This Transition Toolkit has been designed to highlight many of the areas that need to be addressed by businesses. Some risks will be more important to one business than another, and this will depend on the nature and sector of the business. The content will be relevant for those trading in goods and / or services, and it is designed to complement the governments transition guidance that can be used to generate a personalised list of actions.
Brexit Transition Toolkit: Are you prepared?
The UK left the EU on 31 January 2020. The terms of the Withdrawal Agreement provided for a Transition Period through to 31 December 2020 during which time the UK has remained in the Customs Union and the Single Market.
With the end of the Transition Period fast approaching, it is more important than ever that businesses plan ahead. Understanding how individual risk factors might affect their business model is critical and the degree of risk exposure will vary from business to business. Business leaders must take ownership of the situation and prepare a bespoke plan to support them through the changes that lie ahead.
Without a clear understanding of how individual risk factors might affect their business model, small and medium-sized businesses are in danger of doing nothing and facing the consequences.
It is possible that the long lead up to Brexit may have led to a lack of focus on forward planning and for many businesses, the impact of Covid-19 has provided a critical distraction, resulting in more urgent challenges. Despite the uncertainty, what is clear is that the trading relationships with European customers and suppliers will not remain the same after the end of the Transition Period. Regardless of whether a deal is agreed at the eleventh hour, SME’s are bound to be impacted – it’s just a question of how much!
Heading for a future outside of the EU, SME’s trading in both Europe and further afield need a plan that is matched to the risk profile of their business, and they need to act now.
THE END OF THE TRANSITION PERIOD
PREPARE FOR 1 JANUARY 2021
The Transition Period comes to an end on 31 December 2020 and after that date the UK will be outside the EU Customs Union and Single Market. This will fundamentally change the UK trading relationship with the EU and is likely in some shape or form to affect all businesses that trade with EU customers and suppliers.
At the time of writing it is still unclear whether or not the UK will have a Trade Agreement in place with the EU from 1 January 2021. If no deal is agreed, then the UK will trade with the EU on World Trade Organisation terms. Even if a comprehensive Trade Agreement is struck, it will not replicate the level and ease of market access currently enjoyed by UK businesses.
Leaving the EU Customs Union will clearly impact on those importing or exporting goods, and this has gained most of the attention. However, the new trading arrangements will also affect the service sector that accounts for a high proportion of UK exports to the EU, and these businesses will need to review the non-tariff barriers, sometimes at a country level, to understand what arrangements need to be made for life outside the Single Market.
In addition, many UK businesses currently rely on EU Trade Agreements in order to trade competitively in wider global markets. From 1 January 2021 these EU Trade Agreements will no longer apply to UK businesses, with the UK government seeking to negotiate new trade agreements to replace them. What can be agreed and the level of market access is still being negotiated with many of these other countries.
Given these changes, most UK-based SME’s know that they must do something to prepare now, but the focus for much of this year has been on dealing with the impact of the Covid-19 crisis. There is also significant uncertainty as to the outcome of the trade negotiations, which means there is a lack of understanding about where to start. However, with time running out, it is crucial that all business, whether trading in goods or services, make sure that they do review the likely impact and make appropriate contingency plans.