When it comes to Brexit, it’s important to me that my clients feel informed. In this article, I share 12 things about Brexit that my clients need to know.
1. Brexit will affect your business
Whether it’s trade restrictions, visa complications, currency fluctuations or tax implications, Brexit will impact your business in some way, big or small, and you need to be prepared.
2. There’s no going back
Article 50 is a clause in the Lisbon Treaty stating that the treaties relating to EU membership will remain in force until a withdrawal agreement is signed, or failing that, from two years after the notification of intent to withdraw, unless the European Council, in agreement with the member state concerned, decides to extend this period. This means that Brexit is happening no matter what and there’s no going back.
3. The impacts could take some time to affect you
The UK’s departure will be a lengthy process. Brexit will probably take about two years of negotiation, and then there will most likely be a third year of transition. This means that the markets are going to remain open and there will be free movement for the next two, possibly three, years. So there’s no need to panic, but you do need to be prepared.
4. You need to make your plan of action
While the impacts may take some time to hit, my advice would be to start considering multiple scenarios and map out a calculated plan of action as soon as possible. (If you need assistance with this, we can help - contact: firstname.lastname@example.org)
5. You can mitigate the impacts
There are a number of simple, cost-effective mitigation actions that you can take for the diversification of risk, so that you will be prepared regardless of the outcome of the negotiations. For example, you can take a look at your supply chain management or consider expanding your operations into new territories. We will explore these mitigation actions in more detail in a series of follow-up articles.
6. There are 6 priority topics for the negotiations
- Both the UK and the EU have identified the same key concerns and priorities ahead of the negotiation talks. These include:
- safeguard the rights of EU citizens;
- Northern Ireland;
- financial settlement;
- trade agreement;
7. Timing is a sore subject
While the same key issues have been raised by the EU and the UK, both parties diverge in relation to the timing of the discussions surrounding each issues. For example, the EU require the issue of the financial settlement to be addressed before all other priority points, and they have stated they will not address the issue of a trade agreement until the withdrawal agreement has been substantially agreed. On the other hand, the UK want each of its properties to be addressed on a step-by-step basis with the trade agreements being dealt with early on and financial settlement coming at the end of the process.
8. These are the key dates
The following dates are of particular importance:
- 30th September 2018: The EU’s chief Brexit negotiator, Michel Barnier, intends to have Britain’s exit finalised.
- 29th March 2019: Two years after Theresa May triggered Article 50, the UK will cease to be a member of the EU and will no longer be subject to its treaties. This date can be extended for further negotiations if all members of the European Council unanimously agree to an extension.
- May 2019: The next EU parliament elections will take place, without the UK.
9. Brexit could affect Irish trade and GDP
The Irish Department of Finance have estimated that a ‘hard Brexit’, i.e. one in which Britain cuts most of its ties with Europe and gives up access to the European single market, could according to the ERSI cost 0.9% to 1.6% of Irish GDP in the medium term. Ireland has significant exports to Britain so if trade tariffs were imposed, it could mean a 30% drop in these exports according to some economists.
On the other hand, a ‘soft Brexit’, would most likely maintain Britain’s access to the European single market, similar to that of Norway and Iceland who are not members of the EU but have negotiated access to the single market.
10. Irish companies should look at their supply chain management
For Irish companies who trade with the UK, you need to consider what a strict customs border could mean for your business. Also consider the impact of currency fluctuations, e.g. if your customers are paying you in sterling and you’re buying in euro, you could lose out. The key is to look at your supply chain management - where are you buying your goods from and what are the alternative options?
I would also advise Irish companies to take a look into their potential for expanding operations into the UK so that they end up with a foot in both camps. Our series of follow-up articles will explore these topics in greater detail.
11. International companies should consider moving part of their operations
International companies who have operations in the UK will currently be working within the structures of the EU, e.g. selling products that are regulated by the EU and operating within the EU banking system. To ease the impact of Brexit, you may want to shift some of your operations to a member state where you can continue to operate within these structures, such as Ireland.
If a favourable deal is struck, then there will still be open trade. If a less-favourable deal is struck, then any constraints that arise from operating in the UK will be overcome by moving part of your UK operations to Ireland, where you can continue to operate within the EU. If you’re considering moving part or all of your operations to Ireland, we can assist you with the migration. Get in touch to discuss your options.
12. You need to stay informed
Our commitment at RSM Ireland is to keep people informed. As part of our service, we will release a series of follow-up articles over the coming months to help you to plan for Brexit. Topics will include target issues such as tax; talent, regulation, tariffs & trade, currency management, and connectivity.
We can help you to mitigate the impacts of Brexit
Stay in touch on Twitter and LinkedIn, or if you would like to receive these articles directly via email, contact our Tax Partner, Aidan Byrne (email@example.com), our RSM UK/Ireland Desk Partner, Aine Farrelly (firstname.lastname@example.org) or our Managing Partner, John Glennon (email@example.com) be added to the Brexit mailing list.