The Impact of Brexit on Global Business:
Exploring Potential Effects
Since the referendum in 2016, Brexit has been high on the list of conversation topics. Then along came the pandemic. And it seemed for a short while, all things Brexit related were replaced by all things Covid-19. But, as we approach December 31st, which marks the end of the Brexit transition period, it is once again on the radar of people and businesses across the country. According to a survey done by YouGov on October 12th, respondents cited it as the third biggest issue (behind health and the economy) currently facing the country. A key benefit of being in the EU is access to a single market and customs. This means freedom of movement within the region. It’s a single trading area with no border checks or tariffs and a combined VAT. Going forward after the transition period, this will see significant change for the UK.
Mark Baggs
Head of Global Expansion
How will this impact businesses wanting to expand globally?
It’s not fully known what the outcome will be after December 31st with regards to trading between the EU countries and the UK. But Brexit will impact:
- Taxes and duty
- Safety standards
- Personal data
- The movement of people
- The movement of goods
What do we know so far?
Hiring employees
When it comes to hiring employees from overseas, there will be changes to the process. If you’re bringing employees in from the 1st of January, EU citizens moving to the UK for work will require a visa. Therefore, if your business wants to recruit from the EU, you need to apply to become an approved sponsor which takes around two months. This is because from this point, an approved employer sponsor will be required in order for the citizen to be able to move to the UK to work.
If you have existing employees working in the UK from the EU, EEA or Switzerland, they will need to apply to the EU settlement scheme by 30th June 2021.
Exporting goods
To export goods, as of the same time period, the rules will be similar to those when exporting to non-EU countries. The big change here is the requirement to make customs declarations. In order to ease the burden of administration, using a customs agent or fast parcel operater will help the process.
However, following the end of the transition period, the UK will no longer be part of the existing trade agreements between the EU and certain non-EU countries. The plan is to put trade agreements in place. Until then, trading with that country will take place under the World Trade Organisation Most Favoured Nation rules. The list of trade agreements with countries provides further information. You can view the rules of import and quota tariffs under WTO rules on the Market Access Conditions website.
When it comes to product testing, conformity and certification agreements, exports to separate countries will now need to be considered on an individual basis after the end of the transition period. In some cases, countries have agreed to mutually recognise each other via a mutual recognition agreement (MRA). The UK so far has done this with the USA, Australia and New Zealand.
What's next?
Despite the hurdles and regulatory changes that are due to come into action, the UK still brings a wealth of opportunities for businesses.
It’s important to plan your global expansion strategy carefully and well in advance, so your business will be prepared for when the changes come into place.
With a PEO, they can help relieve you of the admin that comes with transitioning to a post Brexit UK. Whether you need help managing your current employees or you require employee mobilisation, Gibson Watts Global can facilitate a seamless transition.
Request a call back from a member of our global expansion team today.