This week’s guest blog comes from the Institute of Export and focuses on what businesses should be thinking about in light of the EU referendum result.
Following the EU referendum result, some businesses who are trading with the EU have expressed some concern as to the future of their business relationships with their EU customers and what they need to be thinking about now.
The first thing to remember is that little is expected to change in the immediate future. The referendum vote is simply a decision by the UK people, and does not trigger any instant changes. The first stage of a formal exit from the EU will be by the UK government invoking “Article 50 of the Treaty of Rome”. Thereafter there will be a negotiating process of up to 2 years, during which time the UK will remain part of the EU, and goods will continue to move free of customs clearance formalities or import duties.
What happens after the negotiation phase and the formal UK exit will depend on the terms of the negotiations between the UK and the European Council, and there have been a lot of discussions and speculation about what free trade agreements might be possible.
Depending on the outcome of the discussion, it is likely that goods will have to undergo some form of customs clearance process both when goods leave the UK and on arrival in the destination country, regardless of whether any import duty would be chargeable. All of the free trade agreements currently in place with the EU do have this requirement, so it would be prudent to plan in the longer term for this.
With regard to documentation, this will also depend on the outcome and detail of the exit negotiations but it is unlikely that it will be reduced in terms of quantity and complexity.
Currency fluctuation is another matter that you will need to take into account in the coming months. In the short-term, the fall in the value of sterling could present you with opportunities to price more competitively but don’t forget you will also need to take into account price increases for fuel, transport and your supply chain which could increase your unit costs
The Institute of Export is running a series of workshops in London, Birmingham and Manchester to help businesses plan for all the possible scenarios and to help you plan the next steps to take to spread your risks.
In the meantime, it would be wise to communicate with your EU clients anyway, to reassure them of your continuing commitment to them and calm any nerves or fears that they may have.
Whatever happens in the coming months, we need to remember that the true nature of trade and its long term benefits to your business and to the UK economy will remain unchanged – but that it is also good business sense to prepare for all eventualities!