Brace for Brexit

A year since Theresa May pulled the trigger on Article 50, how is the UK Channel preparing for the country’s departure from the European Union?
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Brexit

I know what you are thinking: ‘not another article on Brexit’ (and I would forgive you for thinking that – but bear with me). For almost three years now Brexit, and the subsequent discussions about Brexit, have been ever present in trade publications, mainstream media, social media streams and TV panel shows. The pros, the cons, the lies and the fallout of Brexit have been reported beyond death. However, with under a year until the ‘divorce’ proceedings come to an end, it is more important than ever not to overlook Brexit, not to be bogged down by the barrage of blabber and most importantly to ensure that you and your business are Brexit-proofed.

Worryingly, a large number of Channel businesses are at a loss of what to do next. A ‘wait-and-see’ attitude seems to have crept in across the board, with many business owners admitting that they are doing little to nothing in response to Brexit, simply because they don’t know what they should be doing.

As Robbie Herd, business owner at Sevenoaks Computers, puts it: “Brexit mainly feels like you are sitting on a beach waiting for a wave to wash over you, maybe it will wash us away.” Likewise, Stuart Smith, director at IBA UK, believes that exiting the EU could lead the UK into ‘another recession’ if the value of the pound and the uncertainty of markets continue. “If the pattern continues the Channel could be severely affected,” Smith adds. “In respect to post Brexit, we could boom or we could bust.”

And yet, despite all the uncertainty and the inevitable doom and gloom, companies are starting to brace themselves for the eventuality of leaving the EU. Despite his pessimism, even Herd admits that his business has already started to adapt in response to the market changes. “Due to the increased costs to us and prices to customers and reducing margins, we have had to get more efficient. We’ve done this by ensuring less staff per transaction. We’ve also curbed expansion plans and changed our business model to chase recurring revenues, limiting availability of break fix model for consumers.”

Of course, a large part of the uncertainty is par for the course. As Jon Harrison from Platinum Components states: “It’d be nice to have a glass ball to reads the future, but until the government announces specifics and how customs will impact that, I think we are all waiting with baited breath. In terms of how it will impact our business, I think it will very much depend on whether the UK can negotiate trade deals with it’s EU counter parts. Currently we are part of the single market anything bought within the EU market is relatively simple in terms of import to the UK, with low duties/ cheaper shipping costs. If we don’t have trade agreements set in place that reflect the current single market “set-up” then we may experience increased import and export duties, taxation, restrictions on what products we can buy from where and so forth. which in turn can push pricing up to the end consumer.”

He adds: “Let’s face it no one wants to pay more, so this could really have a negative effect on sales. We already have trade agreements in place with Asia, USA, ME etc so unless the current government mean to remove clearance duties those will continue. Our focus has to be Europe for regularity of both import and export and speed of delivery.”

Parliament

And yet while Harrison, and the rest of us, wait for answers and ponder the endless plausible possibilities, there are contingency plans being put in place across all aspects and levels of the Channel. And – say it quietly – some companies are even seeing the positives out of Brexit. Nick Beer, technical director at Dynamode, is one who believes Brexit is just another challenge to be embraced. “As a company we have been around many years and seen many changes in market conditions,” he says. “A successful formulae for any company, especially retail is to adapt, offer products that customers want, be competitive in pricing and support. A lot of the Brexit phenomenon is hype, drawn by the media, it’s a good talking point. However customers, businesses and distributors will always buy products, the economy will still drive ahead.”

Centerprise International CEO Jeremy Nash also believes that ‘going forward, and looking to the long-term, Brexit could be good for the UK tech industry as it will require us to invest in R&D and build up our intellectual capital’. Even more optimistic about Brexit, John Carter, managing director at DMSL, believes Brexit will actually drive growth within certain sectors.

“If it turns out that Brexit has the effect of making life a bit harder for some businesses, that may drive them to look at cloud and hosted services even sooner, and any new start-ups will certainly be looking to run everything online from the word go,” Carter says. “UK SMBs are moving to fibre-based broadband and hosted voice as quickly as they can and as far as we are concerned, Openreach can’t move quickly enough to roll-out the infrastructure. If anything, we will see Brexit adding momentum to that. If global markets do open up for them, there may be some good opportunities – but the UK does need to get a move-on in terms of developing infrastructure and making faster bandwidth available to all businesses right across the country.”

Despite the uncertainty that is permanently attached to Brexit, the likelihood of a wave washing us all away still seems far off. Ensuring that businesses are Brexit-ready is integral even for the companies that are struggling to see the light at the end of the drawn-out tunnel. If contingency plans are put in place, Brexit should be but a ripple in the ocean, not an economy-flattening tsunami. 

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Brexit in the Channel

Rob Horgan speaks to the Channel about how Brexit is, already has and will impact the technology sector in the years to come