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Deal done but disruption still to come?


So a deal has been done, but what does that now mean, a sigh of relief? Yes. But a time to relax? Afraid not.

The narrative of the last four or so years has been about seeking certainty and, after a series of false starts and ends, news of a deal agreement provides that. 

That said, we shouldn’t underestimate the work still needed to implement changes brought by the fine print of the deal. Now the UK has left the Single Market and Customs Union there will be significant extra costs on UK businesses. However, avoiding the economic shock of a ‘no deal’ and stabilising our relationship with our closest trading partners is good news, and over time we can hopefully build on this deal, as well as taking advantage of the opportunity to form more new partnerships around the world.

So, what changes came into effect from 1 January, and what do businesses need do to navigate these?

The agreement of a deal is definitely very good news but we must remind ourselves that it brings with it significant change  - organisations must still be able to operate outside the EU Customs Union and Single Market which is now impacting the movement of  goods and people.  Agreements for FS market access and personal data are still under discussion. 

It is more important than ever that businesses continue to focus on managing the new ways of working that the deal brings with it.  And this comes at a challenging time - cashflow is still under huge pressure in many sectors and some industries are being fundamentally reshaped by the pandemic.

Movement of goods  

Goods moving between the UK and EU are now subject to customs declarations and a new UK Border Operating Model is in place. 

New procedures for controlled goods and changes to VAT also apply.  There may also be changes to tariffs for business between the UK and other non-EU countries depending on the other trade agreements and the implications of WTO rules and the UK Global Tariff.  This impacts supply chains and buyer behaviours, not only between the UK and EU, but also between Great Britain and Northern Ireland.

Click here to read more on preparing for the changes.

Movement of people 

As we’ve known for some months, new immigration rules now in effect change the permissions and documentation for travel to carry out work in the 27 EU member states - whether that’s crossing borders to deliver raw materials or taking the Eurostar to get an acquisition over the line.

It also means that employing EU nationals without settled status is more complicated and costly for UK businesses. Practical things that companies should be doing now, if they haven’t already, include applying for a sponsorship licence and communicating with eligible staff about applying to the EU Settlement Scheme.

Movement of data 

There may be gaps in some organisations’ data protection and privacy plans. GDPR protects personal data - whether relating to employees, customers, or suppliers - moving to countries outside of the EU and EEA unless covered by an adequacy decision, an appropriate safeguard or an exception, which the UK doesn’t yet have.  Although the EU has not yet announced a data adequacy decision for the UK, under the deal there is a grace period for data (initially for six months) during which time the UK will not be treated as a third country for GDPR purposes. As a data adequacy decision is not yet a certainty. businesses need to understand where the personal data they rely on originates, how it moves around their organisation, and where it is stored.  They should update their privacy notices and contracts to make sure data flows remain compliant if the decision doesn’t go in the UK’s favour. Our free tool can help you understand the steps you need to take.

It’s not over yet

And it’s important to remember that, whilst a deal has been agreed, it is not all encompassing. Financial Services is largely outside the trade agreement, and firms lose their 'Passporting' rights to provide financial services to EU clients.  A separate commitment has been reached to agree a Memorandum of Understanding by 31 March 2021 which should include arrangements for Equivalence which may enable some financial services to be conducted between the UK and the EU.  Nor does the deal provide for a comprehensive approach for the mutual recognition of professional qualifications.  

Other areas have been earmarked for future clarification such as chemicals and data privacy, making it clear that we will continue to negotiate with the EU for the foreseeable future.

Contact us

Gavin Barwell

Gavin Barwell

Former Chief of Staff to Theresa May and PwC Advisor, PwC United Kingdom

Andrew Gray

Andrew Gray

Partner, PwC United Kingdom

Tel: +44 (0)7753 928494

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