The UK officially left the European Union on the 31st January 2020. But what happens next? And what will the Brexit impact on business in 2020 be?
What happens now the UK has left the EU?
The UK agreed a deal with the EU which sets out the UK’s terms of withdrawal from the European Union. As well as a political declaration of the future relationship of the UK with the EU.
The UK now enters a period of negotiations regarding the future trading relations of the UK and EU. These negotiations are expected to begin next month. This period is also being referred to as the transition period. Trading terms with the EU continue as they currently are for the duration of the transition period. For example, the UK remains in the single market and customs union.
How long does the transition period last and why is it necessary?
The transition period will last for 11 months. The Brexit transition period will therefore end on the 31stDecember 2020.
The key reason behind the transition period is to give both parties time to engage in the negotiations required over what the new relationship between the UK and EU will look like. A big part of this will be negotiating a trade agreement. Trade agreements are extremely complex so need sufficient time to be discussed.
A trade agreement is not the only thing which needs to be discussed and agreed during the transition period with regards to the future relationship between the UK and EU, however.
- Data sharing and security
- Law enforcement
- Access to fishing waters
- Licensing and regulation of medication
- Aviation standards and safety
How will businesses be impacted by Brexit in 2020?
During 2020, whilst we remain in the transition period, very little will actually change for businesses this year. The gov.uk site states that ‘The current rules on trade, travel, and business for the UK and EU will continue to apply during the transition period.’
This doesn’t mean that businesses can rest where Brexit is concerned, however. Preparing your business for 2021 will still be important given that the new rules which are agreed during the transition period will come into effect on the 1st January 2021.
For advice on preparing your business for the new rules in 2021 this checklist on the gov.uk website may be useful.
How could businesses be impacted by Brexit in 2021?
From 1st January 2021, the landscape could look very different and businesses are therefore likely to see more impacts on their business than in 2020.
Given that many of the aspects of Brexit are still to be negotiated it is difficult to say exactly how businesses may be impacted by Brexit.
But some areas to keep in mind include:
The trade deal – if it is not possible to negotiate a trade agreement during the transition period, the UK will most likely instead switch to trading under the World Trade organisation rules. This could mean the introduction of tariffs and customs checks. Both of which could impact businesses in terms of both costs, paperwork and time.
Free movement of people will end – this may have implications for your employees in the UK. As well as employees who may need to travel to EU countries for work. Visas and permits may be required for example.
Data Protection agreements may need to be updated – particularly if you transfer data to countries within the EU. Yet the ICO make clear that exactly what may change is still unknown. Keep an eye on the ICO website if this is something which may impact your business.
EORI numbers will be required to move goods in and out of the UK – Currently only needed when moving goods between the UK and non-EU countries, the gov.uk site states this will be a requirement for all when moving goods in to or out of the UK from the 1st January 2021
At Anthony Jones, we appreciate that Brexit and its implications is a concern for businesses of all sizes. That is why we are keeping on top of developments and updating our Brexit page on a regular basis to provide timely and relevant information to all of our customers.