In spite of recent progress in the negotiations of terms for the UK to leave the European Union, a hard Brexit remains the most likely outcome in less than 12 months’ time, according to PwC Ireland’s latest thought leadership report, “Brexit: Lighting the way”.
While recent progress on the draft Withdrawal Agreement and the proposed EU-UK agreement on a transition period are welcome, nothing is guaranteed at this point in the process.
The draft Withdrawal Agreement which outlines the proposed shape of future EU-UK trade relations must be agreed by March 2019 for the transition period to proceed.
To achieve this, the full legal text of the draft Withdrawal Agreement must be agreed by October 2018. Uncertainty remains concerning the draft Withdrawal Agreement, including the issues of the Northern Irish border and the role of the European Court of Justice.
Considering these issues, as well as the narrow window for negotiation and the uncertain political climate in the UK, PwC Ireland's view remains unchanged, that a hard Brexit is the most likely outcome.
A hard Brexit would mean that the UK would leave the EU at end of March 2019 with no future trade agreement. World Trade Organisation tariffs would apply, there would possibly be lengthy customs checks at ports and legal complications may ensue. As a result, PwC advises businesses to prepare immediately for such a possible outcome.
Launching the latest Brexit update, “Brexit: Lighting the way”, PwC Ireland’s Managing Partner Feargal O'Rourke said: "As I meet with clients, one thing they want clarity on is post-Brexit trading relationships. The UK's current unwillingness to consider a Customs Union, and continuing talk of 'cherry-picking' which arrangements it does or does not want to retain, means that a hard Brexit remains too likely for businesses to ignore.
“The only thing we can be sure of is that disruption and change is inevitable. Firms need to prepare now for additional costs, border issues, disruption to supply chains and people mobility issues. “We therefore strongly advise Irish businesses to plan for a hard Brexit scenario taking effect at the end of March 2019.”
With less than a year to go, PwC also revealed reveals its ten no-risk actions for businesses to undertake ahead of Brexit to be prepared for its eventual outcome.
Discussing the no-risk actions, David McGee, PwC Ireland’s Brexit Task Force Leader, said: "Businesses need to have contingency plans in place ahead of Brexit. They should review their business models, examine their supply chains as well as looking at diversifying into new markets.
“While some progress has been made on the Brexit negotiations, there is still a long road to go. With all of the moving parts, it is very difficult to see the end game.
“There is no room for complacency. Until we have certainty on all of the issues, businesses should prepare for a hard Brexit and a worst case scenario."
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