Risk & Economy » Brexit » MPs agree an insurance policy – not a deal – but what does this mean for business?

MPs agree an insurance policy - not a deal - but what does this mean for business?

Whilst businesses struggle to find their way amidst the fog of Brexit, accountancy firm Grant Thornton shares findings and inputs on what measures to follow, and how Brexit could be good news for UK businesses.

As businesses demand further clarity on Brexit changes, Grant Thornton has analysed how its 2018 report, along with its 2019 study on the geopolitics on international trade, portray Brexit as both a challenging time in which preparation is key for businesses and a window of opportunity for international growth.

Following recent Brexit announcements, Adam Jackson, Public Affairs and Brexit Advisory Director at Grant Thornton, suggested businesses should follow their no-deal plans for October 31st, yet remain prepared for Brexit whilst keeping a close eye on this week’s report.

He said: “With 10 days to go we still can’t say for sure what will happen on 31 October. The options remain: leaving with no-deal, leaving with a deal, or an extension and delay. Currency markets are likely to be volatile as they follow the ups and downs of the debate.

“Business should maintain their no-deal contingency plans for 31 October, continue getting ready for Brexit, and keep track of developments this week. My current assessment is that the most likely outcome is a deal passing, possibly amended, after a short extension. But the situation is volatile, and no-deal remains a very real risk and should not be discounted.”

Brexit planning underway

After speaking to business leaders about their approach to Brexit over the last two years, Grant Thornton completed its research in December 2018, drawn from its ‘International Business Report,’ which showed that most businesses (78%) had started Brexit planning, with three quarters of those having factored in a ‘no deal’ scenario.

A further survey of 300 leaders of mid-market businesses doing business worldwide disclosed that two thirds (64%) of respondents believe Brexit has weakened the perception of ‘Brand Britain’ globally, highlighting the negative association between UK businesses and Brexit.

The survey also found that nearly three quarters of respondents (73%) believe the UK is far more concerned with Brexit than the rest of the world.

A window of opportunity?

The same research also revealed that Brexit has opened doors to opportunities by encouraging businesses to develop new products and services (56%), and to look beyond Europe for new markets (67%).

The London-based business ‘Cuts Ice’ illustrates this window of opportunity generated by Brexit.

Founded in 2014, the West London-based business employs 145 people whilst being one of Europe’s leading e-liquid producers by manufacturing both its own-brand products and OEM e-liquid for vaping brands.

With 80% of its own brand sales coming from European markets, trading post-Brexit is critical to the business and its growth.

Nigel Quine, Cuts Ice’s CEO, explained: “This is such a new industry that regulations can change daily – markets like the US are pulling back whereas others are opening up. When it comes to Brexit, there’s an interesting duality – we need to mitigate the risks, but it’s also presenting us with some unique opportunities.

“Our strong ties to Europe are integral to what we’re doing as a business. But at the same time, the regulation at an EU level outlines specific requirements which we strongly believe could harm the future use of our products, and therefore the long-term success of our business.”

Whilst Brexit remains at the top of the UK’s agenda, Cuts Ice has been working with Grant Thornton UK LLP to obtain advice and support on Brexit planning.

Quine said: “We would have had to spend a lot of time and resource to prepare for Brexit if we hadn’t had support from Grant Thornton to help us with scenario planning. The planning we’ve done has allowed us to move forward without having to put everything else on hold – which has given us an edge over our competitors.

“In the event of a ‘no-deal’ Brexit, we know that we’ll need a European address on our packaging, and we’ll need to ensure that we have stock there. Our Brexit planning means that we’re prepared for that and we’re able to be agile, whatever might happen later this year.”

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