“Brexit is already happening,” says René Buck of Buck Consultants. He means the contracts that are now being entered into, in which the consequences of Brexit are already considered. The consultant gives advice to companies all over the world, particularly on the choice of branch locations. During the second Brexit session of Dutch newspaper Nieuwsblad Transport, he talked about the consequences of the British departure from the Union.
American companies that are faced with the choice of renewing their DC’s contract for the UK by seven years, are coming to René for advice. He mentions a supplier of medical equipment who has to be able to deliver his supply within the EU within 24 to 36 hours. That company doesn’t want to run the risk of a hard Brexit, and therefore chooses a DC in the UK and one on the European mainland. It’s only one of the examples mentioned by René that shows Brexit is already happening.
Erwin van Aken and René Buck.
Much is still unclear
“When the result of the referendum was announced, the disbelief was clearly seen on the faces of British presenters,” he remembers. The now notorious article 50 of the Treaty of Lisbon was triggered not much later. The article that ensures the member countries can leave the EU is only seven lines long. “When drawing up the treaty, no one thought any member country would every want to leave,” René explains.
Last month it was announced the EU and the British have reached an agreement about the transition period, so that Brexit doesn’t become effective as of 29 March 2019, but as of 31 December 2020. Although there are still a few serious hurdles to overcome, for instance the issue of the Irish and Northern Irish border, René expects this transitional period is coming. “It’s remarkable that the American and British press responded much more negatively to the news of the transitional period. This is mostly due to the fact that there will still be much uncertainty about the period after 2020.”
René Buck of Buck Consultants.
British economy affected
Whether there’ll be a transitional period or not, companies had better prepare for the consequences of a hard Brexit. After leaving the EU, the UK will have to enter into 300 new free trade agreements, among other things. It will be quite a job. The economic effects will also be felt. The UK is an important market within Europe. About 54 per cent of British import and 43 per cent of British export is done with EU member countries.
The OESO made an inventory of the consequences for the result of the referendum. The economic consequences won’t be too bad for both the UK and the EU in the short term, but in the mid to long term the British economy is estimated to be severely affected. The British economy will also suffer from leaving the EU more in the long term. “That will also have consequences for the spending power of the Brits, for example,” René predicts.
Brexit will have consequences
The EU is based on four freedoms: free movement of goods, services, capital and people. “The British want it à la carte: free movement of goods and capital, but not of people.” This is an impossible option from the point of view of the EU. A hard Brexit, when no agreement is made about trade, will result in a trade relationship according to the World Trade Organisation (WHO) regulations. Tariffs for the trade in food could then increase to as much as 20 per cent, or even more, which would result in a considerably debit entry. “Although it’s difficult in fresh sectors, it could be appealing to open a DC in the UK.”
For more information:
Buck Consultants
René Buck
T: +31 (0)24 379 02 22
E: bci@bciglobal.com
W: www.bciglobal.com