How will Brexit affect your business?

Les Roberts, Senior Content Manager at Bionic
By Les Roberts, Senior Content Manager

The UK is no longer part of the EU. This means the UK is no longer part of the EU Single Market and Customs Union, and will no longer be covered by all EU policies, standards and protections. Any rights and benefits the UK had as an EU member state will no longer apply, and the UK will no longer be covered by the EU's international agreements.

All of which sounds pretty bleak. But there was at least one bit of relatively good news as 2020 drew to a close, and that was the necessary dots and crosses being made on the EU-UK Trade and Cooperation Agreement. Although this deal doesn't have all of the comparable benefits of EU membership, it goes beyond traditional free trade agreements and provides a solid base from which business owners can now work on.

Whatever your thoughts on Brexit, it’s a situation that was four years in the making yet this deal was thrashed out just days before the deadline. It was quickly voted through Parliament by 521 to 73, and yet the finer details are still pretty thin on the ground, meaning business owners still have no clear advice on exactly how they’ll be affected by the changes. 

To offer a rough idea of how trade in goods and travel will be affected, the EU issued the following checklist, but the general upshot is that it will now be more difficult and more costly for UK citizens to travel and trade with EU member states.

How will Brexit affect the free movement of people across the EU and the UK?

EU Member StateEU-UK Trade and Cooperation Agreement
Removal of border checks
Pet passports
Visa-free travel (for 90 days in a 180-day period)
Visa-free travel beyond 90 days
Right to work, study and live in another EU countrySubject to conditions
Removal of roaming charges

What does this mean?

In short, it's going to be more difficult for UK citizens to work and study in the EU. Although visa-free travel is allowed for up to 90 days in any 180-day period, anyone looking to stay longer will be subject to additional checks and visa restrictions, similar to those carried out when travelling to countries outside of the EU. Although UK citizens will still be allowed to live, work and study, this will be subject to more stringent conditions and may vary from country to country. All phone calls, texts and data will also be more expensive, which could make keeping in touch from business trips or holidays a lot more expensive.

How will Brexit affect trade in goods between Europe and the UK?

EU Member StateEU-UK Trade and Cooperation Agreement   
Frictionless trade                                                                    
Zero tariffs or quotas
Zero customs formalitiesSubject to conditions
Zero SPS checks
Zero rules for origin proceduresSubject to conditions
Fisheries agreementsSubject to conditions
Benefit from EU international trade agreements

What does this mean?

The big win for UK businesses here is that there will be zero tariffs or quotas on goods moving between the UK and the EU. This ensures lower prices for customers and avoids the nightmare scenario of WTO tariffs pushing up the price of everything, from fruit and veg to motor vehicles.  There will also be specific arrangements made for wine, organics, automotive, pharmaceuticals and chemicals.

On the downside, a lack of frictionless trade means there's the potential for even more red tape and border checks, all of which comes with additional paperwork and costs, which could disrupt supply chains and even push up costs. 

It's great that a trade deal has been done, but it's not the silver bullet some might have you belive.

How will Brexit affect trade in services between Europe and the UK?

EU Member StateEU-UK Trade and Cooperation Agreement   
Financial Services Passport✅       
Easy recognition of professional qualifications      Subject to conditions                                        

What does this mean?

The good news here is that there is a bilateral agreement between the UK and the EU, which means service providers or investors from the UK are treated no less favourably than EU operators in the EU, and vice-versa. To help maintain a level playing field across the UK and the EU, specific arrangements have been made to remove any unjustified barriers to digital trade and services. This means both UK service providers and those from EU member states won't be allowed to discriminate in favour of their own companies.

The bad news is that there will no longer be any automatic recognition of professional qualifications. This means that a whole range of professional services, including doctors, nurses, dentists, pharmacists, vets, engineers and architects must now have their qualifications recognised in each EU member state they wish to practice in. All of which will cost additional time and money.

If your business provides audiovisual services to EU countries, it'll no longer be able to do so on its UK licence. 

How will Brexit affect air transport between Europe and the UK?

EU Member StateEU-UK Trade and Cooperation Agreement   
Financial Services Passport  
Bilateral 5th freedoms for extra-EU cargo                   Subject to conditions

What does this mean?

These rules are only likely to directly affect those businesses that provide passenger and cargo flights, but could cause inconvenience or extra expense to long haul travellers - although there are no restrictions on point-to-point traffic between UK and EU airports, UK air carriers can no longer operate passenger flights onwards to or from the EU, such as flying from London to Bangkok via Amsterdam.

And while EU member states can agree a bilateral 5th freedom with the UK for extra-EU cargo, such as goods travelling from Paris to New York via London, the same provision only applies to UK carriers subject to conditions, which could disrupt supply chains.

How will  Brexit affect road transport between Europe and the UK?

EU Member StateEU-UK Trade and Cooperation Agreement   
Single internal transport market for hauliers            
Bilateral 5th freedoms for extra-EU cargoSubject to conditions

What does this mean?

As the UK is no longer part of the EU Single Market for transport services, there will be stringent - and potentially more time-consuming  -border checks and red tape for road traffic. Thankfully, the signing EU-UK Trade and Cooperation Agreement means things shouldn't be as bad as first feared when Kent became the lorry park many predicted it would be, just before Christmas.

Hauliers carrying loads between the EU and the UK will have unlimited point-to-point access and full transit rights across each other’s territories. Provisions on working conditions, road safety, environmental issues and fair competition, should make for as level a playing field as possible for UK hauliers working in the EU. It's not an ideal outcome, but better than it could have been.

How will Brexit affect energy supply for the UK?

