Boris Johnson’s elevation as Prime Minister and appointment of several Brexiteers to the cabinet has significantly increased the potential for a no-deal Brexit on the 31st October.
A recent report by Investec Economics has put the potential of a no-deal Brexit at 39%, a rise of 19% since the end of July. However, that has probably all changed given what has happened over the last few momentous days at Westminster.
With the bill aimed at preventing a no-deal Brexit likely to complete its passage through the Lords on Friday, the likelihood of a no-deal Brexit may have been reduced, but it has not been removed. And the threat of another general election remains a real possibility.
A no-deal Brexit scenario would mean the UK would have to leave immediately and no agreements would be in place in relation to the future relationship between the UK and the EU. Again, lots of 'uncertainty'!
Preparing for No Deal
Whether Brexit happens on the 31st of October or the deadline line is extended to 31st January 2020, it is becoming increasingly important to prepare for a potential no-deal scenario.
With all this uncertainty in mind businesses must have a contingency plan in place. Malcolm Cohen, a former head of trade at the Department for International Trade suggested that “businesses may be more affected than they know and less than they fear”.
The UK Government has launched a website designed to help UK businesses prepare and we have also put some steps together that your business may wish to consider when preparing for a no-deal Brexit.
- Look at your supply chain - Even if you think you don’t do any business with the EU, it’s worth having a thorough look at all the goods that pass through your business and where they come from and ultimately end up. Speak to your suppliers and service providers and understand what arrangements they have in place.
- Apply for an EORI number - An Economic Operator Registration and Identification number identifies your business and ensures you are paying the correct tax.
- Make import procedures as simple as possible- In the event of a no-deal Brexit, the Government will temporarily let UK-registered companies defer submitting full customs declarations and paying duties on imports in the hope of avoiding too much congestion at borders.
- Check your tariffs - Back in March the government set out plans to remove most UK tariffs if a no-deal were to occur. This would help minimise the costs consumers would have to pay for imported goods.
- Could a customs agent benefit your business? Customs declarations are not something that’s done easily therefore it is advised to appoint an agent.
- Investigate if any product–specific licences needed- Some goods, such as animal products, will need specific labelling and in some cases extra certification to be exported to the EU.
- How could the weak pound affect your finances? – It is believed that a no-deal Brexit would hammer the pound. For instance, while cheap sterling could make your products more attractive to customers outside the UK, it could also push up your costs and make it more expensive for UK customers.
How Trade Finance can help
White Oak IE, Managing Director, Andy Beck said, “As the old saying goes ‘by failing to prepare, you are preparing to fail’ and now is the time to prepare.”
“We at White Oak IE can take away some of the headache. Our unique trade finance product can finance your purchases including VAT, duty and logistics freeing up your working capital. We can also significantly reduce your risk and management time, as we manage the process for you. These solutions could be a viable course of action for your business in the event of a no-deal Brexit.”
If you require additional information on our trade finance solutions visit us at www.whiteoak.ie or call us on 01245 904 066.