Brexit has created uncertainty in all aspects of the UK’s regulatory framework and this is likely to become more obvious as time goes on. This is why we have created this guide to planning for Brexit.
Before you dig further into our planning guide we would recommend that you download our BrexList Brexit checklist.
It is the first of a series, which will include more detailed planning tools for larger companies, and for subscribers who want to focus on specific topics.
The aim of this first Brexlist is to help you get started on the planning process. It gives you some key first steps to take, and has some helpful links to the relevant parts of the Ready for Brexit website. It also includes an easy-to-use User Guide.
It sounds simple, but the scale of EU regulation is huge and the UK was deeply entrenched in the system. Eur-Lex provides a high-level summary of the key areas:
The UK’s withdrawal from the European Union
Planning for Brexit
Brexit is hugely complex. To plan for it you will need to focus on the areas that will impact you and which you could gain from. You will also need to try to put the politics and noise of the Brexit negotiations to one side.
If resources allow, think about appointing a “Ready for Brexit” project leader who will take responsibility for developing your company’s plans for dealing with the potential and impact of Brexit.
Breaking the process down into three separate plans – Pre-Brexit, Brexit Day and Post-Brexit – as shown below, will also help you to prioritise your actions. This high-level scenarios and risk matrix output will help you to inform and populate your Brexit plan, work streams and action lists.
The Brexit plans can be driven and monitored by your Brexit manager using a series of Brexit action lists, like the one below, and an active Brexit risk register to ensure that the overall programme objectives and timeline are being met.
Scenario Planning is a particularly useful way of trying to understand how Brexit will impact your business. The Shell oil company has been a pioneer in scenario planning as its businesses operate in many geographies, sectors and with a great deal of uncertainty around margins, regulation and demand. Shell is happy to share its methods and discuss the impact of the process and you can take a look at what it does here
Shell uses its scenarios to help it plan for different business outcomes and its methodology is well proven.
In the case of Brexit, you will need to identify the potential scenarios that might occur and think about the potential impact on your business.
- Identify the high-level scenarios that may occur. We give below a sample set of three high-level scenarios and their potential impact, which you might find useful.
- As you can see we have used a sliding scale as the eventual outcome is uncertain.
- You will need to remain objective when trying to identify potential impacts and try to identify both the best case and the worst case for each impact identified.
Commentators have also reviewed the potential options for Brexit with the Financial Times producing six thought-provoking potential scenarios to consider here.
Learn from others
The Canadian government has set up a trade commissioner website, which is a useful guide for Canadian companies and is a helpful reference for the UK. It also has some helpful explanations of how the EU works that is easier to understand than some information provided by some EU and UK institutions.
The Canadian agreement does not include a deal on financial services, but it can be used as input to the scenario and Brexit plans. Take a look here.
Key EU trading partners are also looking at how Brexit will impact their business community with the government in the Republic of Ireland taking the initiative, you can view their contingency plans here.
Risk and Mitigation Plan
Most public companies now publish the key risks to which their business is exposed and identify how they plan to mitigate the risk. It’s worth following their lead.
Brexit clearly represents a risk to all UK businesses to some extent, as well as to all businesses that are connected to the UK. It may seem difficult to mitigate, but doing nothing may well mean you damage your business unnecessarily.
Examples of risk that businesses may incur include:
- Currency volatility causing sharp changes in exchange rates
- Change in export credit terms
- Export and import delays
- Increase in working capital due to delays in supply chain and increases in stock
- Changes in VAT and Tariff charges and payment timing
- Loss of migrant workers leading to labour and/or skills shortages
- Loss of product approvals or certification