EU Member StateEU-UK Trade and Cooperation Agreement   
Single internal energy market                                          
Energy trading platformsSubject to conditions

What does this mean?

As we first feared back a couple of years ago, Brexit means the UK will no longer be part of the seamless EU internal energy market that ensures more efficient, cheaper, more secure supplies of electricity, gas and oil. Not an ideal situation considering we import around 40% of our gas and 6% of our electricity.

The good news is, the spectre of disrupted energy supply lines appears to have been laid to rest as the EU-UK Trade and Cooperation Agreement offers guarantees on the security of energy supply and the efficient trading over interconnectors, which are the high-voltage cables that connect the electricity systems of neighbouring countries.

But while the supply is guaranteed, prices are not. This means - as we predicted years ago - Brexit could see us all paying more for our gas and electricity. For more detailed information on how Brexit will affect energy prices, along with the reasons why prices look set to increase, check out our blog on Will business energy prices go up after Brexit?

How will Brexit affect your business?

The extent of the impact Brexit will have on your business will depend upon any number of variables - those that deal directly with countries on the continent will no doubt feel the effects more profoundly.

Here are the main areas we expect to feel an impact, whether directly or as a knock-on effect:

  • International trade
  • Supply chain
  • Customer base
  • Tax and VAT
  • Workforce

The UK government recommends that business owners need to act now if they will be importing or exporting goods to or from the EU, moving goods to or from Northern Ireland, or plan to travel or work in the EU. 

But Brexit has the potential to have both long and short term effects on business of all sizes, across all industries, regardless of whether or not they trade internationally. 

That’s why we’re going to take a closer look at how Brexit will impact those areas that affect all business owners, including supply chains, cashflow and VAT.

How will Brexit affect supply chain and cash flow? 

The terms of the EU-UK Trade and Cooperation Agreement means there will be zero tariffs and zero quotas on all goods moving between the UK and EU countries. 

This is good news as it means we avoid the switch to WTO rules, which could have caused major disruption to businesses who trade directly with the EU - expensive tariffs, increased paperwork, and transport delays could all have conspired to disrupt supply chains and push the prices of goods and services. Thankfully, this will no longer be the case.

But imports and exports will be subject to stricter customs checks and controls, which will cost UK business additional time and money. In turn, this could see a disruption in supply chains and affect cash flow, as these extra costs are passed on to customers - from the haulage company hit with red tape and delays to the salon that buys hair dye from the continent. Price hikes will hit your cash flow and mean you either have to take the hit or put your prices up to compensate, which brings with it the risk of losing custom.

How will Brexit affect VAT?

Domestic VAT rules will remain the same following the end of the transition period. This means that your business shouldn’t notice any changes unless it directly imports or exports to and from the EU.

For more detailed information, go to the UK government website and check out VAT: detailed information.

How will Brexit affect communications?

Connectivity and communications with EU countries is an issue that could affect us all, but one that appears to have been overlooked in many people’s minds. There’ll now be higher rates imposed on mobile calls, text and data while in EU countries, which means you could be hit with a nasty surprise when your mobile bill lands after a trip to Europe next year. 

For more information, go to the government’s guidance page Making phone calls and sending texts to EU and EEA countries after the UK leaves the EU.

How to get ready for Brexit

Even though a trade deal has been agreed upon, it’s difficult to say exactly how your business should prepare for Brexit. Checking out the government’s Brexit transition page is a good place to start, and you should then carry out your own Brexit impact assessment.

To get the ball rolling on your Brexit planning, you’ll need to ask yourself a series of questions, listed below.

Does your business use EU-based services, contractors or products?

Remember, you might use a UK-based supplier, but the services to contractors come from an EU country. 

This will also be a consideration if you use products that are stored - even temporarily - in a warehouse in the EU, and even if they’ve been manufactured in another non-EU country. If you work with any fulfilment agencies, you’ll need to get in touch with them about their practices.

Will Brexit affect your IT systems or data storage?

There are also considerations around data and privacy that could unexpectedly hit any business owner. 

If any of your data is hosted in an EU country (including cloud storage), or you hold personal data about people based in the EU on UK servers, you’ll need to find out more about how this affects compliance and GDPR.

Other things to consider as part of your Brexit assessment

  • Do you use any postal or courier services to send goods or documentation to the EU?
  • Do you employ any EU citizens, in the UK or in the EU, or have plans to?
  • Do you or any staff need to travel to EU countries for work purposes?
  • Do any employees travelling within the EU have mobile phone coverage for both data and calls?
  • Does your business have any European trade union obligations?
  • Do you import or export goods to or from the EU?
  • Is your business governed by any EU standards, such as European EN standards (applicable on any services, systems or products, including food)? This also applies to any products you make that must adhere to EU safety, security or ecological standards.
  • Does your business rely on EU funding or grants? Remember, funding that appears to come from the UK government is often backed by the EU.
  • Does your business hold money or financial interests in an EU country, or have money in an EU-based financial institution.
  • Is your business VAT registered or do you operate under the MOSS agreement? MOSS is an optional scheme that allows you to account for VAT - normally due in multiple EU countries – in just one EU country.
  • Does your business own any patents, trademarks or registered copyrights?
  • Does your business rely on you or any employees having specific professional qualifications? If so, will they still be valid?

If you answer ‘yes’ to any of the above questions, then your business could be significantly impacted by Brexit. In which case, you’ll need to find out more and make the necessary preparations.

Don't let Brexit push up your business energy bills

One thing that does look certain is that we'll be paying more for business energy when the UK leaves the EU. The best way to lessen the impact of bigger post-Brexit business energy bills is to switch suppliers with Bionic. To start an business gas and business electricity price comparison, pop your postcode in the box on the right.