Published Monday 11th January 2021
Brexit dropped in and out of the public consciousness as the terms were negotiated and renegotiated, but as we end the Brexit transition period, the UK’s departure is firmly back on the nation’s mind.
What does the new relationship mean for businesses, and how can they adapt?
The past year has shown just how essential adaptability is across industries. With the fallout out from both the pandemic and Brexit to contend with, 2021 is set to be a challenging year for businesses who must make clear plans that put resilience and agility first.
Here at Expense Reduction Analysts, we are experts in cost reduction. To find out how your business could benefit from our guidance and support throughout the difficulties posed by Brexit, get in touch with our team today.
The End of The Transition Period
After years of Brexit negotiations, the UK is now at the end of the transition period, with Brexit finally being ‘completed’. As of the 1st of January 2021, the UK officially stopped following EU rules.
With this final departure, there will be a multitude of changes that will affect businesses. What has the UK left behind, and what can we expect moving forward?
How Will Businesses Be Affected?
With the confirmation and implementation of a deal, businesses on both UK and EU sides will have to familiarise themselves with the documentation and new procedures that will now be required. Expected changes include:
- Customs declarations – customs officials estimate that 270 million extra declarations will be made every year, resulting in an annual cost of £7 billion for UK businesses.
- New regulations – including the implementation of rules of origin regulations and sanitary checks.
- Certification – some goods may require new export licenses or certificates.
- Adapting to two frameworks – businesses trading with the EU must ensure that goods meet the standards for both the EU and the UK now that regulation frameworks will be different.
- Right to operate – UK businesses will no longer have the automatic right to operate in the EU.
- New border checks.
- Supply chain delays – with extra regulations, delays across the supply chain will be inevitable.
- Intellectual property laws – copyright, trademark and patent regulations will all need to be re-examined by businesses as they change.
The Initial Impact
The upcoming months will be an adjustment period for many businesses which will have to double their efforts to remain adaptable as they bounce back from the impact of COVID-19.
With the added red tape, there will likely be delays on trade routes on both sides of the Channel. Due to these delays and changes, some are predicting that certain imported items, especially food products like meat and dairy, will become more expensive in the short-term.
The Long-Term Impact
The future is uncertain; how businesses are affected by Brexit will largely depend on how robust their plans for resilience are.
Most experts predict that the UK economy will drop slightly over the next couple of years compared to the forecasts for where it would have been if we had stayed in the EU. With the continual disruptions caused by the pandemic, even this slight drop contributes to the recession and economic trouble.
Leaving the Single Market and the New Deal
The European single market aims to simplify trade and make it as efficient as possible for member states in the European Economic Area. Without this economic relationship, the UK is not included in the same rules that dictate how trade can be done across borders.
Under the new deal, it has been negotiated that there will be no tariffs on any goods traded between the UK and the EU. This is good news for many businesses who feared a complete no-deal Brexit. As trading with the EU accounts for over half of UK exports, many companies will benefit from the lack of trade tariffs.
However, it does not mean that trading will be as seamless as it was when the UK remained in the EU. With all the additional red tape that will arise out of the new regulations that UK traders will have to adhere to, time and money will no doubt be lost.
Despite the foreseen disadvantages, the avoidance of further tariffs and the possible chaos brought by a no-deal Brexit will be counted as light in the dark by many.
How Brexit Will Impact Different Industries
No sector will remain untouched by the departure from the EU, but different industries will be affected by Brexit in different ways.
Many are taking particular notice of the potential challenges faced by the financial industry. Banking and finance services in the UK rely heavily on business with Europe. Without the easy access that a European Union membership can provide, consistent business may become problematic.
Planning For The Future
Since the UK voted to leave the EU, there has been much uncertainty around the future of business and any potential partnership between Britain and Europe.
Now that a deal has been established and the future is a little less muddy, organisations can start to make firm plans and investments where they may have been holding off due to the past uncertainty surrounding Brexit.
Times of change may be challenging, but they also open to the door to opportunity. With firm plans in place that promote long-term resilience, businesses will be able to operate through any new changes more smoothly.
If the reduction of your business’ expenses is part of your plan for 2021, contact our team and discover how we can help.