Published Wednesday 30th October 2019
This week was supposed to be our last as full-fledged members of the European Union. Instead, businesses find themselves watching the same political circle revolve as politicians, parties and perhaps the country as a whole fails to agree on a way forward.
Many businesses will be relieved that a potential no-deal exit from the EU has been avoided. However, while it remains a possibility, yet further contingency planning will have to take place. Brexit continues to cause strain on business investment and, as we head into the Christmas period, if it impacts consumer spending, substantial effects could be felt as a result of these indecisions.
The Latest Brexit Developments
When Boris Johnson was announced as the new leader of the Conservative Party in July 2019, he stated that he would make Brexit happen at any cost by the 31st October, the deadline set by previous negotiations. Despite his best efforts and some relatively aggressive tactics, he has been met by the same stumbling blocks that befell his predecessor, Theresa May. Namely, conflicting visions about how the future agreement will take shape and an overwhelming desire to avoid a no-deal Brexit outcome.
The desire to avoid a no-deal Brexit came to a head through the Benn Act. Voted for at the beginning of September, it meant that if the government couldn’t get a deal approved by Parliament by 19th October, they would be forced to request an extension from the EU. In an attempt to beat the deadline, the government achieved a slight variation on the previous withdrawal agreement that removed the ‘backstop’ element that had caused much concern previously. For a moment, it looked like this new deal could have a chance of passing, when the Withdrawal Bill was approved at second reading, signalling a desire from a majority to get a Brexit deal complete. However, the time parliament wished to have to overlook the details meant that the Benn Act was implemented, and the 31st October deadline became unfeasible.
This week, the European Union agreed to an extension of the Brexit process until 31st January. As a result, Boris Johnson has successfully triggered a general election, set to take place on 12th December. Until then, Parliament will continue the legislative processes of analysing the Withdrawal Bill already agreed.
What Will Happen to Brexit Next?
The future course of Brexit remains the UK’s million-dollar question. Until Parliament dissolves on 6th November, ministers will continue to debate the Brexit deal achieved by Boris Johnson. There is a chance that Brexit could be agreed, and the UK’s departure triggered during this time. However, given the tumultuous nature of proceedings so far, such an outcome is highly unlikely.
Instead, it will be the responsibility of a new government to either continue, restart or scrap the current Brexit plans as we enter 2020. If a clear majority government is achieved, the future direction of Brexit should become clear. The worry, however, is that no majority will be delivered at this next election, which could leave Parliament in the same situation as before.
What Should Businesses Expect from Brexit?
Jagjit Chadha, director of the National Institute of Economic and Social Research said that ‘the UK economy will continue to suffer what we’re terming a slow puncture. Not a pop, not a bang. But a slow puncture, as investment is deferred in the face of uncertainty’. A decrease in business investment is said to be one of the primary reasons behind productivity in the UK, with Brexit and the broader economic slowdown the primary reasons, the future looks increasingly challenging. Businesses are diverting resources in preparation for a decline in productivity and slow growth rate in the UK, following the UK’s exit from the EU.
Here at Expense Reduction Analysts, we’ve been helping major UK businesses consolidate their supply chains through the Brexit process. Our cost reduction consultants can help refine your procurement strategies, reducing expenses at a crucial time for many UK companies. If you’re interested in seeing what savings we could create for you, why not get in contact with our team today?