In last week’s Budget the Chancellor announced an increase of £500m in spending on Brexit preparations to deal with the possibility of a no-deal Brexit. This means that £4.2bn of spending has been allocated in total from 2016 up to 2020. As the likelihood of a no-deal Brexit increases (with many analysts now seeing this as the most likely outcome) the Government has stepped up its preparations and set aside extra cash.
Despite these indications from government, many businesses, particularly SMEs, have yet to formally address how they will be affected if there is a no-deal Brexit. Larger corporates, particularly those in the most-affected areas (such as the aviation or pharmaceuticals sectors) have been working on Brexit strategies and addressing risks for a significant period. However, many SMEs have been adopting a “wait and see” approach, unwilling to devote time and resources before it is apparent what will happen when the UK leaves the EU. As the Brexit date draws closer without a deal having been reached, time is running out to identify risks and take steps to identify them.
Businesses should consider ways in which they might be exposed (e.g. if they rely on EU labour, have supply chains from the EU or export EU labour) and take steps to address them. In addition to general operating risks, contracts will be being entered into now that will extend past the Brexit date, so businesses will need to consider how those contracts will be affected and whether Brexit needs to be addressed in them. This could mean including a “Brexit clause” or by taking the risks into accounts in pricing and other commitments.
In addition to direct impacts (e.g. customs checks, tariff barriers) it would also be prudent to consider whether the business is in a position to withstand a period of economic turbulence that a no-deal Brexit could precipitate.
If you would like to consider the ways in which your business may be affected by Brexit please contact one of our lawyers on 0161 941 4000.