The impact of a no-deal Brexit on business
Deal, or no-deal Brexit?
If you run a business, you’re not alone in wondering about the impact of a no-deal Brexit.
A Government tool aims to help you to prepare for Brexit by asking just seven questions, but can the reality of Brexit’s impact really be predicted so easily?
With the governor of the Bank of England gearing up for “a real economic shock” what could a no-deal Brexit really do to UK business?
– Doom and gloom?
* Will a no-deal Brexit reduce business investment?
Mark Carney has predicted that many businesses will close. Others, he says, will close UK branches and will move elsewhere to EU countries. He states that the impact is already being seen, with business investment described as “very, very weak”, and believes that car manufacturers, chemical firms and food manufacturers will be amongst the hardest hit.
* Increasing cost of payments
The cost of sending or receiving Euros electronically may increase. Likewise, surcharges may apply to credit or debit card payments that are made to EEA merchants. Electronic Euro transfers may also take longer to finalise.
* Imported goods price increase
The UK would follow World Trade Organisation trade rules, and the price of imported goods could potentially increase. This affects businesses who have to pay for those imported goods. Many businesses may be forced to pass these price increases on to their customers.
* Skills shortages
Brexit without a deal could reduce immigration significantly. This may result in a skills shortage. Businesses may need to pay higher wages to attract the most skilled workers and may find that job applications don’t come in as thick and fast as they used to.
– Sunnier skies?
* Import and Export VAT flexibility
If the UK leaves the EU with no deal, then the Government is assuring businesses that VAT rules will remain as predictable as possible.
Import VAT will apply as it currently does to non-EU countries. Business owners may be pleased to hear that importing goods to the UK will not result in immediate charges. Businesses can use their VAT return for their import VAT. They will not need to pay it immediately.
Meanwhile, distance selling arrangements will no longer apply to trade with EU countries. UK businesses will be able to sell zero-rate goods to countries in the EU without completing EC sales lists.
* Support for UK industry
Industries such as the steel industry and the fishing industry became shadows of their former selves in the years that followed the UK joining the EU. With import rules potentially becoming more complicated, there is a chance for these UK industries to grow and thrive once again. Potentially, goods and services can be found much closer to home.
* Avoiding a watered-down EU membership
Some are arguing that to leave the EU with a deal in place leaves us with nothing more than a watered-down EU membership. We’d still be following the same rules, albeit with a little more independence and potentially the loss of some EU membership benefits. On the other hand, leaving with no deal means that we are completely free to rewrite the rule book ourselves. That could take us in a positive direction if the right people write those rules.
– Final thoughts
Dr Simon Usherwood, who reads politics at the University of Surrey, says that a no-deal Brexit would leave UK businesses with “absolutely no clarity about what happens” and at this stage, that’s all we’ve got.
Since 2016, £4.2 billion has been spent on Brexit preparations – with £2 billion of that for 2019/2020 . The funds are being put towards Brexit, to help the UK to prepare for every eventuality.
All sorts of people are making all sorts of predictions, but nobody really knows what true impact Brexit will have.
Predicting the impact of a no-deal Brexit on business is incredibly difficult, and all you can do is prepare for a worst-case scenario and hope that it won’t become a reality.
Meanwhile, you shouldn’t let your preparations for a ‘worst case’ outcome slow your business growth and development. By acting too much on your fears, you risk setting yourself up to fail.
If you stop building a house because you’re worried that it’ll be destroyed in a tornado, you’re left homeless even if that tornado never arrives.
Instead, use this time to mentally prepare and to keep things ‘business as usual’ where you can. Crystal Facilities Management will still be here for your cleaning, maintenance and security, no matter what the Brexit outcome.
To get a quote, or to find out more about how we can help your business, give us a call today or find out more on our website.