The British parliament has backed an amendment that sends Theresa May to Brussels to attempt to renegotiate the Irish backstop. Amid more uncertainty for businesses, here are our seven tips to help ensure your company is well prepared for the future – whatever it holds.
1. Carry out worst-case scenario planning. Do you know what the impact of a no-deal Brexit would be? We estimate that it could lead to two years of recession and an average import tariff of 5%.
2. Assess where to save money. Cashflow is crucial and now isn’t a good time to be carrying debts with interest rates expected to rise again this year amid, according to our forecast, a 0-1-0.2% quarterly fall in GDP and sterling set to depreciate below the €1.1 level.
3. Identify your best customers. Once you’re clear who are the most loyal, who buys high-margin products, who doesn’t demand discounts and who pays promptly, improve communication and see if you can build a closer relationship.
4. Identify your key personnel and work out who could you least afford to lose. This is always a key test, but with many EU workers expected to leave the UK in the wake of Brexit, do you need to invest in succession planning and skills training?
5. The devil is in the detail. Work with your legal team as all contracts have the potential to contain clauses reliant on the UK being part of the EU. Will Brexit constitute a material adverse change or increase the likelihood of default, for example?
6. Check your supply chain. If the number of insolvencies continues to rise – we forecast the number to rise by at least 9% if the status quo continues – it could spell trouble if you don’t have trade credit insurance.
7. Consider the impact of higher prices. On the one hand, could you stockpile equipment at current prices? On the other, could you implement or adjust hedging strategies to minimise risk from currency volatility?
This article is part of a series of Brexit content. Stay tuned for future updates!