How you feel about Brexit is no longer relevant. The British people have voted for it and it is going to happen. Short of a political earthquake, the situation will not change.
Unfortunately, that’s about all we can say about Brexit with any degree of certainty. Many of the most basic considerations that could provide greater clarity for business – in or out (of the Customs Union), timing (including the transition / implementation period), hard or soft (like a boiled egg) – remain under discussion.
Our assumption is that Brexit day, 29th March 2019, will be a legislative event, a damp squib, and nothing much will change for British business and their employees until after the 2 year transition / implementation period, currently the end of March 2021. This leaves 3 years for businesses to plan and execute their Brexit strategy. (We discount for now the possibility of a hard Brexit with no transition period at end March 2019 because we believe its impact would be so severe for both the UK and the UK’s main trading partners in the EU.)
Recently, we have attended a number of management consultancy presentations claiming that Brexit strategy is complex, uncertain, mysterious, difficult and/or fraught with risk. We think this view is rubbish, a very thinly disguised effort to frighten clients and generate fees.
In our opinion, high level Brexit strategy is very simple: it is a separation of existing business functions that must remain in the European Union. Ringfencing requirement and business function divestments are other examples of separations.
The implementation of Brexit strategy is also very simple. We set out here our 9 step no-nonsense approach: the first 3 steps focus on strategy; the remaining steps on delivery.
What profitable business activities do you undertake that must be conducted in the EU? What customers might you not be able to serve from outside the EU? Are there potential tax or customs tariff implications that could reduce your margins?
The answers to these questions will help you to quantify the impact of Brexit in monetary terms if no action is taken, and help you to define the scope of your Brexit strategy and secure implementation funding.
This decision is easy if you already have a place of business in the EU (outside the UK).
If your business is located solely in the UK, or your other EU locations are not suitable, you have a number of options, e.g.:
Use the output of steps 1 and 2 to create a Brexit business case and secure funding for delivery.
We think steps 1-3 could take up to 6 months, and deliver a clear Brexit strategy with funding for implementation. That leaves 2 ½ years to mobilise a programme of work and deliver the Brexit strategy.
Valentia Partners assists Tier 1 banking clients in the implementation of Brexit style separations, as described here, and is currently assisting two clients with their Brexit strategy and implementation.