There are only a mere two weeks to go until the deadline for Brexit.
Come October 31, businesses across the UK will have to be prepared for an independent future without the EU. Despite the somewhat promising news that Boris Johnson has secured a deal today (October 17) – that the DUP is yet to back – can we rest a little easier?
Let’s be honest, that might not be possible for a long time yet with so much confusion amidst and uproar because of Brexit. However, there are ways in which businesses can prepare for the deadline – even if this deal is suddenly scrapped.
We spoke to Colin Bell, the North East Local Enterprise Partnership’s (LEP) business growth director, to get his take on the North East climate surrounding Brexit.
The first burning question was, well, what is the region’s overall thought process when it comes to Brexit? Colin’s answer may – or may not – surprise you: “The general feeling for the majority of businesses is that Brexit won’t affect them or that they aren’t clear on its shape.”
This apprehension over Brexit has been apparent since the June 2016 election, when Britain won the democratic vote to leave the EU by 52 per cent (over a staggeringly close 48 per cent of those who voted remain).
Yet, as the deadline leans in closer, it is apparent many businesses – over three long years on – still do not understand the impact Brexit will have on them, particularly those in the North East. But it isn’t necessarily all doom and gloom.
Colin said that, within the North East business community, you can “delve a little deeper with some operational questions”, and it could become “clear that there are areas of risk that, in many cases, can be mitigated through some simple measures.”
He added that this might be possible through “supporting EU members of the workforce to apply for settlement status, applying for an EORI number, reviewing contracts that are based on the UK being part of the EU, or registering for VAT in countries that you send goods to.”
When it comes to the nitty gritty details of Brexit – like the importation of goods, knowing which contracts to update and amend – it would appear there’s a definitive split between those who are confident and those who face dilemmas.
Take tariffs for instance, Colin believes that “industries that are less reliant on the free movement of goods and people” would be more likely to feel prepared. So what happens to those who are not?
“The businesses who face the highest level of disruption are those operating in globally connected supply chains on a ‘Just In Time’ basis.”
‘Just In Time’ is designed to improve efficiency in manufacturing,. It aims to reduce time spent on the production line and, ultimately, reduce the overall production process.
Such integrated cross boarder practices are now common practice in many industries across the EU meaning that changes in the way goods cross boarders could cause significant disruption to production. A good example is Sunderland-based car manufacturer Nissan, which could be affected if the flow of supply is disrupted.
However, Brexit has see many North East businesses “diversify into new markets and new sectors,’’ Colin suggests. He thinks that “Brexit has resulted in many businesses recognising that they are heavily exposed to too few customers and supply chains.”
This could result in short term opportunities as one option available to businesses at the top of supply chains is to localise supply, sourcing more content locally to minimise the effect of changing boarder controls.
In order to combat and manage this risk, heading into foreign territories and expanding a business’ footing in new waters can only “support the development of a more resilient business base and catalyse higher levels of innovation.”
Post-Brexit, companies can expand their base and activities whilst remaining head quartered in the North East. We just need to make sure there remains a “strong labour market and access to talent, a simple regulatory structure, fair business practices, and a competitive fiscal environment” for all.
Developing local operations in countries is ‘part and parcel’ of your typical business model; “it doesn’t mean that businesses need to shift headquarters and leave the UK hook, line and sinker.”
So, with the deadline for Brexit hitting the UK in two weeks, what can be done to prepare for it before then? Colin gave some advice: “The North East Growth Hub is developing its capacity to support businesses with Brexit preparations.
“The team of Growth Hub Connectors has been expanded and can carry out a Brexit Preparation Assessment to make sure businesses are accessing the most appropriate support.”
The North East Growth Hub – a digital resource for business growth and access to finance provided by the North East LEP – has put together a Brexit toolkit for companies to access. It provides information, resources, events and support on what to do come October 31.
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