So, it’s finally happened! After 2 General Elections, much ado about Data Protection, questionable bus advertising, a dancing Prime Minister, a briefly-refrigerated Prime Minister, milkshake protests, and everything in-between… the United Kingdom officially withdrew from the European Union on the 31st of January.
The divide of opinion on the matter is yet to dissipate, but now the UK is due to become independent in its trading and law-making, it’s an opportunity for the nation’s businesses to capitalise on a new political venture. Here’s some key information they’ll need going forward.
Key dates for the transition period:
- March 1st 2020: Mandate for negotiation agreement between the European Ministers and UK Parliament. This will consist of talks regarding free trade.
- June 2020: Final month to request an extension of the transition period. Assessment of negotiation progress.
- July 1st 2020: Completion of deal regarding European access to UK fishing waters. Agreement for the EU & UK to access each other’s financial services markets.
- November 26th 2020: Trade deal to be presented to the European Parliament.
- December 31st 2020: End of the transition period. If a trade deal is not reached, the UK will resort to basic World Trade Organisation terms. If so, this will mean tariffs on goods and stringent border checks (effectively a No-Deal Brexit) and both parties will begin preparing for the economic fallout in 2021. In which case, find out how commercial finance can help you prepare.
- After 2020: Further agreements to trade deals and negotiation on temporary measures & permissions.
(Source: Financial Times)
Key economic facts:
- UK economic growth has decreased from 2.5% in 2015 to 1% in 2019.
- The employment rate has increased. Growing continuously since 2012, we have the highest rate of employment since records began in 1971; the unemployment rate is just 4%.
- Average real wages (inflation-adjusted) are lower than a decade ago but have begun picking up again as inflation has decreased.
- Growth in productivity rates is stagnating.
(Source: House of Commons Library)
How SMEs can prepare for Brexit’s potential financial impact
Barclays Brexit Fund
Barclays has launched a £14.7 billion lending fund for business loans, commercial mortgages and overdrafts up to £250,000 working capital. This also includes the largest ever cashback scheme for SME term loans, cash flow funding for investment in growth, management buy-outs and business acquisition, and innovative business loans for capital, environmental investment and growth funding.
You may be eligible if any the following apply to you:
- Businesses with up to 250 employees and £43m turnover
- Established businesses with ambitious growth plans
- Start-ups with high growth potential
- Companies with early-stage equity funding
- Businesses focused on innovation, research & development, and technology
This arose from discussions between banking chiefs and Business, Treasury and Cabinet Office Ministers to encourage support for SMEs last September.
UK Finance support & guidance
UK Finance is a trade association for the banking and financial services sector, and have created the Let’s Talk Business campaign to help SMEs prepare for the potential changes & opportunities Brexit could produce.
They are supported by the Federation of Small Businesses, British Chambers of Commerce and the Confederation of British Industry, and are committed to producing positive outcomes for businesses following our withdrawal from the EU.
Further advice for Businesses
Impact on B2C Payments
Current trading agreements are still in place, so expect no initial changes until more details of the negotiations are revealed in June onwards.
Direct debit payments between UK and EU consumers and businesses will remain the same until at least the end of the transition period (scheduled to end on 31st December 2020).
International credit cards will not be affected as they operate under global systems.
Points to consider
Click the following links for advice on:
- VAT rules on importation
- Using exportation to provide goods & services
- Employing EU nationals
In a nutshell, we advise that you:
- Research the potential impact of Brexit upon both your customers and suppliers.
- Find as much information & guidance as you can.
- Be wary of fraudsters that will use this opportunity to impersonate various organisations.
- Speak to financial experts to get an idea of how currency volatility may affect you.
- If you’re likely to require additional finances, the earlier you seek support, the easier it’s likely to be. There are many providers out there prepared to help!