The implications of Brexit on the business community.
Brexit is the most historic economic division between major economies since the Second World War and most of the uncertainty shrouding this unprecedented divorce since the referendum result - 51.9 percent in favour of Brexit and 48.1 per cent in the remain camp - revolves around the process of leaving the EU. The only certainty is that the referendum result irrevocably changed the landscape of Europe – economically, politically and culturally.
If the ongoing negotiations are anything to go by, it can safely be deduced that the long-term consequences of Brexit on businesses will take years to fully emerge. This is largely due to the mammoth task facing the UK and the EU as
they engage in sobering negotiations about trade barriers and the extent of
legal disentanglement. It will be no easy feat, as Brexit has created an
unknown force that brings to the fore new risks and difficult decisions for companies whose supply chains and business strategies are designed for a borderless Europe.
Given that the topography is still taking shape, it is difficult to appreciate each peak and vale, much less the ultimate effect of negotiations in real terms. There seems to be a common understanding however, that a hard Brexit would likely lead to the UK losing access to the Internal Market, whereas a soft Brexit
would enable the continuance of a UK-EU relationship in close symbiosis to
existing arrangements. The jury is still out on the pros and cons of either
approach and even though negotiations are, to some extent or other, ongoing, the business sector needs to mobilise now to discover the opportunities in Brexit. This begs the question: what can businesses do to prepare for Brexit?
In a bid to address this question, KPMG is organising a series of workshops on Brexit for the business community. The aim of these workshops is to raise awareness on potential implications, explain the intricacies and advocate strategising accordingly by preparing contingency plans to ensure preparedness for Brexit eventualities.
The most vital element that reverberated throughout the first workshop was the necessity for businesses not to allow themselves to become distracted or to shy away from action: engagement is key. A ‘wait and see’ approach is strongly discouraged as inactivity would see businesses fall victim to external forces. If they are to succeed, businesses must absorb and therefore recognise achievable opportunities, such as renewing efforts to establish and nourish international relationships and ensuring adaptability and flexibility.
Brexit is an opportunity. Businesses in the UK are already relocating their operations to jurisdictions in EU countries, opening a host of opportunities for countries like Malta. A tiny EU jurisdiction renowned for its economic stability and growth, Malta is welcoming a number of multinational businesses who have set their contingency plans into motion and started moving their headquarters out of the UK. This for fear of the unknown rather than on the basis of clarity of the consequences of Brexit.
Strategically located in the middle of three continents and having established strong ties with neighbouring countries, Malta is ideally placed to host a global enterprise. Telecommunications, multilingualism, healthcare and well-oiled professional services offerings are but a few of the requisites that Malta has honed in on, in establishing itself as a financial centre and a home to large firms and an extensive expat community. The days of offshore business are long over. Malta is at the forefront of the current transparency and compliance standards, having just led a remarkable six-month presidency of the Council of the EU.
Whatever drives your business, it would be wise to proactively devise short to medium-term strategies that not only take into account mitigating factors but also factor in sustainable growth post-Brexit. Settling in a jurisdiction that exploits efficiencies is in your interest and partnering with experts would only mitigate inevitable bumps in the transition process.
KPMG in Malta is working closely with our colleagues and Brexperts in the UK who are assisting businesses to navigate these unchartered waters by offering realistic and sustainable tailored solutions. This partnership perfectly dovetails with our aspiration to be the trusted adviser for our clients, making us well positioned to explore and exploit opportunities for our clients’ continuing growth post-Brexit.
© 2021 KPMG, a Maltese civil partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
For more detail about the structure of the KPMG global organization please visit https://home.kpmg/governance.