Following recent political events in the UK, and with just 105 days to go before Brexit, the challenge remains for Theresa May to secure the support of the UK Parliament on the Withdrawal Agreement for Britain to leave the EU by the end of March 2019.
From a business perspective, nothing has changed. Time is running out and there still remains a risk of a disorderly exit by the UK.
PwC Ireland's Managing Partner Feargal O’Rourke said: “The end of March 2019 is approaching fast and there is a risk that the worst case scenario crystalises, leaving the UK trading under WTO rules. While the political uncertainty is likely to continue, business leaders need to focus on running their businesses in the ongoing disruptive environment. Having contingency plans while remaining flexible and agile are key at this time.
“PwC in Ireland continues to believe Mrs May’s current draft Brexit deal would be positive for Irish businesses. It would keep trade between Ireland and the UK close to the status quo and, most importantly, would allow businesses to plan future investment with certainty. However, with continuing political uncertainty in the UK, we cannot assume Parliament will support this deal. We advise clients to step-up their plans for a no-deal Brexit and the worst case scenario, while hoping for a better outcome.”
A recent poll by PwC Ireland taken at its annual Business Forum on 21 November highlighted that business leaders are aware of the consequences of a deal not being agreed on time. The survey revealed that the biggest concern as a result of the draft Withdrawal Agreement not being agreed by 29 March 2019 is supply chain disruption and the cost of finding new sources of supply (24%). Other concerns include reduced economic growth and loss of jobs (23%), the possibility of a hard border in Northern Ireland (17%), delays at borders (13%) and a higher cost of doing business due to tariffs and administration (13%).
PwC Ireland's Brexit Partner Andrew O’Callaghan said: “The risk of Brexit without a deal remains and would seriously disrupt trade between Ireland and the UK. All businesses need to assess which significant and no-regret actions are required in the coming weeks and months. We urge businesses to intensify their plans for all Brexit scenarios including a no-deal Brexit. There is not a lot of time left for businesses to start planning including taking some of the significant actions needed. Doing nothing is not an option.
"With heightened uncertainty, Irish businesses who are trading with the UK should immediately review their supply chains. In particular, we would advise retailers and manufacturers to seriously review their supply chains to ensure day one readiness can be achieved. Brexit poses a real threat to organisations operating models as tariffs and non-tariff barriers drive cost. In order for product to move freely between the UK and Irish markets, businesses need to understand and comply with all new customs processes.
"While the political uncertainty is likely to continue, business leaders need to focus on running their businesses in the ongoing disruptive environment."
"Many businesses have never dealt with third status countries before, making this a real issue as they seek to comply with both UK and Irish customs requirements. We would also advise pharma and medical device organisations to ensure critical medical supplies can be secured. In financial services it is important to understand the impact that the loss of passporting rights will have on the flow of financial services from and into the UK."
PwC’s poll also highlighted the positives for Ireland. Increased FDI in sectors such as technology, digital, financial services and life science, based on Ireland being a gateway to the EU and having access to EU and UK key talent, was seen as the greatest opportunity for Ireland in a post-Brexit world (70%). This was followed by future growth opportunities for our financial services industry (58%) and Ireland playing a more prominent role within the EU (51%).
One in four (23%) see opportunities for greater diversification of markets and suppliers. Post-Brexit, Ireland will be the only location to have unrestricted access to both EU and UK talent. Another recent PwC survey of European asset managers ranked Dublin and Luxembourg as the top two locations for financial services activity. The Central Bank has also indicated that they have received over 100 Brexit related applications for increased business in Ireland.
O’Rourke concluded: “As a small, open economy and having seen many challenges in our history, we are a nation that often sees the upside. No matter what the Brexit outcome, many Irish businesses will continue to have the opportunity to supply goods and services to the UK, the EU and the world. And, with a strong English speaking talent pool and an attractive business environment, Ireland will continue to make its mark on the international stage.”
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