The 31 January has past and we are out of the EU. But what difference does this make and what is the transition period?
The word “transition” is defined as:
A change from one to another or the process by which this happens…
Essentially, until 31 December 2020 – when the transition period ends – the UK will continue to pay into the EU and be subject to its various rules and regulations. The pre-Brexit rules on trade, travel and businesses between the EU and the UK will continue to apply until the end of the year.
During this transition period our government has determined it will negotiate the detailed arrangement that will apply from 1 January 2021.
If these negotiations fail, we may still face the prospect of a “no-deal” scenario next year.
Most political commentators have made the point that a detailed agreement on all issues will be difficult to achieve in 2020; there is an awful lot of ground to cover, and as our Prime Minister has underlined his determination to avoid any extension of the transition period beyond the end of the year, UK businesses face uncertainty yet again: no-deal or a yet to be determined trade agreement.
Our advice to clients is to spend some time during 2020 undertaking a risk assessment based on this uncertainty. It would seem to be sensible to create a plan to cover both extremes.
This makes planning difficult if you buy or sell goods and services to or from EU countries. Unfortunately, even those companies that have no direct trade with the EU will likely find that their suppliers and customers – who do trade in Europe – will be affected and may create disruptions in their supply lines.
Tackling this conundrum – what will be the effects on our businesses from 1 January 2021 – is like playing darts when the board is nailed to the side of a moving bus. As we get closer to the end of the year outcomes will be easier to predict. In the meantime, sensible planning would seem to be appropriate.
Call if you would like our help to set up a formal review of your business prospects once the present transition period has run its course.