Brexit fears may have taken a backseat to fighting the COVID-19 pandemic, but with January 1st looming, Britain’s exit of the European Union must be on top of every board’s agenda.
They were revealing conversations, and not in the slightest way encouraging. Over the past year, Leon Kanters, partner at KPMG Meijburg & Co (Tax & Legal), had numerous meetings with EU-based and UK-based entrepreneurs, and both sides were confident they themselves are prepared for Brexit. The only problem: they are not at all confident the other side is, too.
“Entrepreneurs in the EU think the UK is not prepared, and companies in the UK think businesses in the EU are not prepared”, Kanters said at the recent KPMG RAAD webinar ‘The Business of Brexit’. This was telling, according to Kanters. “They don’t know what they don’t know.”
And that just that may be the most daunting observation, a mere three months before the United Kingdom officially leaves the European Union. “Companies believe that with an agreement business as usual will continue. But even with the most advanced trade agreement possible, there is no way possible businesses will be better off with the UK outside of the EU.”
According to Kanters, there is ‘no uniform answer to Brexit’, as it takes a ‘multi-disciplinary look’. “Some companies say: well, the UK compromises only 8 percent of our turnover, we can overcome losses by adding new markets. Or they prepare for new custom and duties regulations. But that’s no multi-disciplinary approach. How will your trading partners and supply chain be affected?”
Maureen O’Shea, partner at KPMG UK, agrees. “If COVID-19 has taught us anything, it is the lack of visibility in the supply chain. Companies that thought they had a diverse supply chain suddenly found out they were dependent on China. Previously unseen supply chain risks have been uncovered. Brexit absolutely will do the same thing. A supply chain risk assessment is crucial. Do you understand where risks are coming from? Find out who your key suppliers are and prioritize these relationships.”
O’Shea warns companies that do business in the UK not to be naïve, because Brexit will cause an upheaval. “The level of detail in the plans for screening of goods is quite scary”, she says. “And even companies that do not have to pay tariffs will feel the burden of the required paperwork. It is beyond naive to think it is going to be a smooth transition.”
Both O’Shea and Kanters expect disruption and heavy delays, starting on the 1st of January. It only takes one truck driver without the proper paperwork to cause what a medium outlet dubbed ‘the world’s largest traffic nightmare’ in the port of Dover, which barely has room for turning. That is why some companies are already stockpiling goods or switching from Just In Time to Just In Case delivery.
“Brave and open conservations need to be had at board meetings”, O’Shea concludes. “After COVID-19, we cannot afford a deliberate recession. Be prepared, think the details through, and do not underestimate the importance of your supply chain. It is like oxygen. Not visible, yet all-important.”