Are you concerned about the implications of Brexit on your business? Do you trade with the EU? Are you wondering what Brexit means for recruitment, GDPR, VAT, the economy and more? All your burning questions are answered in this blog.
Understanding how a no-deal Brexit will affect your business heavily depends on the nature of your business. Whether you trade with the EU, countries outside the EU or only within the UK, the vote to leave in the Summer of 2016 will more than likely, have a direct or indirect impact on you and your business.
In this blog post we talk about the implications of no-deal Brexit on employment, data protection, VAT and the economy.
According to Indeed, when the UK voted to leave the EU in June, the number of jobseekers looking for opportunities abroad doubled on average.
Furthermore, the Office for National Statistics estimates a total of 2.27 million EU nationals working in the UK, a number which has dwindled since last year. This suggests that ahead of Brexit, EU workers are already starting to consider alternative job markets.
In industries such as construction and healthcare, where there are shortages of skilled workers in the UK, there is significant reliance on EU workers to fill the void by bringing in essential skills. The EU workforce also contributes heavily to the unskilled labour market.
If EU nationals leave the UK, or the UK loses the ability to outsource labour from the EU without a deal there may be a risk of a gap between the demand for skilled workers and supply, potentially leaving businesses struggling to obtain the resources they need.
If your business relies on skills from the EU, how can you plug this gap? According to Recruitment International, you can start by retaining your existing workforces by ensuring they are on par with legislation and eligible to apply for British Citizenship or settled status before Brexit.
Alternatively, you can invest on attracting young talent from local colleges and schools or outsourcing talent from non-EU countries. The world is your oyster!
You’d be forgiven for thinking that EUGDPR may no longer apply to you when the UK leaves the EU since it is for all intents and purposes an EU law, however that’s not necessarily the case.
GDPR (General Data Protection Regulation) applies to any business or organisation based in the EU and or with EU citizens as customers. This means that GDPR has an extraterritorial effect, so even non-EU countries, will need to comply with GDPR if they have EU nationals as their customers. Consequently, UK companies continuing to do business with the EU after Brexit will need to comply with the regulation to avoid infringing any regulations.
Does this mean that leaving the EU with no deal on data protection laws will mean we no longer have our very own data protection laws? Simply put, no. The Data Protection Act is our very own data protection law introduced in 1988 thus predating GDPR. In 2018, the Data Protection Act was updated in order to complement GDPR, implementing the parts of GDPR which ‘are to be determined by a Member Sate Law’.
As an almost identical copy of GDPR, the DPA serves to mitigate any huge shifts in legislation when the UK leaves the EU, thus suggesting that there will be limited if any need for businesses and organisations to change their current policies, assuming of course they did their due diligence when GDPR was first introduced.
As it stands, VAT rates such as the current standard rate of VAT at 20% and the reduced rate, which is only applied to certain goods and services at 5% is dictated by EU law.
Does that mean that, with Brexit the UK will stop adhering to the VAT system?
Not necessarily, in an effort to respond to uncertainty over VAT, the HMRC points out that the UK will continue to have a VAT system after it leaves the EU. The revenue generated by VAT helps to fund public services and the VAT regulations relating to UK domestic transactions will continue to apply to businesses as they do now.
If the UK leaves the EU without a deal, the government’s aim will be to keep VAT procedures as close as possible to what they are now. This will provide continuity and certainty for businesses.
The EU is currently the UK’s largest trade partner accounting for around half of the UK’s trade.
Leaving the EU with no trade deal and applying for World Trade Organisation would translate to significantly increased non-tariff standards and barriers to trade which would in turn increase costs of goods and services more expensive for UK consumers and harming the ability of UK businesses to sell services to EU countries.
Furthermore, a study by economists at the London School of Economics concluded that in the most optimistic scenario, UK income would drop by 1.3% if we left the EU under a ‘soft Brexit’. In a more pessimistic scenario, such as ‘hard Brexit’ or no-deal the drop could be up to 9.6%.
On the flipside an economic benefit of leaving the EU would be an immediate cost saving of around £8.9bn which equates to the UK’s yearly net contribution to the EU budget. Potentially opening new gates for investment in under funded public services such as healthcare and education.
This is important for businesses as it will provide better living conditions for their workforce and provide better education and opportunity for young talent thus benefiting businesses and future recruiters in the long-term.
We wouldn’t blame you for thinking that most of the impacts of a no-deal Brexit are negative. However, there are some positive elements to leaving the EU. Some argue that Brexit means breaking free from any heavy or constraining regulations in Brussels.
Another positive element is that leaving will make businesses look for new and exciting markets such as the Asian or North American markets. Long-term, this may actually be better for growth, jobs and earning. Though this is purely speculation and may not actually be the case, there is potential for a bright future for Britain.