Last editedJan 20223 min read
Brexit could have a very serious impact on companies that trade with the UK or are affected by the UK’s participation in the EU. That’s not just businesses in the UK, but businesses across the world, from France to the U.S. While much of the impact of Brexit on businesses is still shrouded in mystery, there’s lots of information out there that you can use to help your business prepare for the UK’s withdrawal from the EU.
What is Brexit?
Brexit, or British exit, refers to the UK leaving the EU. On June 23rd, 2016, the UK held a referendum (public vote) to decide whether the UK should leave the EU or remain. The ‘Leave’ vote won by 52% to 48%, and in the years since, the UK and EU governments have been locked in negotiations to determine how the movement of people, goods, capital, and services will be administered following the UK’s exit from the union. There were two possible outcomes to Brexit, a withdrawal agreement or a no-deal Brexit:
Withdrawal agreement – This refers to a treaty that sets out the terms of the UK’s withdrawal from the EU. It covers issues such as border arrangements and citizens’ rights, as well as an outline of the UK’s future relationship with the EU.
No-deal Brexit – This refers to a Brexit in which no withdrawal agreement has been set in place prior to the UK’s exit. If the UK exits the EU without a deal, it will take on “third country” status, meaning that it will be treated the same way as countries that do not have free trade agreements for customs, tax, and movement with the EU.
In late December 2019, the government’s Brexit bill was passed by Parliament, leaving the UK set to leave the EU on 31 January 2020 with a withdrawal agreement.
What will be the impact of Brexit on small business?
Brexit and business go hand in hand. As Brexit will have a significant effect on trade, tariffs, freedom of movement, and customs, the business sector will be severely affected. The impact of Brexit on small business may be felt most keenly in the following areas, as they are likely to be revised or evaluated after the UK leaves the EU:
Import and export to and from EU countries
Product safety and compliance
Transport and logistics
Transfer of personal data between the UK and the EU
Employment of EU citizens in the UK or UK citizens in the EU
The links between Brexit and business are clear, but until we have a better understanding of the UK’s future trade deal with the EU, it is difficult to determine the exact impact of Brexit on businesses. Of course, Brexit is likely to affect businesses from different countries in very different ways. Here’s our guide to Brexit’s impact on businesses throughout the world:
How will Brexit impact on businesses in the UK?
The impact of Brexit on businesses in the UK is likely to be severe, with hundreds of laws, tariffs, and customs agreements subject to change. Even if your business trades solely within the UK and only employs UK citizens, Brexit will have an effect. For example, even if you only serve UK customers, you may need to purchase goods or parts from EU countries, so changes to tariffs or customs will have an effect on your business operations.
How will Brexit impact on businesses in Europe?
As legal and regulatory issues are likely to become more complex in the wake of the UK’s exit from the European Union, there are likely to be many European businesses affected by Brexit. In addition to issues around customs and tariffs, European businesses that employ UK citizens also need to consider freedom of movement, as it’s possible that the right-to-work of UK citizens within the EU will be affected.
How will Brexit impact on businesses in France?
London is one of Paris’ most valuable trading partners, with many SMEs and larger businesses having strong ties to the UK. From agriculture and textiles to pharmaceuticals and spirits, Brexit is likely to affect businesses across a broad range of industries. A no-deal Brexit is the immediate concern, as a withdrawal agreement will provide guidance around issues relating to tariffs and border barriers, so preparation is crucial. However, recent reports indicate that more than half of French SMEs that do business with the UK have not assessed the potential impact of Brexit.
How will Brexit impact on businesses in Ireland?
As the UK is one of Ireland’s key trading partners, the impact of Brexit on small business is likely to be substantial. According to a report from PwC, there are three key areas where Brexit is likely to have the biggest economic impact: exchange rate, foreign direct investment, and people and mobility. Businesses in the financial services, digital, pharmaceutical, agri-food, and energy industries are likely to be most affected, and as Brexit is now due to take place in early 2020 (31 January), businesses should begin their contingency planning as soon as possible.
How will Brexit impact on businesses in the U.S.?
Many U.S. companies rely on the UK as a gateway to the European Union, so the terms of the UK’s withdrawal from the EU will affect many businesses in the U.S. Changes to customs declarations, transit times, duties, and taxes all need to be taken into consideration, while contracting is also likely to be affected, as hundreds of laws may need to be re-written. For businesses that work with UK companies, new trade agreements are likely to lead to tariff reductions.
GoCardless is working hard to ensure that Brexit causes as little disruption as possible for our customers. Find out more about how GoCardless can help you automate the way you get paid.