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Early indications from the new Prime Minister Boris Johnson appear to make the possibility of a no deal Brexit significantly more likely.
Speaking in The Commons today (Thursday), Johnson announced that there will be an “active campaign” to prepare businesses for a no deal Brexit.
The UK has until 31st October to agree the terms of a withdrawal agreement or leave the EU with no deal. The Prime Minister has ruled out any further extensions to the deadline, and previously declared that the country should leave the UK “do or die” by the 31st October.
Under the leadership of Theresa May, the government previously spent up to £4 billion preparing for a possible no deal Brexit. This included public training, recruitment of additional staff such as customs officers and contingency plans intended to avoid or at least minimise delays at essential crossing points.
Estimates of spending by business on preparing for a possible no deal Brexit vary, but suggest it may be as much as £80 billion, as businesses facing potentially costly delays have stockpiled materials and built stocks of their own products on the continent.
Several business leaders view the prospect of a no deal Brexit with alarm. “Leaving without a deal would be catastrophic, warned Mike Hawes, Chief Executive of the Society of Motor Manufacturers and Traders (SMMT), “plants will close; jobs will be lost.”
Tony Walker, the Managing Director of Toyota Motor Europe agrees. “No deal is not an option.” He stressed. “In the short term, crashing out of the EU would have immediate and devastating impacts, with border chaos disrupting the Just in Time basis on which our business depends.”
But not all business leaders fear the no-deal option. Tim Martin, the founder of the Wetherspoons pub chain, made a passionate case for leaving with no deal when he appeared on Question Time in June. Martin claimed three immediate benefits, in not having to pay the £38 Billion “divorce bill”, regaining control of fishing, and reduced prices for consumers through the abolition of most import tariffs.
But the Bank of England Governor Mark Carney has warned that more than 100,000 businesses, mostly small to medium enterprises (SME’s), were unprepared for the sudden changes in procedures that would apply to trade with the other 27 countries of the EU. He was referring in particular to businesses that only trade with the EU and not the rest of the world. These businesses have no experience of export and import declarations and the procedures that apply when trading with the rest of the world and will immediately become mandatory in the event of a no deal Brexit.
The government has taken steps to simplify such procedures if we leave the EU with no deal. This includes the introduction of a facility called the Transitional Simplified Procedure, which would minimise import clearance arrangements for a limited period.
But the British government cannot control what authorities in other countries do, and goods travelling to or from the UK are expected to be subject to the same checks and procedures as goods from non-EU countries as soon as a no deal Brexit takes effect. The requirements vary according to the nature of the goods, but in all cases will include more paperwork and advance declaration of shipments via CHIEF the government’s online database for import and export clearance.
Time is already short for adopting plans for the no deal scenario. Many companies will need to train staff in import and export procedures and may need to invest in software or new procedures in order to comply.
Business leaders cannot afford to wait any more. The prospect of a no deal Brexit on October 31st is real, and it will have immediate effect. Check our database of export trainers for more information.
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