Worst Case Scenario Planning Is Crucial Says Specialist Lawyer
With fewer than 45 days to go until Brexit and the threat of the UK leaving the EU with no-deal, it is vital that businesses plan for the worst case scenario rather than just hoping for the best, says Irwin Mitchell commercial partner, Winston Green.
Expert Opinion“It’s important that businesses examine their areas of greatest risk if there was a no-deal Brexit and have detailed contingency to plans to deal them. Merely, hoping that the worst case scenario will not happen just isn’t an option. If nothing changes before the end of March, the UK will be leaving the EU without a deal”. Winston Green - Partner
Irwin Mitchell recently published its UK Powerhouse report and analysed the economic impact of different Brexit scenarios on the economy over the next 15 years.
In a no-deal scenario, it says that GDP and business investment growth will fall sharply in the short term. At their lowest points, it expects GDP to contract 0.2%, while real business investment falls by 8.4% as firms move their business overseas.
Winston says it’s vital businesses prepare for the challenges that are ahead and adds that often the best way for a business to establish its exposure is in the first instance to look at how vulnerable its suppliers and customers are.
Expert Opinion“According to our recent UK Powerhouse report, in the case of a no-deal, real consumer spending growth will fall sharply post-Brexit as confidence is severely damaged and inflationary pressures heighten. Not only will the higher trade frictions at the border drive up the cost of imports, we forecast that the pound will weaken markedly against major currencies, worsening the foreign purchasing power of UK consumers.
“Often the best place to start in the planning process is to speak to your suppliers and ask what their Brexit plans are.
“It is also important to assess whether they are ready and if they carry an insolvency risk in the future. Being prepared for different outcomes is crucial.
“Look at your own contracts and understand the level of exposure to currency fluctuations, increased tariffs and interest rate changes might be.
“Our report anticipates that the Bank of England will initially cut rates in an attempt to boost GDP and consumer spending following a no-deal and then quickly raise them to curb inflation from higher import prices. If this occurred over the next couple of years, understand how this would affect your commercial agreements and take action if required.”
Winston Green - Partner
Irwin Mitchell recently published a no-deal Brexit action plan which advises businesses on what they need to look at in order to prepare and deal most effectively with issues ranging from GDPR to tariffs.