Preparing for a no-deal Brexit

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    James_M

    James_M UKBF Newcomer Administrator

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    The 29 March 2019, when the UK is scheduled to leave the EU, is getting ever closer – not that you’d believe it from the apparent lack of urgency in Whitehall – and it’s only sensible for business people to plan for a no-deal.

    Planning has been infuriatingly difficult for businesses of every size and in every sector, but for firms that buy and sell to the EU it’s important to have contingency plans in place, based on the information we do have.

    Around 43% of the UK’s exports are to the EU, generating £235 billion in export revenue, and nobody wants that to stop dead overnight.

    There are a few key things to bear in mind.

    Defaulting to WTO rules

    If the UK leaves the EU without any alternative deal, the expectation is that trade will immediately revert to World Trade Organisation (WTO) rules. In other words, passengers without a valid advance ticket will be charged the full fare.

    For two weeks into April, goods moving between the EU and UK won’t need to be checked at borders, and there’ll be no tariffs imposed. It will feel like business as usual. It’s very likely this will lull more than a few people into a false sense of security.

    Then, as WTO rules bite, goods will begin to be subject to customs checks and tariffs, increasing the costs for businesses, and leading to slower processing times on the borders.

    Good(ish) news for importers

    The Government has said that, in the event of no-deal, customs checks will be relaxed for businesses importing goods into UK. Unfortunately, there’s no guarantee of the same flexibility for those exporting to the EU.

    HMRC is currently saying that importers will just need to file a simple online form up to one hour before a lorry is due to cross via Eurostar, or up to two hours if it’s coming over the English Channel on a ferry.

    Importers will have to update the online entry within 24 hours to make sure HMRC is aware goods are arriving, with duty payable up to a month after that.

    Supply chain pain

    Businesses which have built their success on a steady supply of EU imports – especially the just-in-time brigade – have hopefully been thinking about minimising disruption to the supply chain well before now.

    Sourcing an alternative supplier within the UK is one way around the issue, but this may not be an option for your business, and, of course, if there was a competitive UK supplier, you’d probably already be working with them.

    Instead, you might need to look at alternative planning arrangements which might include stockpiling EU-sourced product lines you know will be in demand. Even if things eventually settle down, this should help see you through any immediate wobble.

    But, of course, warehouse space might be hard to find, and unusually expensive, as bigger players such as supermarkets have soaked up much of the spare capacity. Equally, if your warehouse is anything less than bulging, there might be an opportunity here.

    Currency quakes

    As of the start of 2019, three in five UK businesses with suppliers in the EU were reporting that currency fluctuations were driving up the cost of running their business.

    Sourcing within the UK, even if it costs more, can help protect your profitability as payments and invoices are all handled in a single currency, reducing the chance of unexpected jumps.

    If sourcing within the UK is not an option, you might consider paying your suppliers in their own currency. Forward exchange contracts are another useful tool, allowing you to lock in favourable exchange rates for a future date.

    Double down on marketing

    As we potentially enter a new world, it might be time for a new marketing strategy. Review it and refocus, thinking about whether there might be any easy wins, either domestically or in the EU, that could balance out the turbulence of no-deal.

    If you’ve not already started trading online, this would be a good time to start. The UK has the third largest e-commerce market in the world and online giants, such as Amazon and Alibaba, are a relatively easy way to reach new international customers.

    Don’t panic

    Of course no-deal might be dodged at the last minute, at which point many importers and exporters will breathe a long sigh of relief. Still, this is a classic example of a situation where it pays to plan for the worst, even as you hope for the best.

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  2. The Byre

    The Byre UKBF Ace Free Member

    8,359 3,238
    There will be no Brexit. Soft, hard, deal, no deal, with bells on, without bells on, the whole enterprise is and always was doomed from the start - doomed to be bungled by incompetent idiots, each suffering from Grayling-mad-cow-disease.

    At the last minute, parliament will come to its senses, take control and call a second referendum and then it will be 'Remain' by c.a. 7% and we can all go back to worrying about The Millennium Bug and the Kardashians' inflated lips.

    Britain will continue to drift slowly sideways and down.

    Don't get me wrong! My wet dream would be a no-deal Brexit, followed by 50-mile tail-backs at Dover, Calais and elsewhere, empty supermarket shelves, riots in the streets, patients dying for want of basic medicines and day-to-day supplies, like catheters and sutures. Perhaps then Britain will wake up and realise that it is a part of the Rest of the World and that it needs to employ politicians who are capable of actually leading and making decisions!

    Well, I can dream, can't I?
     
    Posted: Mar 8, 2019 By: The Byre Member since: Aug 13, 2013
    #2
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  3. HomeWrking

    HomeWrking UKBF Contributor Free Member

    34 5
    This is where it really bites - have we been working and building up world-class enterprise, manufacturing and general productivity for the last 40 years or just doing advantageous short-term deals, selling off national assets and creating a credit bubble. If all the mortgages were paid off then fine...
     
    Posted: Mar 10, 2019 By: HomeWrking Member since: Mar 9, 2019
    #3