Industry views | 16 April 2019
By Marcos Hart, Group Transformation & Risk Director
After months of uncertainty and the very real threat of a no-deal Brexit, the UK now has up to six more months to find a solution. Last week the EU agreed to move the withdrawal deadline back to 31 October, but the message from European Council president Donald Tusk was clear: ‘Please do not waste this time’.
What happens between now and autumn is in fact far from clear. By late October, the UK could have a new prime minister, or have held a fresh general election. There’s still a possibility of a second referendum or no Brexit at all; albeit there does not appear to be the votes to get a so-called “People’s Vote” through parliament.
And there remains, of course, a chance that the UK will leave earlier than the agreed date, if a deal resulting from the current talks between Conservative and Labour leaders can be pushed through parliament.
In short, we’re not much closer to a concrete outcome to Brexit. One thing we can say is that the threat of a no deal Brexit has been temporarily eased - with parliament having legislated to this effect.
One of the greatest areas of uncertainty for businesses remains the customs union arrangement with the EU post-Brexit. Should the UK negotiate a deal that includes this, the movement of goods across the border will remain largely unchanged, preventing hold-ups at ports and easing cost concerns around tariffs. But, given the lack of progress being made around many of the key Brexit issues, it would be unwise to rely on this, even with suggestions that the odds have increased with the delay.
Businesses that depend on frictionless borders – including just-in-time manufacturers, pharmaceutical companies and grocery retailers – will be watching customs union developments closely. It would be unwise to move away from continuity plans (such as stockpiling) for now, with the possibility of a no deal Brexit or an alternative arrangement still on the table. But, with more time available, there is at least the chance to think more strategically around items being stored with one eye on the possibility that the movement of goods could be less affected than initially feared.
With imports and exports, a similar approach of planning for the worst-case scenario remains important; particularly when dealing with goods subject to customs and/or excise duties. Duty-suspension through the use of bonded warehousing is an attractive option for keeping cash flow healthy when working with goods affected by these regulations. This storage option allows for increased stock holding in the UK to mitigate for post-Brexit supply chain risks, but provides the security of delaying duty payments until goods make it into circulation.
Wincanton operates bonded warehouse facilities in locations such as Greenford, Greater London, which could help your business to reduce the financial burdens associated with increasing imports ahead of Brexit. As well as this, we hold Authorised Economic Operators (AEO) status and are HMRC audited and approved, meaning our systems and procedures are compliant with all customs and excise regulations.
In the short-term, Brexit fears have been somewhat eased. The UK remains on course to leave the EU later this year, but the avoidance of a no deal exit is good news for businesses. Although there’s the chance to take a step back and plan strategically, in just under six months’ time, we could be back in a similar position. Our advice is to use the coming weeks to reflect and assess your own needs before making big decisions.
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