Less than a year remains before the UK withdraws from the European Union on 29 March 2019, but talks between the UK and EU about their future relationship are just getting off the ground. Whether negotiators will be able to forge a positive future relationship that can ameliorate some of the anticipated negative effects of Brexit on UK businesses and markets remains to be seen. Moreover, a significant level of uncertainty looms as to whether a deal will be reached on the terms of the UK’s withdrawal and accepted by the parliaments that must ratify it.
At best, negotiators will reach a political agreement on key elements of a future arrangement by October that can be appended to the broader Withdrawal Agreement that must be in place for an orderly exit. Detailed talks, including the negotiation of a possible association agreement and/or free trade agreement between the UK and EU likely will not begin until after Brexit Day, 29 March 2019. Moreover, while the two sides have agreed to a transition period continuing from March 2019 until the end of 2020 in which much would remain the same, the transition period itself is part of the overarching Withdrawal Agreement that must be approved by the European Parliament, the UK Parliament and a super-qualified majority of the EU Member States prior to the end of March 2019 to avoid the UK crashing out of the EU.
Businesses operating in the UK are well-advised to conduct a thorough business impact assessment. Among other things, companies should analyze potential risks to supply chains, increased tariffs and duties, immigration status of employees, and changing requirements for marketing products. Where business impacts are identified under either a “no deal” or orderly scenario, robust contingency planning should be undertaken at the earliest opportunity to adapt supply chains, logistics, and contracts, etc. For companies with a cross-border presence that includes the UK, addressing any immigration issues, securing advance or alternative supplies, identifying data-flows and taking actions to secure them with appropriate protection of personal data, as well as possibly duplicating certain operations in the EU27 and/or in the UK must all be considered. As European institutions and agencies have repeatedly warned, businesses have no time to waste and should focus their preparations on the possibility of a “cliff-edge” Brexit in March 2019. Now is also the time to engage with government counterparts to identify and explore with EU and UK negotiators potential solutions to Brexit-related challenges.