Brexit update: what businesses can expect in 2019

  • Last updated: 13 June 2023
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Brexit update what businesses can expect in 2019

Brexit is a conversation most people would rather avoid at this point, but it’s a painful reality for most businesses. After more than two years of negotiations and just a few months away from the withdrawal date, it’s still unclear what the nature of Brexit will be, and exactly what impact it will have on businesses across the UK and the wider world.

While larger businesses and corporations have already planned for the multiple eventualities, not all of us have that luxury. As such, it falls to us to delve into the arrangements that have been made so far, and what we know about the likely impact of the various Brexit scenarios. Here’s our basic guide to where we stand going into 2019, and what you can do to prepare for the effects of Brexit.

What is the Commons Vote?

After some wrangling, Theresa May’s government has finally produced an ultimatum: there will be what’s being called a ‘meaningful vote’ on her proposed Brexit deal in the week beginning the 14th January 2019. This will be a straight vote in the Commons: either MPs accept the deal that has been formulated in principle, and final preparations and negotiations can begin; or Parliament rejects the deal, and the government goes back to the drawing board.

If the vote passes, Brexit would go ahead under the Prime Minister’s terms, albeit without a guarantee that the ‘Irish backstop’ - which would preserve EU rules and standards on the Irish border in the event that a more comprehensive agreement is not reached by March - would not be permanent. While the ability for the EU to maintain the backstop permanently could be removed after the vote, the EU has stated that it cannot make this guarantee.

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If the vote fails to pass, it may cause fresh chaos within the government. Theresa May could face a formal vote of no confidence from the opposition parties, which would require a majority of MPs from all parties to vote against the Prime Minister. This would be a contentious move however, as it would require swift action to resume negotiations and find a solution to the Brexit issue. This increases the risk of a ‘no deal’ scenario or a flash referendum, which could see the UK back out of Brexit altogether.

What would happen in a ‘no deal’ scenario?

Brexit update what businesses can expect in 2019 2With the deadline for withdrawal from the EU falling on 29th March 2019, a vote against the Prime Minister’s deal would leave very little room to strike a new one. The Prime Minister has repeatedly stated that the only alternatives to her deal are either ‘no deal’ or ‘no Brexit’. A ‘no deal’ scenario would see the UK leave the EU without any trade agreements in place.

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While some have claimed this would cause chaos across Europe, it is hard to gauge the true impact. The EU recently revealed that it has made substantial preparations for this scenario, which include provisions for trade and travel to continue under current rules for a short period.

The UK government has also stepped up preparations, ringfencing a £2 billion fund for government departments to cover the effects of a ‘no deal’ Brexit. However, its preparations elsewhere - such as at the Dover-Calais crossing - have come under question, with former Brexit minister Dominic Raab stating just a couple of months ago that he had underestimated the complexity of this issue.

What would happen in a ‘no Brexit’ scenario?

‘No Brexit’ would see the UK resume its current position within the EU. The European Court of Justice has confirmed that this would result in no loss of status or previously bartered agreements, in a legal case that was not warmly received by either the EU or the UK government. The former did not wish to concede ground in late-stage negotiations, while the latter dismissed it as a scenario which absolutely could not happen.

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This scenario is unlikely in that it would necessitate another referendum - the so-called ‘People’s Vote’ - to gain public approval for a reversal. The government has repeatedly stated that this will not happen, and Labour have not yet publicly supported it. It is possible in the event that the meaningful vote does not pass, but would require a massive reversal from the two biggest parties in Parliament, and could cause significant strife among Leave voters.

How might this affect businesses?

Businesses in the UK are in an unenviable position. Depending on your reliance on imports and exports, you may already have taken action to assess the security of your supply chain. Some manufacturing and retail businesses have already opted to stockpile components or goods, providing a surplus in the event of delays at the border or a fall in the value of the Pound. The imposition of tariffs may also affect costs, particularly in the event of ‘no deal’, where the UK would default to high WTO tariffs.

It is also prudent to consider your talent pipeline, and whether you will need new staff in the near future. This may partly be contingent on how Brexit impacts your bottom line, and so the need to hire new staff might be reduced because of Brexit. However, it is also possible that you might be looking to approach new markets outside of Europe, which could require employees with different skills.You might therefore consider hiring talent now in case of a ‘no deal’ scenario, where free movement might end without a transition period. You should also consider local talent pipelines, and whether you can tap or even support local schools and universities to improve the quality and quantity of hires in the future.

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Tax is another consideration, albeit a more minor one. Import VAT will work the same as it does currently, with the exception of parcels valued up to and including £135. For export VAT, you will still need to register for VAT in any country in which you hold stock. However, from 2019 it should be possible to use one of the EU VAT MOSS tools for VAT reporting on all products, as opposed to just digital goods and services. Ireland and Malta should still offer English language MOSS portals, among some other nations.

There is also the issue of EU regulatory standards. It remains to be seen which bodies the Uk will remain in, as some of them are not contingent on EU membership. Current evidence suggests that product standards and data protection laws will be preserved through ‘status quo’ agreements, whatever the nature of Brexit. However, there is the possibility that EU trademarks will not be applicable in the UK in the future, and vice versa. It’s also possible that UK bodies will no longer be able to grant certification for EU standards.

Much is still to be decided, and as has been proved consistently through the Brexit negotiations, there are no easy decisions. We hope that this has helped to clarify what lies ahead, however, and to provide some simple tips on what you should be looking out for. For more information on preparing for Brexit and expanding or moving your business around the world - including opening a bank account or cheap company registrationVATaccountants & visas, please contact us on 0033 (0)1 53 57 49 10 or email us from our contact page and we’ll be happy to help.

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