Squire Patton Boggs and Retail Economics welcome you to the Second Quarterly UK Retail Brexit Trade Review. Since we launched the service in March, we have witnessed an ongoing trade war between the US and China; a visit from President Donald Trump; the recently launched White Paper following the Cabinet’s deliberations at Chequers; the resignations of both the Brexit Secretary and the Foreign Secretary; and the tense debates regarding the Trade Bill and the Customs Bill, which demonstrated the finely balanced state of the UK’s negotiating position.
As we enter the summer recess in Parliament, the government is publishing more detailed plans regarding how the UK should plan for no deal by 29 March 2019. At the same time, the EU is keen to finalise the negotiations over the Withdrawal Agreement.
In this report, we focus on the impact of Brexit but also consider the ongoing trade wars. We include:
An executive summary of the latest state of play
A summary of key Brexit developments since April
An analysis of the White Paper and the impact on imports, as well as the practical legal and regulatory steps you should consider
An explanation of the most likely Brexit trade models
A summary of the Brexit timetable
An updated analysis of the potential impact of Brexit on the retail sector
The report provides recommendations, including:
Continue to prepare for all three possible Brexit outcomes:
World Trade Organization (WTO)/most favoured nation. A failure to agree an FTA or customs union would mean that the UK’s trading relationship with the EU would revert to MFN terms.
Free trade agreement. An FTA could avoid tariffs on imports from the EU, but introduces some new costs in the form of customs declarations and compliance with rules of origin.
Customs union. A customs union would ensure that import costs stay very much as they are for sourcing both from the EU and from the rest of the world.
People. Prepare for an increase in recruitment competition and salary costs.
Supply chain. All existing contracts need to be reviewed with a focus on tariffs, VAT, intellectual property, customs delays, pricing commitments and possible regulatory changes. Make sure that all new contract negotiations are done so with an eye on Brexit.
Finance. Plan for the impact of potentially adverse cash flow issues on your business, whether this is through VAT, additional time required due to customs clearance, supply chain issues, etc.
Brexit timetable. Keep an eye on the Brexit timetable and make sure that your key stakeholders report back to the board or Brexit Working Group to keep you ahead of the curve.
If we can help you by providing a broad retail perspective regardless of what stage you are at in your scenario planning, we would be happy to arrange for a complimentary meeting.
For retailers – We can help to safeguard you against oversights in new costs and regulation arising from policy developments. We scenario plan and model for what the new trade deal could mean and highlight cost implications from customs duties on different products (e.g. sensitive products).
For companies selling services into the retail industry – We can keep you abreast of how Brexit affects your core customer base, which is essential for sharpening your business strategy and recognising how best to foster key relationships during turbulent times ahead.
