Why preparation for Brexit date 2 should be different
31st March 2019. The date came and went. Brexit was, in the end and not surprisingly, postponed. All the mad scramble towards this date with HMRC seemingly making it up as they went along and Brexit consultants unable to answer key questions, proved we weren’t quite ready. This is probably putting it mildly.
It transpires just 17% of business operating internationally had signed up for Transitional Simplified procedures (TSP). A survey by the Institute of Directors showed over 50% of those surveyed had not made any “no-deal” Brexit contingency plans.
It’s no surprise when a conflicted Government and other key parties appeared to be offering a soft landing for every possible outcome. But the reality is to ensure a soft landing, we have to run a safety check of said landing pads. It appears though that none conform yet, as last nights recent PM leadership debate attested.
For all the talk, even at the stage of electing a new PM, still no-one can agree, still no-one can offer any guarantee. Because no matter what we agree, 27 other member states also have to agree.
Despite the differing soundbites such as pro, remain, prorogue, managed, orderly, disorderly, frictionless, close relationship, customs union, opt-in, out, leave, stay, alignment, Norway, Jersey, Switzerland, Turkey…phew…the confusion ultimately still points to the very real prospect of a “hard” Brexit either being the chosen option, or the default we fall into.
Our new Brexit date is set at 31st October 2019, a howling Halloween to end all Halloweens. Businesses simply must now use the time wisely to examine closely and make preparations for a no-deal Brexit.
The significant issue staring us down this time though is the date falls just before peak trading for retailers. Black Friday, Cyber Monday and the Xmas Season already stretch logistics systems annually to the max, add in possible customs delays, tariffs, transport capacity contraction and for sure limited to no warehouse space, preparations now need to look very different than they did the last time round.
Critical to this is warehouse space. Brexit date 1 had many businesses stockpiling ahead of potential disruption. Should we still have a disorderly Brexit, October 31st will cue a warehouse bun-fight as fast moving stock bumps heads with longer term stockpiled goods for space. A warehousing car crash in the making no less.
A survey conducted by the United Kingdom Warehousing Association (UKWA) reported 85% of members surveyed had received Brexit related inquiries last time round, with about 75% unable to take on more business. Storage costs also increased by a quarter.
Companies who have entered into 12 month agreements with warehouses may now have to consider whether to extend contracts in the ramp up to Xmas. Who wants to be stuck without inventory at such a critical point?
Ultimately all these problems arise from the uncertainty in Government. The fact there are confusing messages such as “we expect to make a deal, but we need to leave ‘no-deal’ on the table” frequenting our news feeds on a daily basis.
With so many variables leading to a final outcome that may be too late, all we can suggest is speak with your logistics, transport and warehouse partners and form a contingency plan for no-deal that includes having all the customs formalities in place.
There is no beta testing for Brexit, there are only economic models and expert hunches at best, and at worst politically motivated assessments. But as we all know in the UK, the weather, independent and based on billions of pounds of technology, still can’t tell us if it’s going to rain on Friday.
So we need to take things into our own hands and use our own sense to ensure we are as protected as follows. We know how dealing with Brexit can bring one to despair but let’s face it down and plan and prepare for a no-deal Brexit based on these new challenges. Treat it like a tooth extraction, you know you have to go, and you’ll feel good when it’s over.