Was 2016 Bizarre for you or is it the start of evolutionary times? With Leicester, Trump and Brexit, we can safely state that 2016 was turbulent, with similar excitement expected in 2017 due to Drones, Blockchain, IoT, French/German Elections, plus the true fallout from Brexit and Trump politics etc.
Focusing on Brexit for now and the potential impacts to your business, the people of Britain voted for a British exit, or Brexit, from the EU in a historic referendum on Thursday June 23 2016. This has resulted in 2 potential outcomes for the UK (with downwind impacts for Ireland);
Essentially, it all boils down to trade – if the UK does not agree a deal that continues “tariff-free” trading with the EU single market, then it will be seen as having opted for a hard exit.
2. Soft Brexit
In direct contrast to a hard Brexit, a soft one would not involve giving up most of our current free trading arrangements when the UK leave the EU.
Unfortunately, it seems like a Hard Brexit is most likely while to-date the most visible outcome has been the volatile value of Sterling (with a noticeable ‘bounce’ since November)
So what can we expect?
1. The UK border agencies could charge import duties and also collect VAT on all imports.
2. The transfer of goods, services, people and data to/from the UK will likely become more complicated and costly – more of an inconvenience rather than a major barrier to trade
3. UK growth is expected to slow considerably in 2017, which will place increased pressure on the UK economy
As in all situations, this will impact some industries and businesses more than others. If you supply to, or import from, one or more of the following sectors, you can expect complications and change in your supply base from 2017;
As experts on the Lisbon Treaty (since we read it twice!), a country leaving the European Union has 2 years in which to negotiate a withdrawal agreement. This time-frame permits preparation in 2017 for the Brexit impacts of 2018, while businesses should invest in Procurement so as to;
1. Reduce your supply-chain risk if overly dependent on UK suppliers
2. Develop internal expertise to deal with customs, visas, tariffs, VAT, currencies etc.
3. Provide internal Category, Contract and Vendor Management expertise (3 investments which should be considered irrespective of Brexit)
4. Prepare for global sourcing events and opportunities
5. Provide Procurement Training, so as to invest in your buyers to improve their mindset, skillset and toolset
As always, please do not hesitate to contact us with your Brexit and Procurement queries.