Wow! 3 years and 7 months after the EU Referendum in which 51,9% of voters ticked “Leave”, we only have a very short time left to go until the UK leaves the EU!
With amazingly little fanfare or drama, the UK will quietly and legally exit the world’s largest trading bloc after 45 years as one of its most significant members.
With the departure of the UK and its 16% budget contribution *(source Financial Times), the economy of the EU is set to become smaller than that of the US.
Reading the British media over the past few weeks, it seems as if “Meghxit or Harrxit” seem to be more in the public interest than Brexit as a another fiercely independent member leaves a stable instituion that is argubaly in need of modernization.
However, this is major not just for the UK, for the EU27 and for all “third-party” trading partners of the UK with whom new trade deals will need to be negotiated and implemented.
We, as Great Britian export 48% of our goods to the EU. The uncertainly as to the future of trade between the UK and the rest of the world remains. In fact, the only changed in the past 4 months is that we know we will be trading outside of the EU.
Time is short with shadow of World Trade Organization rules and tariffs looming. The Confederation of British Industry (CBI) that in the case of no trade deal with the EU, 90% of the UK’s goods exports to the EU by value would face tariffs. The average tariff on UK exports to the bloc would be 4.3 percent while the average on imports from the EU into the UK would be around 5.7 percent. More expensive goods and services.
Therefore as one countdown ends and another begins to our new status from 1st January 2021, businesses need to continue to assess and measure their exposure in three key areas:
- People: access to talent and visa and residency from 01/01/21
- Import, export and supply chain: navigating future rules, tariffs and VAT requirements and check with suppliers
- Tax Compliance: as the UK as its businesses define a stand-alone tax regime
Finally and on a positive note, the impact on British citizens residing in the EU and EU citizens residing in the UK will be thankfully negligable for the time being. People will retain and maintain their rights due to a “Settled Status” scheme in respect of work, healthcare, pensions, or travel as set-out in the Withdrawl Agreement.
I get the sense that this is the end of the beginning rather than the beginning of the end and that the transition period of 11 months will require significant flexibility. The hard work has just begun.
Andrew Dickson, International Liaison Director, Grant Thornton Austria.