It’s Past Time To Prepare For A No-Deal Brexit; Spend The Money And Hope It’s A Waste
Center-right politicians from Scandinavian countries aren’t prone to hyperbole. But on August 17, Danish Minister of Finance Kristian Jensen told the UK’s BBC Radio 4 that he pegged the odds of a “no-deal” Brexit at 50-50.
This, coupled with the UK government’s publication of its no-deal Brexit guidance on August 23, means that if you haven’t already begun planning for no-deal, you should start immediately.
No-deal means that the UK and the EU fail to agree on the terms of the UK’s withdrawal from the EU and that the UK becomes a “third country” in relation to the rest of the EU at 23:00 UTC on March 29, 2019 without any transition period. For example, goods moving between the UK and the EU will face tariffs and customs delays, forcing manufacturers such as Airbus and Jaguar Land Rover to reduce investment in or move production out of the UK altogether.
When my colleagues and I published our initial advice for CIOs on the day after the 2016 Brexit referendum, I never dreamed that we’d be at serious risk of a no-deal. But with less than seven months left, it doesn’t matter what path of tortuous ineptitude we traveled to arrive here; all firms with operations that cross a UK border must prepare for the absurdly disruptive worst.
For CIOs, here are the critical priorities:
- People. Now that the UK government has clarified how the 3.2 million EU citizens living in the UK prior to 29 March 2018 should apply to remain in the UK regardless of what sort of Brexit happens, work with HR to know each of these employees’ preferences, and set up individual plans for each. As in, “Amy has only been in the UK for one year, so she’s only eligible for pre-settled status. Thus, she’ll need to be mindful of how much time she spends in the UK over the next few years.”
- Import and export processes. Work with your line-of-business colleagues to understand what cross-border (UK-EU) dependencies you have (for everything from parts to payments), and be ready to move financial operations between tax entities, switch suppliers, pay newly applicable VAT, etc.
- Data. If there’s no deal and no data adequacy decision by the EU, you can no longer legally transfer EU resident data to the UK. Be ready to move all EU data to a data center or cloud region based in one of the 27 EU countries.
Forrester will monitor the progress of negotiations between the UK and the EU and provide our clients with the best guidance we can in areas from online retail to cybersecurity.
Note: Forrester updated this blog post to reflect recent developments in Brexit planning.