There is an inherent risk in publishing an article about Brexit when the high stakes game of deal or no deal between the UK and EU rumbles on.
At the time of writing, a deal seems unlikely, which means that unless there is another extension, 2021 will see the end of the transition period and the ushering in of tariffs and border checks. Budget 2021 assumed this sort of ‘disorderly Brexit’, based on the EU and UK trading on World Trade Organisation terms. In this scenario, the Government’s forecasts suggest the overall impact of Brexit is to reduce the Irish economic baseline by close to three percentage points.
The combination of responding to a global pandemic and general Brexit fatigue has meant that many organisations have not done as much Brexit preparation as they would have liked.
Given the short time remaining to prepare for Brexit, it is important to consider how best to react – and the following ‘Four Cs’ framework may be instructive. The main area where Dublin businesses are likely to need to focus is with compliance. There are a number of new rules and processes which will be introduced in a short time frame, and businesses must seek clarity and react appropriately over the coming weeks.
Compliance
The regulatory landscape will change. Have you considered how your business will comply with the new rules and processes around:
- Customs checks and documentation
- New VAT processes for exports throughout supply chain
- Any changes to product standards conformity testing and labelling for exports to the UK
- Data and GDPR safeguards
Continuity
Mitigating the chances of any post-transition disruptions and any wider economic uncertainty is key. This may be through:
- Retaining the current workforce – where possible avoid losing staff (e.g. to competitors) at this key time. Consider how you can make yourself an attractive employer (e.g. through offering non-cash benefits)
- Re-evaluating, post pandemic, financial break even points and knowing what needs to be done to keep afloat
- Reviewing stock levels
- Engaging with suppliers and customers
- Reviewing any vulnerability throughout supply chain and customers, especially in light of the Covid-19 pandemic
Cost
With the economy significantly disrupted, businesses need to think now about the ongoing impact this will have, and actions they can take in response. Areas to consider include:
- Decreasing discretionary spends
- Tightening debt management – settling outstanding bills and paying off unsettled debts
- What have you learnt from managing cash flow throughout the pandemic? Can this be taken forward into 2021?
Communication
Communication is vital. This may be through engaging with accountants, investors or your bank, supply chains, employees, or customers. This will help mitigate disruption and build business strength in a period of political and economic volatility. Use the current Covid-19 disruption, and the prospect of different challenges as we approach 2021, as an opportunity to reach out, identify any possible problems and build solutions ahead of time. It is also vital that everyone in your organisation understands what changes are being implemented and how they relate to their roles.
“Use this time to reach out to employees, customers and suppliers”
Whatever happens come the end of the transition period, deal or no deal, Dublin businesses need to focus on the ‘Four Cs’ and get ready to react to whatever comes our way.
Political and Economic Affairs, Grant Thornton
