Nearly 80 percent of Belgian businesses do not believe that a Brexit deal will be reached has been saved
Nearly 80 percent of Belgian businesses do not believe that a Brexit deal will be reached
Sixty-five percent feel there’s room for improvement in their readiness approach
26 October 2020
With just over two months to go before the end of the Brexit transition period, uncertainty still prevails. What will the legal, logistical and financial situation be on 1 January 2021? Are companies in Belgium ready? Our poll of over 250 corporate executives during our Brexit – The endgame webinar on 19 October suggests many organisations need to step up their Brexit preparations as they have little faith an agreement will be reached by the end of the year.
Change is inevitable
This time there will be no extension to the Brexit transition period. And given the nature and scale of the differences between the EU and the UK, there’s still a real possibility that a comprehensive trade agreement will not be reached. The lack of clarity around the politics has resulted in no-deal planning by the authorities for a long time, but it has met with varying interest from business.
Overall there are serious grounds for concern that the implications of a no deal, or the degree of inevitable change a deal will bring, are not understood by tens of thousands of businesses on both sides of the channel. Whatever the outcome of the negotiations, there will be significant changes to the way the EU and the UK trade.
The uncertainty of the Brexit negotiations is of course nothing new. What’s new in 2020 is the coexistence with the COVID-19 crisis. Plans that may have made sense pre-COVID may not make sense now. Funds that had been set aside to manage the Brexit impact may have been allocated to the COVID response. So looking at both together is essential to ensure business continuity.
There will be significant changes to the way the EU and the UK trade
Impact on customs and trade
Deal or no deal, there will be an impact on trade, customs and VAT. Procedural requirements, border checks and increased costs will most likely cause delays and other challenges for companies, supply chains and retailers in almost every sector of the economy.
There are some very concrete steps companies in Belgium must take now to be as prepared as possible. These include obtaining an EU/UK EORI number, appointing a EU/UK declarant, assessing and ensuring regulatory compliance, getting a UK VAT number, and reviewing contracts and product classifications.
Legal and contractual challenges
COVID-19 may have delayed review of Brexit sensitive contracts but now it’s urgent, to avoid problems arising in 2021. All contracts with UK parties need to be prioritised and checked to ensure that they remain enforceable once the transition period is over, especially as Brexit does not constitute force majeure in contractual disputes. Companies should also check if their suppliers have taken the necessary steps and are ready for Brexit—otherwise their business might be prepared but they find themself in trouble because their suppliers cannot deliver as agreed.
Contracts being concluded now should include the necessary clauses to mitigate the impact of Brexit risks. Standard contract templates, and terms and conditions of sales, can also be amended. Personal data transfers must also be addressed, ensuring that the appropriate safeguards are in place to remain compliant with the GDPR.
Preventing logistics delays
The ongoing COVID-19 pandemic has shed light on vulnerabilities in supply chains, which will be further exposed in a complex Brexit scenario. An integrated response to both crises is therefore of the essence. Companies need to be ready for immediate disruption as well as long-term impacts.
Now organisations can prepare by inter alia checking licenses and certificates, getting ready for the higher volume of customs declarations for imports and exports, and building critical inventory to ensure production. Stress-testing the resilience of an organisation’s supply chain, and adapting where necessary, will help manage the impact of Brexit.
HR and talent readiness
Immigration rules, social security changes and the extent to which professional qualifications will still be accepted on both sides of the Channel, as well as matters such as driving licence and health insurance validity, will be key mobility and workforce considerations, whether there is a deal or not. Brexit will bring increased complexity for work permits, visas, residence permits, and challenges for regulated professions, including lawyers, health care professionals, pharmacists, architects and engineers.
Communication is of the essence. Employers can ensure that they are Brexit-ready by building awareness internally of policy changes, budget and project planning, and actively communicating with employees and internal stakeholders, as well as key clients/government agencies.
To avoid major disruption in all areas and all levels of the business, organisations in Belgium must ask themselves three questions—Are we ready? Do we know what to prepare? What should we do first?—and take action, now.