By the end of this week there will be less than 100 days to Brexit.  

MOST businesses have not done any Brexit  planning.  The main reason being that they have taken a view that it will either won’t hppen or it won’t affect them.

In the first case it should be noted that as is the current mantra Parliament is deadlocked with no majority for any option including remaining.  Until that deadlock is cleared then we maintain the current course.  Needless to say that course is either Prime Minister May’s deal or by default no deal.

How will that affect me?

Regarding the idea that Brexit won’t affect your business, that is simply an ostrich mentality.  Brexit will affect all businesses in the Uk either with primary effects or secondary effects.

To elaborate, primary effects are those that directly affect your business and these include:-

a) Importing or exporting goods
b) Labour supply
c) transacting in foreign exchange
d) supply chain where either raw materials or services required for your business are involved
e) Overheads such as office equipment
f) Tarriffs and Non Tarriff Barriers

Furthermore, secondary effects are those that effect your business environment such as:-

a) Logistics 
b) Property
c) Availability of funding
d) Cost of debt
e) Wider drop in demand
f) Possibly reductions in available support for research and development expenditure

What’s the forecast look like?

Obviously, every business is unique, however we all trade within the UK. Unfortunately, the current estimates of a no deal exit are a reduction in GDP of between 4.75% and 7.75%.  

This will manifest itself through the following:-

a) an estimated initial drop in the exchange rate of 7-10% against major currencies
b) an increase in inflation to approximately 3.5% due to both the exchange rate effects and a potential increase in cost of imported goods through tarriff changes
c) a period of disruption at certain UK ports notably Dover which could last between 4-6 weeks thus restricting some supplies (Dover accounts for 20% of the UK import / export traffic).
d) it is likely that there will be some constraints on the availability of debt funding which may drive the cost of funding upwards.

So what is being done?

The UK government is rushing to put contingency plans in place and the Bank of England has been planning for a no-deal scenario for a while.  

These however will be on the macro level.

So if you are a builder have you safeguarded supplies of construction materials?  

If you are a financial services provider, will you be able to offer your client the same range of products in April than in March?  

Maybe you are a clothes retailer how is your supply chain affected.?  

Perhaps you are dependent on European Nationals for your workers have you discussed with them their plans and how will you adjust when the Immigration White Paper is published?  

Above all how is your business going to react when there is a drop in demand?

So what should I do?

The most obvious answer to this question is to develop a plan.  Consider where your exposure to Brexit is and what aspects of your business it will affect? What is the likely impact on your sales, costs, supply chain, workforce and funding?  It is likely to be a big task so contact us if you need any assistance and we can run a quick Brexit Health check for you.

Alternatively, you can sit there with your head in the sand.

 

 

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