Brexit is not one event. It is a range of possible deals. The final Brexit agreement with the EU will determine the UK's (and your company's) future for the next 20 years.
So concentrating on BAU is not good enough. We must ensure our industry gets Brexit-Lite, not Brexit-brutal.
As part of Brexit, every piece of EU-based UK law must be reviewed and a decision taken to repeal, keep or amend it. This is an opportunity to remake the legal landscape to your business's advantage. So every business should join the Brexit debate and government consultation. Because getting a bad Brexit is this decade's biggest business risk.
Every organisation should have a Brexit plan based on a roots-up review of employees, customers, counter-parties and trade relationships. The plan should cover every likely brand of Brexit. This link sets out possible scenarios: "Making Sense of Brexit".
Given the Prime Minister's desire for a bespoke British deal, the final outcome will probably blend these options. The Prime Minister has also said she wants to consult UK business about Brexit's terms. So we should ask her for what we need - promptly - because the consultations have already begun.
Some essential steps should be taken to prepare your business for Brexit:
1. Employment and Immigration
Start with your people. Without them, you don't have a business. Where is your workforce from? How much of it benefits from current EU freedom of movement? How would you be affected if your EU nationals had to go home; or if you couldn't easily recruit in your current target jurisdictions? These questions may be particularly relevant to developers and contractors (with large EU workforces) and technical businesses, such as architects - but every business should ask them.
Answering these questions will shape your strategy. You may also want to lobby government for a post-Brexit immigration policy that is fit for your business.
2. Trading Networks
Where do you import your products and materials from? Or export to? For each of these products and materials, how do the EU's customs and tariff rules benefit your supply chain (or perhaps hinder it)? Which of these rules do you most need? Lobby for what you need and contingency plan in case you don't get it.
If the UK exits the EU without a finalised trade deal (quite likely as an exit is quicker to negotiate than a trade deal), then we revert to the World Trade Organisation rules. How will these rules affect your business and what additional costs will they bring? Post-Brexit, the UK will also no longer benefit from EU treaties with third party countries. You may therefore face new barriers in trading goods and services outside the EU. You will need a country by country check to adjust your contracts and arrangements to fit the new Brexit world.
3. Contractual Relationships
From now on, your long term contracts need to contain transitional Brexit and change/divergence of law provisions to account for the future separation of UK and EU law. Current contracts will need to be reviewed for currency risk, tariff, tax, customs and trade assumptions. Future contracts should be adjusted to cater for change in all these areas. This contractual audit should be coupled with a review of your pricing and profitability and B-Day's (Brexit-Day's) potential impact.
This is a major issue for the real estate industry. Passporting allows PRA and FCA authorised banks, insurers and financial sector companies to sell their services and products (and open offices) across the EU without need for further authorisation. It is an invaluable simplification of the previous multi-jurisdictional authorisation regime and a powerful driver for businesses locating within the EU.
So whether you are landlord or occupier, you should argue for retention of passporting. If the UK looks likely to lose passporting it may have a detrimental effect on occupational demand and new development in all of our major cities. Because major financial players may not locate to (or relocate away from) them.
Brexit planning means taking a long term view. Everyone is worrying about a recession and the Bank of England has swung its monetary jack hammer to ease the economy's transition.
But, in Brexit terms, focussing on a possible near term recession is planning for a thunderstorm when climate change is at the window. We need to lift our eyes up to the true nature of the business future Brexit will bring. Our industry should aspire to lead the way to that future and make sure it gets a Brexit deal that succeeds.
Originally published by CoStar.