Brexit Impact

We have put together answers to the most common questions our customers and stakeholders have asked about Brexit. This section outlines high-level information and timelines about the Brexit process, and key areas your business should focus on in relation to preparing for Brexit. We also have two more sections detailing guidance on:

  • Brexit preparation covering: strategic sourcing; logistics and transport; customs, tariffs and taxation; people and immigration.
  • Business sectors covering: agri-food; manufacturing; financial and professional services; technology; leisure and tourism; and life and health sciences.

These are subject to change and will be updated as more information and clarity about Brexit becomes available, so do check back from time to time.

Britain exiting the European Union (EU), or Brexit in shorthand, was the result of the 23 June 2016 referendum vote by the British public when 51.9% voted to leave.

On 29 March 2017, the UK Prime Minister (PM) triggered the withdrawal process (Article 50 of the Lisbon Treaty), formally beginning the UK’s exit from the EU. Under this treaty, the UK’s exit from the EU was scheduled to occur exactly two years later - on 29 March 2019. In April 2019, the UK and EU27 agreed a further extension of Article 50 until 31 October 2019.

When considering whether a deal or no-deal has been agreed for the UK to exit the EU, it is important to clarify that this refers to whether or not the Withdrawal Agreement has been agreed and ratified.

This agreement aims to set out the arrangements for the UK’s withdrawal from the EU. The key areas of focus within the ‘'Withdrawal Agreement'’ include, issues of citizens’ rights, financial contributions and the Irish border

Additional information on the transition period and a high level statement on the overarching trade deal is included within the agreement. Note, the UK’s future relationship with the EU is being negotiated in a separate agreement which will be entered into once the UK has left the EU.

It is important to highlight that both a deal or no-deal outcome will bring about substantial changes compared with the status quo of the UK being part of the Single Market and Customs Union.

Single Market

This market allows the free movement of goods, services, money and people within the EU which helps boost trade, create jobs and lower prices. In practice, it requires significant regulation to make it work as, for example, products must be made to the same technical standard and general level playing field rules have to be imposed across each Member State.

Customs Union

This union ensures that all EU member states charge the same import duties to countries outside the EU. This allows member states to trade freely with each other, without customs checks at borders.

Securing a deal

Securing a deal will bring certainty for citizens and a managed transition for businesses. However, as outlined earlier, it will not resolve the nature of the future economic partnership and involves major change from the status quo. The spectrum of future arrangements is likely to lie between the ‘Chequers Plan’ and the ‘Canada-Style’ partnerships.

  • Chequers Plan This plan was created by former Prime Minister Theresa May’s Cabinet in July 2018 and was her Government's preferred way forward. It includes proposals for the UK to mirror EU rules on goods, to have joint jurisdiction between the UK and EU, for borders between the UK and EU to be treated as a combined customs territory and for the free movement of people to end and be replaced by a ‘mobility framework’. This framework would allow UK and EU citizens to travel to each other’s territories, and apply for study and work. In addition, the UK would be free to strike its own trade deals with countries around the world - something it is currently unable to do as a member of the EU.
  • Canada-Style The EU judges that because the UK is leaving the Single Market and Customs Union, what it can offer is a Free Trade Agreement similar to the EU-Canada Comprehensive Economic and Trade Agreement (CETA), which was signed in 2016.CETA removed 99% of customs duties on EU exports to Canada and vice versa, and allows EU companies to bid for public contracts in Canada. But, under the deal, Canada is not obliged to pay into the EU budget, sign up to free movement or abide by European Court of Justice (ECJ) rulings. This ‘Canada-Style’ arrangement is very different to our current situation as we currently don’t incur custom duties with the EU.

No deal

A no-deal Brexit would result in the UK immediately leaving the EU without a withdrawal agreement. This means that the UK would begin to trade under World Trade Organisation (WTO) rules and would no longer be party to agreements with the EU in a whole range of areas.

This very significant change to WTO rules would result in customs checks, tariffs on goods, a regulatory block to trading with the EU in some areas, denied access to EU research/ funding programmes and restrictions to the long term freedom of movement between the UK and EU.

On tariffs, for instance, the UK Government has published a Temporary Tariff Regime which would apply to goods entering the UK from mainland Europe. Similarly, goods moving into mainland Europe in a no-deal scenario will be subject to the EU’s Common External Tariff. Different arrangements will apply to trade across the Northern Ireland - Ireland land border, the detail of which is still unclear.

The UK Parliament has yet to ratify the terms of the original ‘Withdrawal Agreement’ proposed by Theresa May and the EU. The UK Government has outlined that it remains confident that a deal can be reached and ratified through respective Parliamentary processes. The UK Government continues to talk to the EU about altering the ‘Withdrawal Agreement’ and Prime Minister Boris Johnson has stated that the UK will leave the EU on 31 October deal or no-deal.

In September 2019, legislation designed to stop a no-deal Brexit on 31 October was passed by the UK Parliament. If a deal is not agreed between the UK and EU by 19 October, and MPs don't vote in favour of leaving with no-deal, then the Prime Minister will be legally obliged to ask the EU for a Brexit delay until 31 January 2020.

Even if the Prime Minister requests an extension there is no guarantee that the other EU countries would agree. No-deal remains the default position if an agreement or extension cannot be reached.

