Contingency plans published for 'no deal' Brexit

The government began publishing a series of advisory papers on contingency plans companies and individuals should put in place if the UK and European Union fail to reach a Brexit deal.

Contingency plans published for 'no deal' Brexit
Although Brexit Secretary Dominic Raab insisted a good deal with the EU is "within our sights", the government went ahead with the publication of the first batch of 24 (of about 80) technical papers on preparations for a 'no deal' Brexit.

New costs for companies trading with Europe

One of the papers focused on the potential new costs for companies trading with Europe. It said firms should "if necessary, put steps in place to renegotiate commercial terms to reflect any changes in customs and excise procedures, and any new tariffs that may apply to UK-EU terms".It added, "Businesses should now consider the impacts on them in a no-deal scenario, which would mean a requirement to apply the same customs and excise rules to goods traded with the EU that apply for goods traded outside of the EU, including the requirement to submit customs declarations.

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"Businesses should consider whether it is appropriate for them to acquire software and or engage a customs broker, freight forwarder or logistics provider to support them with these new requirements."Engaging a customs broker or acquiring the appropriate software and authorisations from HMRC will come at a cost."

Cross-border trade in Northern Ireland

On cross-border trade in Northern Ireland, the paper urged businesses in Ulster to contact the government in the Irish Republic for advice. "The Irish government have indicated they would need to discuss arrangements in the event of a no deal with the European Commission and EU member states," it said."We would recommend that, if you trade across the land border you should consider whether you will need advice from the Irish government about preparations you need to make."On financial services, Mr Raab urged banks to press ahead with the establishment of European hubs - which many are already doing - with the 'no deal' paper for the sector warning that UK banks were likely to lose access to EU payments systems.The financial services paper said that “customers (including business using these providers to process euro payments) could face increased costs and slower processing times for Euro transactions”.It added that the cost of card payments between the UK and EU were likely increase and warned that UK citizens living in the EU might "lose the ability to access lending and deposit services, and insurance contracts”.

Clear guidelines for businesses in the event of a 'no deal'

Adam Marshall, director-general of the British Chambers of Commerce, said clear guidance for firms was long overdue. "No-deal preparations should have happened far earlier, and the onus is on government to move quickly and give businesses as much detailed technical information as possible to avoid significant disruption in any scenario," he said."Our test for the Government's 'no deal' notices is straightforward - do firms now have the clarity they need so that they can continue to conduct business both here at home and across borders on March 30 2019?"Companies need to know how the UK government will handle customs and VAT procedures at the border on day one after Brexit."Companies need to know what the immigration rules will be on day one, both to reassure existing staff and to recruit successfully."Firms need to know what they need to do to ensure that their contracts are valid, their transactions processed, and their rights protected."

Business leaders demand to know more about a "no deal" Brexit

Publication by the government of the first tranche of Brexit 'No Deal' technical notices brought a mixed response from business leaders, several welcoming the move but saying more clarity was needed.Josh Hardie, deputy director-general of the Confederation of British Industry (CBI), said few doubted that leaving the EU without an agreement would "wreak havoc on economies across Europe".He added, "These papers show that those who claim crashing out of the EU on World Trade Organisation rules is acceptable live in a world of fantasy, where facts are not allowed to challenge ideology.“It’s right and responsible that the government have supplied information to businesses on issues from financial services passporting to food labelling, all of which will help lower the risks of the harshest outcomes from a ‘no deal’ Brexit. But without a similar response from the EU, many of these mitigating measures would be blunted.“The reality is that businesses across the UK have already spent millions of pounds and thousands of hours on getting ready for no deal. Whilst smaller firms simply do not have the resources to assess what the worst-case scenario would mean to their enterprises. “These technical notices can only be a starting point for the government. Smaller businesses in particular will need a one-stop-shop where they can get the information and support they need to better understand the issues they would face.“Above all, negotiators must now get on with finalising a Withdrawal Agreement, putting pen put to paper on a jobs-first transition period and finally, agree on a new relationship that puts people’s livelihoods above politics.”

Many European businesses reliant on UK institution funding

Simon Thompson, chief executive of the Chartered Banker Institute, agreed that, at both retail and wholesale level, a no-deal scenario would be bad news for citizens and businesses both in the UK and in the EU."We mustn't forget that at least one million Britons living in the EU rely on the efficient functioning of the banking system for services including payments and pensions. Many businesses across Europe rely on funding and trade finance from UK institutions," he said."I'm sure that, with goodwill and patience all round, pragmatic solutions in the event of no-deal could be found and implemented. But this would be much less optimal than an agreement that maintains the majority of current arrangements, and ensures the banking and financial system does what it is supposed to - supporting individuals and helping grow business in the UK and EU."Stephen Martin, director-general of the Institute of Directors, described publication of the notices as "a welcome step from the government, though not before time". He added, "Now the government has planned for the worst, it can get on with negotiating for better."These notices should serve as a call to action for the many firms that feel they haven’t had enough information on what to plan for. To date businesses have been relying on trade associations, costly legal advice and even the EU to help equip themselves with the information needed to plan for all outcomes."Further detail on what steps the government would take to mitigate the effect of no deal is especially important for business confidence. The government must continue to come clean about these plans so that firms are truly in the know when making their own preparations. A no deal would be bad, but a no deal with no planning would be worse."Fundamentally, while releasing these notices was important to help businesses prepare for no deal, this is not the outcome that anyone should want. The government must now throw all of its efforts into ensuring a withdrawal agreement is reached and we have an all-important transition period to allow us to establish our future economic partnership with the EU.”

EEF Brexit hotline

Stephen Phipson, chief executive of the manufacturers’ organisation EEF, welcomed the increased clarity offered by the technical notices but said he wanted to see the remaining notices published as soon as possible "so companies have the full picture to enable them to prepare properly for a no-deal scenario".He said, "The decision to allow importers to defer VAT payments is very gratefully received and is something EEF has been campaigning hard for with government in order to protect the 145,000 businesses in the UK which are above the VAT threshold. "We also welcome the commitment to create UK replacements for the regulatory bodies we will leave next March if we fail to reach a deal with the EU. However, we would like government to make firm commitments to ensure these bodies can swiftly recruit the skilled people they need to deliver a seamless regulatory environment in the event of a no deal exit."To help manufacturers, EEF is today launching a dedicated Brexit hotline to help companies understand the implications of the technical notices. However, we remain confident that government will secure a deal with the EU and will continue to work with ministers to help secure this."For more Brexit related news, visit our Brexit pages.Access hundreds of global services and suppliers in our Online DirectoryClick to get to the Relocate Global Online Directory  Get access to our free Global Mobility Toolkit Global Mobility Toolkit download factsheets resource centre