The agreement of the financial settlement and the deadline for agreeing an extension to the transition period are rapidly approaching. It is likely the UK will not ask the EU for that extension by June 30, putting pressure on the parties to agree to the future economic partnership by 31 December.
If the extension to the transition period is not requested and a trade deal is not agreed by 31 December, there is the risk of a hard Brexit. In that case, the UK will trade with the EU in the future on WTO terms.
With negotiations stalling and Michel Barnier stating that “the UK continues to backtrack on the commitments it has undertaken in the Political Declaration”, Irish businesses should prepare now for a hard Brexit.
Why do we believe this?
The UK negotiators have said they will not apply to extend the transition period under any circumstances. In that case, there are less than six months to agree a free-trade deal that would include zero quotas or tariffs. This is an aggressive timeline and the first four rounds of negotiations have produced no progress of note. Neither side seems to have an appetite to change its position. The Bank of England governor Andrew Bailey has told banks to step up their plans for the possibility of a no-deal Brexit. We believe you and your business need to act now.
What are the implications for business?
The impact of a no-deal Brexit would put significant pressure on Irish businesses already reeling from the effect of COVID-19.
Many organisations have completed their Brexit scenario planning, and seen those plans stress-tested by COVID-19. Now, it is imperative to determine exactly how the imposition of WTO trade terms and the associated supply chain, workforce, trade and tariff changes will affect your business. We have seen how disruption and uncertainty have shaped the economy and your business’ outlook in recent months. It is time to take learnings from that experience and build upon the resilience shown during the coronavirus crisis to prepare for what lies ahead.