Keep calm and follow these steps
A hard Brexit it is - but what does that mean for your business? There are steps that can be taken to minimise the coming disruption, writes David Carson of Deloitte
The UK Prime Minister's speech this week brought clarity to her country's stance on Brexit. She has prioritised immigration control over membership of the single market and the customs union.
Overall, the latest comments lead to the inevitable conclusion that the UK and the EU will have a more distant form of relationship.
Given the UK's acceptance that membership of the single market is not a possibility, it is important that Irish businesses plan against the scenario of most change and are prepared for substantial changes to trading conditions and access to talent from the UK.
So what should business do?
Establish a Brexit taskforce
• If you have not already done so, activate a 'Brexit taskforce' - identify the key personnel who will be involved in responding to Brexit developments;
• Identify specific areas that may be materially affected and require further investigation;
• Communicate an initial message to all stakeholders - shareholders will want to see a plan, customers will want guarantees and employees will want reassurance;
• Prepare and take action where key opportunities are clear or immediate risks need mitigation; and
• Plan and monitor for triggers in the unfolding situation, and execute if appropriate.
Foreign exchange rates
One of the most immediate impacts of Brexit was a dramatic fall in the value of Sterling. Many Irish businesses did not have currency hedging in place. Irish businesses should review their currency-hedging strategies and identify what level of exchange rate could put their business at risk. This will drive the need for remedial action.
Businesses should consider whether they need an even more radical approach which may include acquiring a UK business or diversifying into new markets to reduce their exposure to the UK.
Customs duties and tariffs
Irish businesses should assess the potential impact of customs tariffs applicable to trading with the UK. Scenarios can be run and tested by reference to other international trade agreements.
The Vat impact on trade with the UK following its departure from the EU should be assessed, particularly where that trade involves the movement of goods.
Movement of people and restrictions to market access
Employers should review current contractual documents and practices for both their domestic and internationally mobile workforce to assess potential contractual issues including data protection and immigration quotas.
Significant barriers may arise in highly regulated sectors. Businesses operating in such sectors will need to monitor any proposed changes as negotiating positions emerge.
Many commentators picked up from the Prime Minister's speech that the UK may look to reduce corporation tax in order to become more competitive. Once free from the jurisdiction of the European Parliament and the European Court of Justice, there is the prospect that the UK could soften the regulatory environment for the same reasons.
In summary, business should proactively engage in scenario planning to assess the possible impact of Brexit. Action plans should be drawn up for the short and medium term. The time to take such action is now.
David Carson is a partner and Brexit lead at Deloitte
Sunday Indo Business