For any business that has taken a "watch and wait" brief in relation to Brexit, it is now time for action. "The period from June 23rd 2016 until today has seen a huge amount of uncertainty, and uncertainty can be bad news for business," says David Carson, partner and leader of the Brexit Response Team for Deloitte Ireland.
“The triggering of Article 50 isn’t going to end this uncertainty, but if you haven’t started to plan for Brexit, now is the time.”
Start by running a slide rule over every aspect of your business, looking at each one from a Brexit perspective. Then, “prepare for a worst-case scenario,” says Carson. This is not about being negative but about future-proofing. “If you prepare for a worst-case scenario, you do so not to be pessimistic; prepare for the worst and if a better outcome emerges, you’ll be well-placed to make the most of it.”
Brexit gives rise to two immediate issues. The first is a potentially positive one for Ireland Inc, whereby UK-based businesses look to relocate part or all of their operations to an EU country, possibly Ireland.
The second is the impact on Irish companies exporting to the UK, and the fear that they could be negatively impacted. “Brexit is not a European issue, but a global one, which is why Deloitte has set up a global Brexit group” says Carson, who works with the global group and leads Deloitte’s Brexit team in Ireland.
The firm’s Brexit work to date, by its broad nature of impact, has drawn on skills and expertise from all the specialisms within Deloitte. It covers all sectors too, including financial services, life sciences, food, agri-business and consumer businesses, into energy, hospitality, leisure and tourism. “Different sectors will be impacted in different ways,” he says.
The breadth and depth of analysis required is something Deloitte is well-placed to provide, as the largest professional services firm globally and the second largest in Ireland, employing 2,900 people on the island of Ireland, and recruiting at a rate of 500 people per year.
Though much of its expansion is as a result of the economic recovery here, still more is arising as businesses get to grips with what Brexit will mean for them.
As well as working with multi-national companies that wish to remain in the EU by moving some or all of their operations to EU countries such as Ireland, Deloitte is also helping Irish companies to locate operations in the UK. It works with each client to tease out the implications of Brexit, whether from a tax, regulatory and workforce perspective, to consider the risks to its supply chain, and, equally, identify opportunities. It may be that a restructuring, or “right-sizing” of teams is required to best deal with the changing EU map.
Whether you are trading with the UK, have UK employees here or have Irish employees based in the UK, Brexit will have implications for your business.
The good news for Irish businesses faced with such tasks is that the recession honed many of the skills required for such an undertaking. “The lessons learned in the downturn will help. In particular, some of the skills acquired in relation to restructuring businesses and controlling losses,” he says. For new challenges, such as those relating to supply chains, Deloitte is helping client companies to deploy digital technologies that cut costs and enable them to remain competitive.
“The thing about Brexit is that the devil is very much in the detail. The more you look at it, the more issues that emerge, which is why we take a multi-disciplinary approach,” he says.
“It could be that customs and tax changes create additional administrative costs. It may be that Brexit gives rise to an increase in M&A activity. If you are to operate in the UK market, for example, now is the time to look at establishing a business in the UK in order to protect your supply chain. Our consultants, from strategy to tax to corporate finance specialists, are all on hand to help businesses move through this process.”
The “flip side” of this are businesses looking to Ireland for an EU base, particularly in relation to financial services and life sciences.
“Ireland has a very successful history of attracting foreign direct investment. The IDA has done a fantastic job and is very alert to opportunities arising on foot of Brexit. However, Ireland Inc has adopted a non-predatory approach in these cases.
“We are not going to advocate that firms should relocate to Ireland, but where that decision has been made, Ireland has to be competitive compared to other EU states. It is fair to say that the Central Bank is seen as direct and certain on requirements for regulated entities looking to locate here. This certainty is a positive for those that locate here.”
Although the final outcome of the negotiations is unknowable, what is certain is that change is on the way.
“The key to coping is not to be passive. Whether you are trading with the UK, have UK employees here or have Irish employees based in the UK, Brexit will have implications for your business.”
You need to start planning now. “This is one challenge that can’t be addressed in relation to a single issue alone, be it tax, or regulatory. This requires a multi-disciplinary approach. Large companies are better placed to have these resources internally, however medium-sized private businesses in Ireland probably don’t and so need to reach out for assistance,” he says.
“Don’t wait until after Brexit has taken place to do this, only to find yourself at a competitive disadvantage. The time to act is now.”
For more see deloitte.ie