At PwC, we are still clear that a deal is more likely than ‘no deal’, and that at the end of status quo transition, the UK will leave the EU with a Free Trade Agreement which builds upon the existing EU-Canada deal.
But with the EU encouraging people to make contingency plans for a ‘no deal’ scenario, we wanted to help you understand what that would mean for business and industry.
Well, let’s start with companies buying and selling goods between the UK and EU…
Tariffs will need to be paid on all UK-EU cross-border trade. The impact will vary enormously by industry, with tariffs ranging from zero on pharmaceuticals, to 10% on cars, to much higher for clothing and agricultural products, for example.
The EU will no longer recognize many products tested, certified or registered in the UK. For high-risk products including those in highly regulated sectors, such as pharma and chemicals, this could mean that UK products can no longer be sold on the EU market once we leave.
Customs will be introduced, requiring customs declarations for all imports and exports and checks at the border, with increased costs, delays and uncertainty.
Turning to services, in the most highly regulated areas - such as financial services, audio-visual and many of the professions, UK-based companies and individuals will, with immediate effect, no longer be able to provide their services to EU-based clients.
And then finally people, where free movement will end, and the new immigration policy - based on the existing points-based system - will make it harder and more expensive to recruit EU staff, particularly in lower skilled occupations.
These are just are some of the implications of a ‘no deal’ Brexit for business. As you can see they have economy and firm-wide implications. To mitigate these risks, companies will need to be reviewing their supply chains, warehousing, data, systems, talent management, EU presence, contracts, tax and a whole host of other areas.
What is clear, is that the risk of a ‘no deal’ Brexit could become an abrupt reality in just 9 months’ time. And even the transition - if agreed - grants companies just two and a half years to undertake potentially major changes to their operations.
With just 9 months to go until Brexit, now is the time to act.
Senior Trade Adviser, PwC United Kingdom
Tel: +44 (0)7432 340 942