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27 Jul, 2020

Listen: Businesses urged to re-focus on Brexit readiness

Since March, Covid-19 has overshadowed Brexit. However, for businesses with exposure to the UK, it really is time to re-focus on a political process which may have a longer-lasting impact on the Irish food and agribusiness sector than Covid-19.

Since March, Covid-19 has overshadowed Brexit. However, for businesses with exposure to the UK, it really is time to re-focus on a political process which may have a longer-lasting impact on the Irish food and agribusiness sector than Covid-19, writes David Leydon, head of Food & AgriBusiness with ifac.

At an individual business level, with diminished cash reserves, many workforces, including management teams, are feeling the strain of the past four months. These very businesses face the challenge of gearing up again to handle Brexit on top of the ongoing management of Covid-19. Notwithstanding this, Covid-19 has shown the resourcefulness of the food and agribusiness sector, the logistics capability, and its ability to keep supermarket shelves stocked.

It was also good to see that companies who use the UK as a land-bridge to the Continent will be able to use “green lanes” at continental ports from Cherbourg to Rotterdam and avoid inspections and hopefully delays. UK companies will need to go through the “red lanes” for inspection.

Also positive is that many of the larger food and agribusinesses have a risk mitigation plan in place for Brexit, are actively planning and meeting on a weekly basis once again, have a Brexit co-ordinator internally and have external advisory support especially on tariffs. In summary, they are investing resources in preparing for a range of Brexit scenarios.

However, even with their risk mitigation plan in place, the difficult reality is that there is still no clarity on what type of Brexit they are preparing for. This uncertainty continues to impact on decision-making and planning.

SME sector at risk

It’s a different scenario for the SME sector who have exposure to the UK market. We have consistently found that these businesses don’t have the resources to invest in deep Brexit planning. This is a big concern. We need more support for this cohort. The Enterprise Ireland (EI) Be Prepared Grant in place for Brexit is only available to EI clients. This grant should be opened up to non-EI clients too, just like the EI Financial Planning Grant in response to Covid-19. Hopefully, this will be part of the memo Minister Coveney is bringing to Cabinet by mid-July to deal with Brexit.

For SME business owners, we are advising that they have their customs registration number (EORI number) in place, that they are clear on the correct tariff and taric classification for their products, that they have a deferred payment account for customs duties on products they import, and that a VAT assessment has been completed for both GB and NI.

Additionally, at this stage, communications with stakeholders, customers, suppliers, logistic providers, and bankers should be increasing on Brexit with some scenario planning taking place. Given the challenges of Covid-19, having a strong financial plan in place is imperative and having headroom for a difficult start to 2021 is necessary.

Listen to our own David Leydon, Head of Food & Agribusiness at ifac, discussing Brexit readinesss on South East Radio below.

To view our previous Brexit articles click here.