Brexit: Impact and How Businesses Can Cope With It

After 47 years of the United Kingdom’s initial entry into the European Union, its withdrawal which was culminated by a variety of internal and external arrangements finally proceeded on January 31, 2020. The negotiations for the terms of the “British exit” has been ongoing since 2016. Two months have passed since Brexit, but the effects are yet to unfold, with more new policies set to be drafted and implemented by January 1, 2021. All eyes are on Brexit’s impact to global trade and immigration.


Bracing for Impact

Many of the deal negotiations have been centered around creating “equivalence” where there would still be some compatibility between the regulatory outcomes for financial systems of both the UK and the EU. But the discussion around no-deal Brexit is making a comeback, and is more likely to happen than ever. While both want a free trade agreement and close alignment, they also believe that the other will try to change the rules of engagement without notice. With the future still being unforeseeable, we put together a series of consequential possibilities that businesses might want to pay attention to.

First of all, a lower GDP ahead resulting from stricter trade barriers with the EU is expected as the historical trend of Britain’s GDP has been pointing out. More complicated customs regulations for parcel movements between them is one of the most painful impacts. Brexit would also eliminate Britain’s tariff-free trade status with the other EU members, raising the costs of exports which would hurt UK exporters as their goods become more expensive in Europe.

According to their Withdrawal Agreement, the UK will remain within the EU VAT regime and Single Market until 31 December 2020. After that Britain will no longer be able to utilise the EU VAT refund system currently in place. And UK companies would lose the ability to bid on public contracts in any EU country which are open to bidders from any member country.

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All in all, evaluating the progress of post-Brexit arrangements is crucial for global businesses to ride out the challenges of the withdrawal. By preparing in advance, your company is less likely to be caught in a disadvantageous position and cede ground to your competitors.

It is particularly important for industry leaders to study the scale and scope of independence both economies will have from each other. With businesses in Britain having about a year to transit from operating within the terms of the European Free Alliance, contingent strategies will have to be the focus especially for small- and medium-sized enterprises.

The option for many of these business owners is to leave the UK entirely and transfer their operations to other urban hubs and centers around Europe. One example would be Dublin, with its capacity to be a new English-speaking entry point to the European Union. But for those who plan to work around Brexit, especially for the capacity and promise of equivalence, can adopt these strategies moving forward.

How to Prepare Your Business for Brexit Risks

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1. Assess the impact of Brexit on individual entities

The UK government has already given some instructions and suggestions for businesses in the country, like changes in customs requirements for moving goods out and into the EU and residency and healthcare coverage policies.

 While taking the necessary steps that are available now, business owners should study historical data for the effects of Brexit before the withdrawal to ground forecasts or their own predictions for the future of their enterprise. It helps to gain general knowledge on the future big picture, so whatever happens will not catch owners off guard. Start a risk assessment to identify how vulnerable your business is to Brexit-related risk in order to take actions to mitigate them. It is also important to study the effects of Brexit on other entities and industries related to your business. Having a collective assessment will inform further contingency plans and strategies.

2. Stay on top of policy changes

Whether a company will choose to operate outside of Britain or will opt to stay, policy changes will affect all entrepreneurs. Because of the aforementioned changes in regulations, sellers should tailor the policies to conform to both the new United Kingdom and European Union regulations, making a point to differentiate between them in a post-Brexit world. Although strategists should approach different options with care, the time constraint due to eventual changes in shipping, tariff, and tax policies require acting on accurate information and intelligent predictions as soon as possible. So keep yourselves updated with policies to reflect specific Brexit details once they are known.

3. Consider restructuring the company

When it comes to a firm’s structure, a lot of aspects are involved including finance, location, supply chain, staffing and many others. Corporations might need to consider a structural makeover to ensure their business operates smoothly after Brexit.

Cash flow impact from reduced consumer spending and higher costs call for a review of existing business operations and the consideration to remodel it for possible Brexit scenarios. Some UK companies that have subsidiaries in the EU may experience an increase in the withholding tax cost of repatriating funds to the UK as a result of the loss of access to certain EU Directives and rules. So these firms can look into relocating their branches to avoid unnecessary fees. Companies should also identify some additional suppliers to avoid any complications that could arise from Brexit’s impact on tariffs and customs. For UK firms staffed with EU workers, it is crucial to go over the new visa requirements to ensure eligibility. If not, employers will have to assess other recruitment possibilities.

4. Diversify to mitigate risks

Business expansion outside of the UK and EU is always an opportunity worth trying. Especially with the UK government actively seeking new trade arrangements with countries outside of the EU/EEA. These trade agreements are largely still in progress, and could potentially bring advantages in accessing these markets should there be improvements to trade conditions for UK businesses.

Businesses could also keep currency options open and research on working through different regulations per country and region as a way to secure their financial stability. In the meantime, as the number of companies leaving the country get imminently higher, British domestic demand might become difficult to supplement with fewer suppliers. So companies can still retain their UK entity’s operations, which would help to mitigate risks from the global market.

Arm Yourself with Professional Help

The UK’s withdrawal from the EU impacts both businesses operating within the UK and British entrepreneurs working in markets abroad. While the changes that will be implemented in transactions and company formation will be gradual, this kind of global business environment renovation requires discernment and strategy from innovators and investors.


Desfran is equipped and committed to walking our partners through various business environments, be it smooth or challenging. We offer customised solutions for every business venturing across borders. If you are looking to learn how you could build your business in the light of undulating socio-political developments, we have the just the right team waiting to talk to you.


Are you Brexit-ready? Use this guide to help you prepare,

Brexit Consequences for the U.K., the EU, and the United States,

Brexit deal: Economic analyses,

Brexit and financial services,

Brexit’s Impact on Business and Ecommerce Shops: How to Sell With Brexit,

Brexit Infographic: Preparing Your SME Business for EU Exit,

Business After Brexit: What Changes for UK Businesses?,

How Can Businesses Prepare for the New Points-based Immigration System?,

How to prepare for Brexit – checklist,

The Tax Impact of Brexit, Deloitte

UK to leave EU VAT regime 31 Dec 2020,

What will Brexit mean for EU VAT refunds?,

Worried about Brexit? Should you set up an entity in the EU now,

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