How can companies prepare for no deal Brexit?
Summary The risk that the United Kingdom (UK) will leave the EU without an agreement on 29 March 2019 is imminent. The Danish government and business organisations have therefore stepped up efforts to inform citizens and companies about how they can prepare for a possible no deal Brexit.
It is important that companies with activities in the UK already now prepare for a no deal scenario. Businesses should as soon as possible mitigate doubts about supply chain issues, existing contracts, obstacles to free movement, IT systems, and personal data management. These are the recommendations of the European Commission, the Danish government, and several business organisations.
If Britain leaves the EU without a deal, companies are faced with tariff and non-tariff barriers over night. There will be no withdrawal treaty or a transition period and a future trade agreement will have long prospects. At the same time, it is expected that agreement on contingency plans can be reached in a few selected areas to mitigate the immediate consequences. This applies in particular to aviation, delivery of medicine to the UK, and bilateral agreements to safeguard the rights of EU citizens in the UK (and vice versa).
- If Britain leaves the EU without a withdrawal agreement and a transition period, companies will face tariff and non-tariff barriers.
- Studies show that most large companies in a number of EU countries have prepared for different Brexit scenarios. It is more unclear whether small and medium-sized enterprises are as prepared.
- Danish companies should already now take precautions and prepare for a possible no-deal scenario.
- Companies should carefully consider how they will react to fluctuations in the exchange rate, restrictions on the free movement of goods, persons and services, different regulation, and future financing.
- Contracts with British counterparts that run after Brexit should be thoroughly checked. There can already now be clarified regarding the choice of jurisdiction, i.e. which country's laws will apply after Brexit in case of disputes.
- Data and IT systems must be prepared to handle trade barriers, customs, and VAT, particularly for companies that do not currently trade with third countries.