that the new system can work for you.
West Midlands businesses are resilient and innovative. There is no question that most will survive and, subject to the new trading regime that emerges, prosper. If politics had not plagued this issue for so long, we could expect a long transitional period until a reasonable free trade agreement was reached.
After all, the government has the option to keep everything the same for another three years under the Withdrawal Bill. Because of politics we have to expect that this will not be palatable to the Prime Minister. So now it is time to get ready and prepare.
Here at FBC Manby Bowdler, we have a stellar team of experts on our dedicated Brexit Advisory Team who can help you take control of your business.
If you would like to contact Peter or the rest of the team to discuss your business needs please call 01694 724440, 07901 008220 or email firstname.lastname@example.org.