Brace for Impact: the logistics of a no-deal Brexit. An op-ed by Eszter Kantor
Committed to carrying on business as usual from April 2019? As there is no agreement in place for continuing economic relations with the European Union, companies and entrepreneurs need to make their own contingencies to avoid delayed arrivals and extra costs.
Being a mere six weeks away from exiting the UK’s most important trading market forced some to take action. Warehouses have been rented and loaded with supplies to ensure manufacturing can continue, while others have relocated their offices to the continent. These contingencies require capital investment that some small and medium sized companies and independent contractors simply cannot afford. Apart from mentally preparing yourselves and spending your savings on trying to keep operations running, you will also need to engage. Engage with your suppliers in- and outside of Europe as well as with the relevant regulatory agencies, to ensure you have all necessary information at hand to continue your business.
In the absence of a deal, customs checks will be imposed from March 30th. That is if your goods will make it to customs. Fewer than expected and definitely fewer than necessary customs agents have been hired and trained, meaning goods will be sitting in containers, trucks and lorries hours, maybe days before anybody looks at the paperwork. Those registered with trusted trader schemes such as the EU`s Authorized Economic Operator Scheme will have a fast-tracked process once they are at the border, so go online at HM Revenue and see how you can apply. Thinking about using the friendly skies to fly your goods to Europe? You may have less options, larger crowds and higher ticket prices. Currently not all UK airlines fulfill the corporate ownership requirements to have flying rights in Europe and less airlines mean less competition to drive prices down. So be prepared for longer queues and higher ticket prices.
Once your goods make it through the border you will have the wonderful surprise of being able to pay for VAT and tariff right before you collect your goods. No quarterly VAT payment, this one for imports will be paid as your product clears customs. Check out HM Revenue`s guidance on what to do and how.
These new rules do not just impact your EU suppliers and buyers but also those from other countries. The UK has not yet managed to replicate all the EU’s free trade agreements, so you will need to check WTO tariffs and requirements to be able to trade with the rest of the world. The UK Government has set up a dedicated website helping you identify the right tariffs.
You will of course have the opportunity to pass the cost increase onto customers, the exact same way as you will be faced with price increase for all imported foodstuff, medication, cars, furniture and more. Calculate your profit margins and add at least an extra 30-60 percent to your costs to manage the unmanageable and unexpected Brexit impact.
Should you wish to travel or work in Europe and beyond, you will need to do your own due diligence. Check the host countries visa policy to make sure you will be allowed to work. Leave some extra days and a few extra pounds for the administration and visa costs.
Your life will get more expensive and more complicated, as will everyone else`s. The good news is, that according to some close political by-standers, this chaotic scenario would very quickly force a political compromise. I hope we don’t have to see chaos. The compromise should come sooner rather than later.