The UK Government has produced extensive guidance on how to prepare for Brexit if there is a no-deal outcome, and we encourage all Northern Ireland businesses to review this information in more detail.

 

April 2019: The UK and EU27 agreed a further extension to Article 50 until 31 October 2019 but with the possibility of leaving earlier if the Withdrawal Agreement is ratified by both parties before this date.

The Withdrawal Agreement has yet to be approved by the UK Parliament and it is now up to Prime Minister Boris Johnson to negotiate with the EU on potential amendments to the current Withdrawal Agreement.

8 October: Parliament is prorogued.

14 October: State Opening of Parliament and Queen's Speech.

17-18 October: The last scheduled EU Council summit before the UK’s scheduled exit from the EU.

19 October: The law designed to stop a no-deal Brexit on 31 October comes into effect. If by this stage a deal is not agreed or MPs have not voted in favour of leaving with no-deal, then the Prime Minister will be legally obliged to ask the EU for a Brexit extension. Any extension request would have to be approved unanimously by all of the other EU Member States.

31 October: Current EU exit date.

12-13 December: European Council meeting.

Firstly, your business might not trade with the EU, but what does the workforce look like? Most businesses across Northern Ireland are going to have some employees who are originally from the EU.

Or what about your supply chain organisations? Perhaps they do? Any delays and costs incurred through supply chains could well become delays and costs for your business too.

Regardless of which Brexit scenario materialises, there are a number of actions which Northern Ireland businesses should be considering now to lay the groundwork for their future trading, post-Brexit. These include:

  • Be agile - prepare for the various outcomes now, so you can respond to new developments, as they occur. Where appropriate, consider creating a dedicated governance body to be accountable for understanding what different Brexit scenarios mean for your organisation.
  • Support your staff - work with affected groups to provide support, plan and prepare for Brexit changes.
  • Understand your supply chain - understand where and how your business buys and sells products and services. This will enable you to understand the impact of any new trade model and prepare to change current practices where required.
  • Clean up and capture more data - data will be key regardless of the final Brexit deal. Make sure your data is accurate, appropriately classified and stored now, to make day one post-Brexit easier. Should imports require declaration of additional data for the processing of customs clearances, NI businesses should be capturing the customs origin and value of products to take advantage of any Free Trade Agreements.
  • Review existing contracts - the legal change that will result from Brexit will impact contracts placed under EU law. Businesses should identify contracts where there are the biggest financial and operational impacts.
  • Engage with third parties - you can put yourself in a strong position by staying close to other organisations and stakeholders (for example banks or insurers) that are most important to you. It’s not just your own readiness, but the readiness of all your partners that will matter.

Northern Ireland businesses should consider the following four areas in relation to getting ready for Brexit.

Markets and regulation

How will Brexit affect the UK economy and market demand?

  • Macroeconomics: What plans do you have in place to manage volatility in the value of sterling?
  • Market opportunity: What new product/market opportunities does Brexit open up for you? Or how will it impact your competitors?
  • Reputation: What sources of regulation are significant for your business at present, and are they likely to change?
  • Funding: Do you receive research and development funding from the EU or from organisations based in the EU?

Trade and customs

What impact will changes on trade have on cost, administration and time within your business?

People and immigration

How will changes to immigration impact on your business?

  • Workforce compositions: Do you know how many EU and non-EU personnel you employ directly? Or how reliant is your business and your supply chain on labour from the EU? It may be best to audit the present workforce and recruitment practices and develop strategies now for future recruitment.
  • Workforce planning: Have you conducted scenario planning to understand the risks and impacts on your business critical functions due to uncertainty in personnel? Or do you have a location strategy should your geographical footprint need to change? You should also ensure your ‘Right to Work’ checks are up to date and policies are kept under review.
  • Mobility: How mobile is your workforce? Or are you supporting your existing employees to secure their status in their current country of residence? If you currently recruit EU nationals, you should consider obtaining a Tier 2 sponsorship licence now. This will help to ensure you are prepared to quickly shift approach if necessary, come 31 January 2020.

Governance and mobilisation

How are you organising your response to Brexit?

  • Governance: Who is responsible for mitigation planning? Or does management have in place plans to manage the risks and opportunities presented by Brexit?
  • Tracking: Do you understand the range of possible Brexit outcomes? Or does your contingency plan meet industry regulator guidance (if available)?
  • Communications: How are you communicating your Brexit strategy internally?

Trade between Northern Ireland and Ireland is significant, with the value of goods exported from Northern Ireland to Ireland reaching £2.9bn in 2017 and imports from Ireland to Northern Ireland accounting for £2.1bn. Visit the HM Revenue and Customs website for more information.

The border between Northern Ireland and Ireland has been one of the major issues of discussion during the Brexit negotiations. The Centre for Cross Border Studies estimates that up to 30,000 people are cross-border workers, in that they live and work on different sides of the border.

Both the UK and EU are in agreement that they want free cross-border flow of trade and people. However, both parties have yet to agree on how to achieve this outcome.

A contingency plan has been proposed called the ‘backstop’ customs arrangement which would avoid a hard border between Northern Ireland and Ireland.

This has been included within the Withdrawal Agreement and was ratified by the EU27 at the 25 November 2018 EU Summit. The ‘backstop’ however, would only come into effect should the UK and EU fail to agree a future, overarching deal.