Brexit and Business: What's Happening?
Political turmoil reigns, but since the referendum was announced in 2016, the UK’s markets have suffered from instability and the devaluing of the Pound. But what’s going on now?
What’s going on?
In short everything and nothing. Unable to push her withdrawal plan through and gain the full support of the government, Teresa May and her party have been amending the withdrawal agreement with the aim of uniting the political parties and delivering on Brexit.
On Tuesday 29th January, members of parliament were given the opportunity to review the amended agreement and vote on seven selected amendments that included ruling out a no deal scenario, called for an extension of Article 50, delaying or postponing Brexit, a 6-day period to discuss and vote on alternatives and replacing the backstop in Northern Ireland.
Both the Brady amendment, calling for an alternative to the backstop, and the Spelman amendment, prevention of a “no-deal Brexit” were passed and although neither are legally binding, they have persuaded May to re-open the withdrawal agreement and re-negotiate the boarder with Northern Ireland.
However, currently the EU’s chief negotiator, Michael Barnier, has stated that there will be no renegotiation and that the backstop is ‘part and parcel’ of the withdrawal agreement.
How is Brexit affecting businesses?
- Currently there has been no negative effect of Brexit on businesses in the UK and employment remains at an all-time high despite JLR and Ford cutting jobs.
- However, this is likely to change with Honda now announcing their closure of the Swindon branch where they make the Civic, although MP's are stating this is more due to market decline.
- Many companies are investing in ‘no-deal’ contingency plans sourcing funds from other areas of their business, such as recruitment and seeking new bases outside of the UK.
- Uncertainty has stagnated business investment. It is more than 10% lower than forecasts predicated prior to the referendum.
- UK sales has seen a significant negative impact; UK Barley orders are drying up and buyers voiced concerns during London Fashion Week.
- Some companies in the drug making and food industries are stockpiling goods and buying up machinery to help prevent disruption to supply.
What should I do?
If you have a business relationship with a UK company, it is definitely worth speaking with them about their contingency plans and how they foresee Brexit impacting them.
However, it is also highly advisable to consider contingency plans for your business. Review your contracts and make sure your terms and conditions support your company’s needs. Keep up to date with information regarding negotiations, the impact of staff and tax implications. For new business relationships, bear in mind potential import and export difficulties. Draft meticulous contracts that cover you during these uncertain times. And, if you are currently in dispute with a UK company, try to resolve this pre-Brexit. If this isn’t possible, contact a specialist international dispute lawyer who knows how Brexit will affect you.
Want to know more about updating, amending or drafting business contracts? Have a dispute with a UK company? We can help. Our team of international lawyers are experts in contracts. Every year, we handle hundreds of international contracts and cases. Contact us today to find out how we can help you.