While there are many things that he we still don’t know about Brexit, we can be sure that it remains a cause of great economic and social uncertainty.
It is particularly concerning for businesses that operate cross border, as the nature of the relationship that the UK and the EU ultimately enter into will have a significant bearing on commercial costs, recruitment and the supply chain into individual businesses.
In this post, we’ll explore this in further detail, and ask how Brexit is likely to impact on supply chain operations.
1. New Deals will be Required for the UK to Trade with Nations Such as the U.S.
At present, the UK has around 52 trade agreements with countries around the world thanks to its relationship with the EU. Once it leaves the Union, however, the government will not be able to trade with anyone until it agrees new and independent deals with the U.S., members of the Commonwealth and of course the EU itself.
This could have a negative, short-term impact on businesses, particularly those that trade frequently with companies in North America. For now, it’s relatively easy for UK firms to ship and dispatch goods to the American market through firms such as TNT, but this could change under the terms of a new agreement (particularly given President Trump’s much-publicised trade war).
Similarly, U.S. companies may also not be able to use the UK as a base for its European supply chain operations post-Brexit, at least not without incurring additional costs. This could cause American firms to relocate to regions within the EU, particularly over the course of the next few years.
2. British Firms May Struggle to Transfer Data to the EU post-Brexit
In case you didn’t know, the EU is set to introduce the General Data Protection Regulation (GDPR) on May 25th, 2018, which in turn will replace the Data Protection Act that was launched back in 1998.
As the UK will officially remain an EU member state until March 29th, 2019, this new data regulation will be enshrined in UK law prior to Brexit being confirmed. While this will prevent any short-term issues in terms of the compliance of British firms, the situation could change markedly if Britain chooses to repeal this legislation and create its own data protection law.
The issue here is that the UK would be compelled to create a data protection policy that could align with the GDPR. If this objective was not met or the British government decided to push through protectionist legislation that paid no mind to EU regulations, it could become exceptionally difficult to transfer data between these two regions.
This is central to any successful, cross-border supply chain operation, so it’s important to bear in mind come 2019.
3. The UK Could Become a More Business-friendly Environment
On the flip-side, Brexit could make Britain a more business-friendly environment, particularly form small and medium-sized businesses based in the U.S. and similar regions.
While nobody would want to see the UK transformed into a deregulated tax haven, the government may be able to offer advantages to international firms in terms of business regulations and operational costs.
This could translate into more efficient and cost-effective supply chain operations, potentially helping the UK to offset the negative impact of Brexit.