The EU Referendum and your Exporting and Business Foreign Exchange Activity
That's it. You've made your decision, you've marked your box and you can now exhale from the extended period of economic breath holding that many were undertaking in the lead up to the EU Referendum.
Whether or not you're happy with the outcome of the EU Referendum of 23rd June 2016, it is clear that there will be winners and losers. And it's often said in business, "It's those companies who are able to adapt to change that will succeed". Regardless of how you feel about the result, entrepreneurship in the UK will not be diminished. Those businesses with forward reaching ideas, skilled directors and employees and good infrastructure will flourish no matter what the external market environment may present.
Since the result of the EU Referendum was announced in the early hours of Friday 24th June, we've had calls and emails from clients who are trading with the EU currently, that have expressed some concern as to the future of their business relationships with their EU customers and what they need to be thinking about now.
The first thing to remember is that little is expected to change in the immediate future. The referendum result is simply a decision by UK voters, and does not prompt any instant changes. The first stage of a formal exit from the EU will be for the UK government to invoke "Article 50 of the Treaty of Rome". After that process has started, there'll be a negotiating period of up to 2 years (which may be extended if the other 27 member countries agree to it), during which time the UK will remain part of the EU, and goods will continue to move in free circulation within the EU which means no duty or VAT liability. And of course, within this period, you still don't need a commercial invoice to ship anywhere within the EU. So that's the next 2 years sorted.
What happens after the 2 year negotiation phase and the formal UK exit will depend on the outcome of the negotiations between the UK and the European Council, and there have been a lot of discussions and speculation about what free trade agreements might be possible. They're currently simply speculation and "guess work".
Depending on the outcome of the discussion, it is possible that goods will have to undergo some form of customs clearance process (similar to when you're importing and exporting outside of the EU currently) both when goods leave the UK and on arrival in the destination country and there may be duty and/or VAT applicable going forward. There also be no change; we may still have free movement of goods and Customs may undertake operations in exactly the same way they do now.
Currency fluctuation is another matter that you may need to take into account in the coming months. The value of sterling could present you with opportunities to price more competitively and similarly, it could result in price increases for fuel, transport and your supply chain, which could all increase your unit costs of course. Again, there's currently no definitive advice here. Other than it's as important as ever to speak to our partners and their FX dealers if your business has future exchange requirements and to offer some reassurance; they are available to help with any questions you might have.
A simple snippet of advice; communicate with your EU clients. Reassure them of your continuing commitment to them and calm any nerves or fears that they may have. You're still in business, you're still a European business (and always will be if you're based in the United Kingdom) and you'll still be supplying the high quality products and services to them that you always have.
We'll happily speak with you about any concerns or opportunities and if we can't help, we'll likely have someone we're able to put you in touch with. We have the expertise, in house or through our trusted network of partners, to help businesses plan for all the possible scenarios and to help you plan the next steps to take to spread your risks and maximise your growth opportunities.
Whatever happens in the coming months, we need to remember that the true nature of trade and its long term benefits to your business and to the UK economy in general, will remain unchanged; but that it is also good business sense to prepare for all eventualities.
"A simple snippet of advice; communicate with your EU clients. Reassure them of your continuing commitment to them and calm any nerves or fears that they may have. You're still in business, you're still a European business (and always will be if you're based in the United Kingdom) and you'll still be supplying the high quality products and services to them that you always have."