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Brexit Negotiations
Forward Thinking Business Blog –
Perhaps the most significant thing we’ve learned about Brexit so far is that the island of Ireland will be a priority in the forthcoming negotiations. On 22 May 2017 the EU Council stated that nothing in the UK withdrawal agreement should undermine the objectives and commitments of the Good Friday Agreement adding that flexible and imaginative solutions will be required aimed at avoiding a hard border, while respecting EU law.
While this commitment to the island of Ireland is welcome, post-Brexit we cannot rule out the EU insisting on rigorous controls over goods traded between Ireland and the UK, and further afield. Pending greater clarity, businesses should factor the potential impact of customs duties into their Brexit plans.
The weakness of the pound against the euro continues to present difficulties for Irish exporters selling into the UK and for NI businesses with staff who routinely commute across the border. These employees, who are paid in Sterling but whose household bills are in euro, have seen take home pay eroded over the last 12 months. Anecdotally, this is having an impact on businesses’ ability to attract and retain talent.
Access to skills is also a concern for companies who rely on low-cost EU labour. FPM clients in the affected sectors are worried about the impact that future restrictions on freedom of movement could have on their businesses. Since the general election, there has been some speculation about the potential for a ‘softer’ Brexit which might see the UK remain in the Customs Union. While this could be good news for businesses North and South, it would be foolhardy to count on it until there is greater clarity from the negotiations.
Notwithstanding Northern Ireland’s potential influence on the UK’s Brexit negotiation priorities as a result of the recent general election, FPM continues to advise businesses to plan for the worst case scenario, says Feargal McCormack.
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So, as the politicians begin Brexit negotiations, businesses should keep calm and carry on.
The main challenge with Brexit, remains the uncertainty, and one year on from the UK Brexit Referendum, not knowing what it means. Brexit will create opportunities and challenges, and for the island economy, North and South, it is most likely that the challenges will outweigh the opportunities. Brexit is a serious issue, but one that is surmountable. We are confident that Irish creativity, astute business acumen, pragmatism and positivity will prevail.
In the absence of certainty, in respect of Brexit, FPM continues to advise clients to start scenario planning now, to work on identifying potential pressure points for their business, and plan for the worst while hoping for the best.
In previous blog posts, we’ve discussed the importance of managing supply chain, employee and skills-related issues, location, financing, cross border transactions and data protection. We’ve talked about the need to review contracts to ensure that they will continue to be fit for purpose post-Brexit. It is becoming clear that tax will be an important consideration particularly for businesses and individuals with cross-border operations and interests who will need to look carefully at how Brexit will affect their tax obligations. If you have not already done so, we encourage you to contact FPM’s tax team for advice on what you can do now to minimise potential future liabilities.
The clock is ticking. The two year timeframe for negotiations set out in Article 50 ends on 29 March 2019. The EU has said it wants the first phase of the negotiations, which gets under way this week, “to provide as much clarity and legal certainty as possible to citizens, businesses, stakeholders and international partners”. Businesses North and South will certainly welcome clarity and certainty if and when it comes. In the meantime, FPM will continue to monitor developments and keep you updated through our regular client communications. Businesses need to have a plan to manage the challenges and whatever opportunities that Brexit may bring.
If you have specific concerns…
