50 days to go 2.0

Again, we find ourselves with just fifty days to go until the scheduled Brexit date.

The past seven days have been momentous in UK politics, with the risk of a no deal exit on 31 October reaching a peak, then dramatically reducing with the passage of the Benn-Burt Bill (or as it is formally known, the European Union (Withdrawal) (No. 6) ACT), resulting in law requiring the Prime Minister to ask the EU for another extension if specific criteria are met. So, now that Parliament has been prorogued, what can business expect over the next fifty days?

The risk of a no-deal exit may have receded but it hasn’t been removed. Over the next five weeks, the government will continue negotiations to further its primary aim to seek a deal with the EU, whilst at the same time ramping up its no-deal planning. The “Get Ready for Brexit” advertising campaign has begun, aimed at increasing business readiness for the UK’s exit - if you haven’t yet seen the distinctive red, white and blue advertising, you probably will soon.

Then there are several key dates to look out for:

On Monday 14 October, the UK Parliament will open with the Queen’s Speech, which marks a new parliamentary session and sets out the Government’s legislative agenda. We could see the government present a revised deal on this date, but we could also see another call for an early general election or a no confidence vote.

The EU Council will meet on Thursday 17 to Friday 18 October - that will mark the last chance for the UK Government to secure any changes to the current Withdrawal Agreement and Political Declaration.

As a result of the new Act, the Prime Minister has until Saturday 19 October to secure the approval of MPs either: i) for a Withdrawal Agreement; or ii) to leave the EU without a deal. If neither happens then the Prime Minister must ask the EU for another Brexit extension until 31 January 2020. If the EU offers a date that differs from 31 January 2020, then the Prime Minister must put it to MPs (within two days) to approve or reject that extension.

A no deal risk is reduced but it remains the legal default unless the EU accepts the UK’s request for an extension or if perhaps a different legal route is identified and tested. – or something else not yet predicted happens...

What should business do now?

Many businesses have undertaken some Brexit planning, but recent initiative from the UK government has seen a real focus on encouraging preparations, including providing new funds to trade bodies for the provision of guidance, revising government technical notices, revamping the gov.uk website and developing a useful questionnaire which points business to the relevant policy areas on the website.

Despite all of this activity from government departments, the political uncertainty seems to be affecting business response levels. We still see some adopting a ‘wait and see’ strategy, but as time ticks on and the uncertainty continues, these judgement calls ought to be re-visited and business should review their preparedness during this period of Parliamentary calm.

But, at this uncertain stage, can business realistically do much to identify, or reassess, and actually mitigate their risks?

Yes. The first thing to do is to consider the issues that are most likely to affect your sector at this stage – we have a new series of Industry Insights that outline the potential impact of Brexit on a range of sectors from agri-food companies through to professional services providers.

Having worked out your critical issues, the key is to identify your ‘no-regret’ mitigating actions – those steps that divert as little resource as possible, and ensure preparedness for whatever direction Brexit heads.

Here are seven actions to support your Brexit preparations now:

1. Market access and trade: assess what might hinder your ability to sell goods and services both inside and outside of the EU, including the potential loss of EU Trade Agreements; for example, tariffs, authorisations, licences, regulation, labelling or domestic restrictions. Services restrictions are often much less obvious, but can be an absolute barrier to trade as they aren’t managed with a tariff.
2. Supply chain and customs: map your supply chain. If you have not been automatically enrolled by HMRC, register for an Economic Operators Registration and Identification (EORI) number. Get ready to complete and submit new customs declaration forms by training your people and redesigning your systems and processes – check whether you are eligible for the new government training and IT grants, and consider stockpiling/accelerating exports.
3. Brexit risk management and monitoring: review whether your risk register is comprehensive, and your reporting statements are aligned with the latest from Regulators. Take the new questionnaire and assess revised UK government technical notices on www.gov.uk/brexit, as well as EU and global government communications and regulatory changes to ensure compliance.
4. Contract and legal review: understand, assess and mitigate risks within your commercial contracts in order to protect your business from increased costs as a result of border friction, additional tariffs and un-anticipated contract termination. Assess whether your business can continue to transfer data cross border from the EEA to the UK and if legal safeguards such as standard contractual clauses have been considered. Also, review EU intellectual property and .eu domains to ensure continuity post-Brexit.
5. People: monitor government announcements both in the UK and in each of the EU countries. Agree your workforce support and engagement strategy, including business travel policy around 31 October. Make regular communications to your employees explaining their right to reside and work status – there is some good news here with a new policy for arrivals after exit date with the ‘Temporary Leave to Remain’.
6. Financials: model the potential impact of no deal in your budget and forecast to cover currency fluctuation, cashflow, changes in customer demand, access to capital, costs or tariffs. Consider whether you could access government grants for Brexit expenditure in the UK or EU – a significant fund of €780m has been set aside by the EU for support in the event of a no-deal exit.
7. Stakeholders: talk to your audit committees, engage with NEDS, draft customer communications, agree a strategy with key suppliers, engage with government, regulators and trade bodies and maintain conversations with investors. Regular communication enables stakeholders to understand the risks and upsides Brexit may present, and gives them an opportunity to positively influence and support your business.

You can download Deloitte’s Brexit Tactical Actions checklist here.

For support in assessing or establishing your Brexit related plans, you can email us.