Britain’s decision to leave the European Union has created significant economic uncertainty. For two and a half years, we all have been busy trying to figure out what this means. But most importantly, how to adapt and succeed under the new soon-to-come rules of European commerce.
The truth is, there are infinite variations of short and long-term consequences. But the fact remains the fact. Whether you run an EU, UK or a multinational business, it will most likely be affected by Brexit.
Many business owners have decided to wait for more clarity before making any decisions. However, with only 74 days remaining, the time to act is now.
So, what does Brexit really mean for your company?
Additional taxes to increase prices of export/import.
For the past several decades all UK-based companies have enjoyed the benefits of the single market. Unfortunately, with hard Brexit expected, the free movement of capital, goods, people and services will most likely come to an end. The UK will trade with the EU on the basis of rules set down by WTO. Which means that tariffs and special import taxes would apply.
Independently, whether the UK decides upon a deal or no-deal Brexit, compliance will be the major challenge. There is no doubt that in either scenario employment, immigration and tax legislation changes will follow. First of all, you would need to audit and possibly amend international contracts. As well as tax and social security registration forms. Moreover, additional paperwork and permits might be required for your foreign employees.
Logistics and transportation.
The end of the single market not only signifies the growth of business expenses. Severe commercial transportation disruptions are forecasted. In case of no-deal Brexit, custom checks will take place on both sides, at the UK and the EU27 borders. Meaning that the delivery of goods will take much longer. In addition to this, it is still unknown how airborne transit cargo will be handled.
Increased production costs.
An increase in production costs is no longer a speculation, it is the matter of a fact. Most of the goods are completely or partially manufactured outside of the UK. The production costs have already risen due to the drop of British Pound Sterling. Further currency fluctuations would result in further price escalation.
Skilled workforce shortage.
The suggestion that UK labour market will never be the same after Brexit is rather accurate. The immigration dilemma is not the only issue. Again, with the drop of British Pound and additional Brexit-related business expenses, UK employers may struggle to provide competitive salaries to migrant workers. This may result in British nationals also seeking better opportunities elsewhere.
Volatile currency fluctuations.
The consequences of British Pound losing its positions against Euro and US Dollar are more far-reaching than a decrease in its buying capacity. It may cause instability in the financial and real estate sectors. Not mentioning weaken the economy altogether.
As troublesome as the future may seem, the times of uncertainty often happen to be the times of big opportunities. Businesses that take the necessary due diligence and planning will avoid any potential turbulence.
Contact Bradford Jacobs, your trusted Brexit partner in Europe, now to make sure that your business is fully ready and avoid any difficulties.