With just six weeks until the scheduled Brexit date of 29th March and no clarity as to where the exit deal may end up, the risk of disruption to supply chains, market access and workforce continues to loom large in the minds of business leaders. As Greg Clark (the UK Business Secretary) pointed out at a recent Parliamentary Select Committee, exporters shipping to Asia are sending consignments now that will arrive after Brexit, so for the next few weeks there is uncertainty as to whether their goods will be subject to increased tariffs, or even accepted at port on arrival because of delays in ‘rolling over’ EU trade agreements.
Most businesses have by now done some Brexit planning, but Deloitte surveys over the past 2 weeks show that few feel that they have comprehensive plans in place, and fewer still have started to implement them outside of the automotive and financial services sectors. We still see some adopting a ‘wait and see’ strategy but as time ticks on and the uncertainty continues, these judgement calls are being re-visited. Brexit is more frequently appearing on risk registers and we are seeing increasing levels of scrutiny in the past few weeks by audit committees and at Board level.
So at this late stage, can business realistically do anything to identify, or reassess, and actually mitigate their risks?
Yes. The key is to identify actions of ‘no-regret’ – those steps that divert as little resource as possible, and potentially add value to your business whatever direction Brexit heads. There is still time to take short term tactical actions over the next few weeks to better prepare your business for a range of potential outcomes, including no-deal.
Here are seven actions to support your Brexit preparations now:
- Market access: assess what might hinder your ability to sell goods and services both inside and outside of the EU, including the potential loss of EU Trade Agreements; for example, tariffs, authorisations, licences, regulation, labelling or domestic restrictions.
- Supply chain and customs: map your supply chain, register for an Economic Operators Registration and Identification (EORI) number, get ready to complete and submit new customs declaration forms, and consider stockpiling/accelerating exports.
- Brexit risk management and monitoring: review whether your risk register is comprehensive. Assess UK government technical notices (www.gov.uk/brexit), as well as EU and global government communications and regulatory changes to ensure compliance.
- Contract and legal review: assess commercial contracts, and re-negotiate terms – for instance, delivery terms and penalty clauses – to protect against Brexit risks. Also look at whether you can transfer data cross border if needed and if your trademarks are protected after Brexit.
- People: monitor government announcements both in UK and in each of the EU countries, agree your workforce support and engagement strategy, including business travel policy around 29th March. Make regular communications to your employees explaining their right to reside and work status.
- Financials: model the potential impact of no-deal in your budget and forecast to cover currency fluctuation, customer demand, access to capital, costs or tariffs. Consider whether you could access government grants for Brexit expenditure in the UK or EU.
- Stakeholders: talk to your audit committees, draft customer communications, agree a strategy with key suppliers, engage with government, regulators and trade bodies and maintain conversations with investors.
Even seemingly straightforward actions can turn out to be complex. For instance, an application for an EORI number should be a simple online process – but is proving problematic: if you already have a number allocated in another EU country, a UK one won’t be granted until the UK leaves the EU (and vice versa) so there could be a short hiatus period to be managed, for example by appointing an agent to make declarations. Businesses need to understand issues like this sooner rather than later to avoid disruption.
Download Brexit Tactics for the full version of Deloitte’s Brexit tactical actions checklist.
For support in assessing or establishing your Brexit related plans, you can email us.