Are companies ready for Brexit?

Businesses are feeling relatively confident that the eventual deal struck will be relatively “soft”. Yet with much still to be determined around the outcomes of Brexit

Photo taken during the session
Photo taken during the session
Continuing with our prolonged analysis of the Brexit from several legal and social perspectives, last Tuesday 3rd of April Fide held a session under the name of “Are companies ready for Brexit?”, in order to discuss the progress in the negotiations to date and the conclusions of the report, which has an emphasis on the impact it will have on the business world.

On March 29, 2019 the United Kingdom will cease to be a member state of the EU. Following the procedure agreed by the European leaders, the EU 27, through the Task Force art. 50, is negotiating the UK’s orderly withdrawal from the EU. Last December, the Heads of State and Government concluded that there had been sufficient progress on citizens' rights, Ireland / Northern Ireland and financial settlement; and it was decided to move to phase 2 of the negotiations, in which we find ourselves. 

In this phase, it is necessary:
  1. Draft the withdrawal agreement, which foresees all the consequences of the withdrawal.
  2. Negotiate the withdrawal period, requested by the United Kingdom and which the EU 27 is willing to recognize, under the conditions agreed upon by the 27 Member States.
  3. Once the European Council approves the corresponding guidelines, start the discussion on the framework of the future relationship.
In this respect, the United Kingdom has stated that it does not wish to continue being part of the Single Market, nor of the Customs Union; wants to recover its regulatory autonomy and not submit to the jurisdiction of the European Court of Justice.

Pannellists John Maloney (Head of the Brexit Taskforce) and Dan Healy (Head of Research) presented the key findings from their recent Survey “Brexit in the Boardroom: A View from Business”. A survey which was developed after having spoken to 2,500 leaders of large businesses across four major EU economies (France, Germany, Spain and the UK) to better understand how their organisations are reacting to events and planning in this time of high uncertainty.

The session was moderated by Isabel Colina Sánchez, Deputy Director General for Economic and Financial Affairs, General Directorate for Integration and General Affairs Coordination of the European Union (centre).

The findings of the survey include, among others:
  • Timing: 75% of firms expect clarity on the UK/EU relationship by June 2018 at which point ‘irreversible changes’ will be made to their business planning.
  • What kind of Brexit: 65% of all respondents believe there will be tariff free access for goods, 52% believe the ECJ will still have jurisdiction, and 59% that there will be free movement of people.
  • Response of business: 85% of UK firms have established Brexit response structures, with 84% in Spain, 82% in France and 80% in Germany. However notably only 40% are focused on dealing with supply chain issues and just 24% are planning to engage with or influence policy makers.
Overall the survey results seem to indicate that businesses are feeling relatively confident that the eventual deal struck will be relatively “soft”. Yet with much still to be determined around the outcomes of Brexit, and our results indicating that much is still to be done for businesses to be ready, we consider: is this sentiment overly optimistic?

We invite you to review the Executive Summary here.

We invite you to review the Full Report here.