By Gedalia Waldman
After several years of uncertainty is the UK business community finally in a position to make a clear decision on their future? Yes and no seems to be the answer for now.
I spoke with many businesses who had concerns, not only about Brexit but also the prospect of a Labour Government led by Corbyn and his shadow cabinet.
Regardless of their traditional political leanings, I was repeatedly told by my contacts that they were concerned about the Corbyn Government’s apparent anti-business sentiments and lack of clarity regarding Brexit.
I can’t say I was surprised considering some of the policies that were emerging in their manifesto, but the uncertainty for the situation was only made worse by the gridlock that Parliament had faced in the run-up to the election.
Unfortunately, this left many clients in Limbo. One of our longest-standing clients, who has been with us for more than 20 years was looking for a sale of their business that would allow them to retire, but it made no sense for them to sell when the market was suppressed, which meant that they had to put their life plans on hold – I am certain they were by no means alone in this.
So, considering what we were hearing, it was no surprise that Conservatives secured victory at the end of last year.
This delivered the certainty about Brexit and the UK’s future direction that the markets and our clients needed and is reflected, anecdotally at least, in an increase in interest for investment amongst UK businesses.
For example, our long-standing clients, after patiently waiting for months have had significantly renewed interest from their potential buyers. They are now in the process of selling their business, crystallising the hard-earned value that they’ve created.
For a long time now, owners and shareholders in the UK have held back on investing further into their businesses over fears of a no-deal Brexit or concerns of a growing anti-business agenda. For many, the risk was just too great. Now though it appears to be full steam ahead.
So, why then is there uncertainty in my initial response? Despite the Conservative win and a confirmation that the country will be leaving the EU on 31 January 2020, there remains one very large elephant in the room – a future trade deal.
Having spoken with several clients some are still holding back at the moment over fears that a trade deal may never happen.
Of course, the UK Government hasn’t been easy on itself either. Most trade deals take three to five years to be arranged, but the UK only has 11 months to get an agreement negotiated and approved, not only with the governing bodies of the EU but also with all 27 member states – that is no easy task.
Despite the Government’s bravado of ‘getting Brexit done’, there is a lot to do and not a lot of time to do it. Add into the mix the chance of trying to negotiate a US trade deal alongside this and the cards seem to be stacked against the Government.
Unfortunately, without an agreement in place, the country still faces the prospect of leaving the EU at the end of the transition period on 31 December 2020 with no deal, which would mean that it will be required to trade with EU member states under World Trade Organisation (WTO) rules.
Leaving under these circumstances would result in border complications and the potential imposition of tariffs on goods and services between the UK and member states.
This, in turn, could result in significant additional costs being added to the UK’s supply chain and so the Government, we are assured, is doing its utmost to achieve a deal that avoids this scenario.
This short deadline creates new uncertainties for businesses, some of whom will already be concerned about their ongoing relationship with customers and suppliers in the EU. This is certainly the feedback we are getting from some business leaders, despite their desire to move forward from the years of anguish after the referendum.
So, what advice can I offer during this transition period? First and foremost, if you haven’t reviewed your supply chains and projects with EU companies now is the time to do so.
Not only could you find pressure points, but there may also be plenty of new opportunities out there to take advantage of.
What’s more, businesses should use this opportunity to cast their eyes further afield to see what possibilities lie beyond the EU in the years to come – don’t forget the UK is already in the process of agreeing new trading arrangements as we speak and so who knows what the future may hold.
Many proponents of Brexit say that coming out of the EU may result in a boom for British trade, as it will open up the door to regions where the Union previously had limited access – only time will truly tell.
We are proud of our close association with some of the world’s leading independent accountancy firms via our membership of Reanda International and are well-positioned to help with international advice. To find out how you can explore and exploit new opportunities on the horizon post-Brexit, why not speak to our team today.
By Gedalia Waldman