Brexit Business Impact: How to Future-proof your Trade
Major uncertainty has hit the United Kingdom since the 2016 Brexit referendum. This is despite few real changes in legal status, regulation, or tariffs so far. In the past two years, UK and EU citizens followed the development of the withdrawal agreement. This agreement will determine what comes next for both parties. But things are […]
24 January 2019 — read
Major uncertainty has hit the United Kingdom since the 2016 Brexit referendum. This is despite few real changes in legal status, regulation, or tariffs so far. In the past two years, UK and EU citizens followed the development of the withdrawal agreement. This agreement will determine what comes next for both parties. But things are coming to a head this year. The UK will leave the EU on March 29 regardless of a deal with the EU. Developments are taking a toll on the UK’s economy. There is now rising inflation and less investor confidence. What can businesses across the UK do to survive Brexit? 1. Study the state of your industry “A disorderly Brexit has the potential of leading the UK into a recession, which could have significant disruption to finance and economic growth.” That’s according to Business Economics professor Francesco Moscone at the Brunel University London. But no one is sure how exactly it will impact businesses. There is a lack of preparation among owners and managers. Stay ahead of the curve by assessing your industry. Below are some common industries in the UK and potential impacts as outlined by experts. Hospitality The weaker pound has affected the hospitality industry in two ways. On one hand, costs increased have for imported goods. This has eroded the profits of business owners. On the other, it has encouraged more tourism from both local and overseas visitors. This has also resulted in a greater demand for accommodation. Besides this, the hospitality workforce is being significantly affected. Eduard Elias, co-founder of Cycas Hospitality, said that many foreign workers are leaving the UK or choosing not to come in the first place. Hospitality businesses need to prepare for rising costs in both goods procurement and operating expenses, such as hiring and retention. Restaurant Research from accountancy firm Moore Stephens has shown that 20% of the UK’s restaurants are at risk of closure because of Brexit. This is due to several factors. One is the predicted food shortage due to import price increases. Only 49% of the food consumed in the UK is produced here. 30% comes directly from the EU. Notably, when it comes to fruit and vegetables, 40% of fresh produce comes from the EU. Workforce supply is also a major issue: 75% of waiters and 25% of chefs in the UK are EU nationals, according to CEO of the British Hospitality Association (BHA), Ufi Ibrahim. Overall, Brexit could most heavily affect the restaurant industry. Healthcare Like in hospitality, post-Brexit labour supply is going to be a major concern in the healthcare industry. According to the NHS data, 10% of NHS doctors, 16% of NHS midwives, and 5% of NHS nurses come from elsewhere in the EU. In an already challenging recruitment environment, UK businesses will need to prepare for a shortfall in medical health professionals. There are also concerns about post-Brexit healthcare regulations and qualifications, as the UK may no longer be required to align with EU rules and frameworks. It is thus not surprising that according to data and analytics company, GlobalData, 59% of healthcare industry professionals now view Brexit negatively. 2. Audit your supply chains and EU contracts Brexit can disrupt the operations of any UK business if an EU supplier cannot cope with changes. Unprepared EU suppliers could be unwilling to continue cross-border transactions. According to the Chartered Institute of Procurement and Supply (CIPS), 40% of UK companies are already seeking domestic suppliers. This will save costs on customs and other import fees. Further, 25% of UK businesses with 250+ employees have spent over £100,000 preparing their supply chains for Brexit. It is thus important for every business owner to trace their supply chain. Assess whether it is worth maintaining these transactions early on. All EU contracts also need to be revisited, as not all of them include legal provisions for importing and exporting that define who is responsible for shipping goods across borders. These provisions, known as incoterms, determine risk and affect VAT. Current contracts may lack the details for a new customs border between the UK and the EU. If the business is large, there will be more contracts to assess. There may be a transition period in the withdrawal agreement that will give you some time to prepare. However, you have a higher chance of surviving Brexit if you do this early on. 3. Invest in the right technology By March 29, Brexit will affect everyone in the UK across the board. For businesses, it will have an impact especially on labour supply and finance. The legal changes will come fast, and may prove overwhelming for some. Investing in the right technology months ahead of Brexit will determine the future of the business. From rotas, to onboarding, to payroll, the right workforce technology platform can ease the transition by outsourcing the nitty gritty to a reliable service provider. Tanda, for example, manages many aspects of day-to-day operations that will be affected by Brexit. Managing rotas will prove to be challenging post-Brexit, what with the predicted shortfall in staff. But Tanda’s rota software allows you to build rotas to match customer demand, see staff availability as you go, and set targets and rota costs to make sure you never go over budget. The customisable onboarding feature that comes with the package lets you collect information about UK and EU employees, and makes sure you never lose that information. Finally, Tanda’s labour compliance makes sure you never breach the new labour laws. Preparing your business for Brexit is going to take some hard and fast decisions. There is no doubt that Brexit’s implementation will affect many aspects of the economy. Brexit may hit some industries harder than others, among them hospitality, restaurants, and healthcare. Stay ahead of the curve by studying the implications for your industry, auditing supply chains and EU contracts, and investing in the right technology. Whatever the outcome of the negotiations and the terms of the withdrawal agreement, businesses need to begin preparing today if they hope to become Brexit-proof.