Only 16 percent of Belgian businesses are prepared for Brexit has been saved
Only 16 percent of Belgian businesses are prepared for Brexit
Deloitte poll reveals 45 percent are still worried or unsure
We are currently in the Brexit transition period and virtually nothing has changed yet for businesses or the public. However, the end of the year is fast approaching and with the United Kingdom ruling out any extension of the transition period into next year, 1 January 2021 will mark the start of the UK-EU’s new trade relationship. Are Belgian businesses ready? Our poll of 62 corporate executives attending Deloitte’s Brexit readiness webinar on 2 July suggests the answer for the majority of firms might be no.
Ready for the unknown
While concerns about the details of a deal, or lack thereof, are on the minds of many Belgian businesses, it does not appear to have prompted enough action to mitigate the anticipated risks. Instead, 45 percent of our poll respondents are still worried or unsure about their preparedness. Only 16 percent are completely prepared and have no concerns, while 39 percent are not yet prepared, but feel confident they have enough time to get ready for Brexit.
Disruption to market access tends to be the most commonly expressed concern for businesses. For importers and exporters, the lack of clarity on how trading will be affected gives rise to greater uncertainty. Whether or not there is a trade deal, companies will have a lot to consider. Will they be able to deliver goods or services without delays? Will there be complex new procedures and additional costs next year? What will the UK’s regulations and new compliance processes be if they want to sell there? Will VAT increase in complexity?
The UK has begun the process of diverging from EU rules to create its own post-Brexit business environment, and it is clear the world will change in 2021. For example, the UK recently published its global trade tariff schedules for the future. These have been set lower than the existing EU tariffs in certain areas, in the hope it will make the UK more attractive for exporters worldwide.
Companies need to have alternative strategies and systems in place to cope with these changes, and to be ready to deal with more than one potential outcome of the negotiations.
45 percent of our poll respondents are still worried or unsure about their preparedness
Will a deal be reached?
This lack of preparedness may stem from the belief that a deal will be reached, but the reality of the negotiations is still that a deal will not be possible without concessions on both sides. In any case, a deal will likely be a narrow one. Issues such as Northern Ireland have continued to add complexity to proceedings, and as of yet it is unclear how the current sticking points will be resolved.
There are those who will observe the EU is in the stronger position in the trade talks, owing to the relative sizes of the two economies. Regardless, responding to the ongoing COVID-19 pandemic and other matters has seen the importance of Brexit slip from the top of the EU’s political and economic agenda. They are thus less likely to concede a key principle just to get an agreement. This does however not mean that they would not prefer a deal, just not at any price.
The UK, forecast to experience one of the deepest recessions of the OECD nations, could be further incentivised to avoid a non-negotiated outcome. It may decide to concede on some of their current demands in order to avoid the major additional pain for business that a no-deal Brexit would bring.
Only time will tell if (or when) politicians decide to move. With negotiations continuing and ‘no deal’ a possibility, Belgian companies should be preparing for all outcomes to be ready for what awaits us after 31 December 2020.
a deal will not be possible without concessions on both sides