With Brexit negotiations at an impasse, talk of no deal remains a hot topic.
Depending on who you talk to, views range from optimism that despite the events of the past couple of weeks a deal will be done albeit late in the day, to concern that we will find ourselves in a no deal scenario and faced with the disruption that could cause.
Earlier this week we asked over 500 business leaders on our Brexit webcast (listen here) whether they thought we would get a deal and sentiment was pretty evenly split. Almost half had no confidence that a deal would be done (marginally ahead at 47.5%) whilst 43.5% had some confidence.
Absent a crystal ball, it is hard to call, however, on balance it seems there is still some likelihood that a deal can be done.
From where we are today, further compromise will be required. Any deal will also potentially face political challenges when put to parliament for ratification.
There are numerous things that could theoretically derail a deal, so despite my own cautious optimism, there remains only one sensible course of action that business can take. That is to consider what the impact of no deal would be, and to plan accordingly.
Against a backdrop of ongoing ambiguity, business leaders I talk to are craving information, a set of parameters against which they can assess their potential exposure.
A good starting point is the no deal notices issued by the UK government over the past few months.
These are technical notices that set out the implications of a no deal scenario. They include the actions that the UK government will take in this situation and the recommended steps for business. We should of course note that whilst there are many inter-dependencies between the UK and the EU - the notices only outline the measures the UK can take. They cannot guarantee EU reciprocity. However, they do provide perhaps our first real line of sight into what no deal could actually mean.
A no deal scenario would present issues for any business buying from or selling to the EU. There would be potential restrictions on moving goods or providing services under WTO rules and additional administration, increased costs and delays are likely.
For businesses that have yet to undertake preparations for Brexit, these notices should be a reminder of the need to take action now. For those organisations that already have Brexit plans in place, these notices provide a useful checklist to ensure that all bases are covered.
Some of the papers recommend actions that businesses should be taking now. For example, pharmaceuticals organisations are advised to stockpile at least 6 weeks additional stock, in order to mitigate potential supply chain disruption.
The technical note on trade suggests high level mitigating actions for businesses to consider. For example, whether a customs broker or new software would be required to process declarations (taking into consideration the lead times on systems upgrades). The note also puts forward potential mitigation strategies, such as customs warehousing, which allows businesses to store goods with duties suspended.
Businesses should understand the potential issues and consider what mitigations and contingencies may be required. It is important to know where the 'trigger points' are and have plans in place specifically for 'Day 1' and the proceeding weeks – where, in the case of no deal, disruption could be considerable.
That is not to say we advocate businesses implementing substantial and costly operational changes 'just in case'. We suggest a proportionate response to Brexit planning, focussing on the issues that matter most to a particular organisation.
Planning for change - being informed, assessing the level of potential risk and taking strategic and operational decisions based on what we know, what we don't yet know and an organisations own risk appetite.
Despite the uncertainty, there are practical steps that can be taken now to ensure your organisation is ready for every Brexit outcome.
My advice is to plan and prepare for the situation of most change i.e. no deal, no transition and the UK operating under WTO trading rules next year. If you are prepared for that situation, then you will be in good shape for every outcome.
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