The EU has granted Britain an extension for Brexit until 31 October. The British parliament has to commit to trying to find a withdrawal deal all parties can agree to. The EU will assess if this is the case in June. Until then, all scenarios remain on the table. Whatever happens, Brexit will have consequences for EU entrepreneurs doing business with the UK, and vice versa. A no-deal Brexit would have most impact; that is why it is wise to prepare yourself for that option.
1. Hard Brexit
In case of a hard Brexit, the UK will leave the European internal market and the European Customs Union. The British will take back control over its border and determine which goods and people may enter and leave the country. You probably will have to deal with order controls, customs formalities and import tariffs. This will delay trade and lead to more expenses.
2. No deal or cliff edgeA ‘no deal’ or ‘cliff edge’ Brexit happens if no agreement is reached on 31 October 2019. If no agreement can be reached, the World Trade Organization (WTO) regulations will come into force. The EU and UK will attempt to reduce the chaos by negotiating ad hoc-agreements. For instance about cross-border shipment of goods, travelling, import duties, border controls, and financial matters.
3. WTO rulesIn case of a no-deal Brexit, all trade between the UK and the EU will fall under the regulations of the WTO. This means import tariffs and inspections at the border. Very likely this could lead to delays.
4. Substantial import chargesBear in mind that goods prices could increase by 10 to 30%. In case of a no-deal Brexit, all ties will be cut and the UK will become a third country to all EU importers and exporters. This means that if you import goods from the UK, you need to file an import declaration at customs. Also you will have to pay import duties. And if you export goods to the UK, you will need to file an export declaration. After Brexit, there will be no more intra-Community dispatches or acquisition. VAT procedures will change, just as other agreements on trade within the EU, such as product requirements and labelling requirements.
5. Exchange rate of the British poundUnder a no-deal Brexit, specialists expect the exchange rate of the pound to fall. How would a rise or fall in the pound affect you? The rise or fall of one currency relative to another currency determines whether importing and exporting is in your favour. For example, if the pound falls and you import products from the UK into the EU, the products will become cheaper to import. On the other hand, if you export products from the EU to the UK, these products will become more expensive in the UK.
Think carefully about the impact a no-deal Brexit will have on your company. Ask yourself questions such as: what administrative formalities will I have to deal with? Which investments do I have to make, for example investing in software for customs declaration, hiring staff and logistics? And which costs do I pass on by making my products/services more expensive? Is it wise to stock up on my products, and where should I store them? Are my contracts Brexit-proof? Try to identify the consequences and risks of a no-deal Brexit as much as possible. If your Dutch is good enough, you can use the Brexit Impact Scan to help you determine what to do.
At this moment, the negotiations are ongoing and it is still unclear what will happen. A deal is still possible, but if you prepare yourself for no-deal, you'll be covered either way.
If you have dealings with the United Kingdom, you’ll do wisely to follow the developments. There are several platforms. The main Dutch governmental one is the Brexitloket (in Dutch), which offers all kinds of information and advice.
- European Union Newsroom – Brexit file
- European Commission - Brexit Preparedness, notices, legislation, and other activities
- Brexitmonitor, Netherlands Statistics
- Get Ready for Brexit - an initiative by several Dutch shipping companies