We last wrote about Brexit in early March, ahead of a series of Parliamentary votes, which, in the end, delayed the UK leaving the EU. In this post, we take a look at the current situation and what could unfold for retailers in the coming months.
After Parliament rejected her Brexit deal three times, Theresa May negotiated a Brexit delay with the European Union (EU), then resigned as Prime Minister. This has left the UK with a looming deadline to leave the EU – 31 October 2019 – plus a Conservative Party leadership contest to decide the next Prime Minister.
Whoever wins that contest will play the lead role in delivering Brexit and deciding what type of Brexit it will be. So who are the candidates? And what impact could their different approaches have on retailers?
The Conservative Party leadership candidates
On 10 June, the Conservative Party unveiled a longlist of 10 would-be leaders, who fall into two different Brexit camps.
The renegotiate candidates
Ministers Michael Gove, Matt Hancock, Mark Harper, Jeremy Hunt, Sajid Javid and Dominic Raab have all said that they would (try to) renegotiate the UK’s withdrawal agreement with the EU. The aim of this would be to reach a new compromise over the Irish backstop and transition from the current Customs Union to a new trade agreement in an orderly way.
Some of these candidates believe this renegotiation could be done by the current deadline. Others would be open to a delay. Similarly, some have ruled out no-deal completely, preferring to stay in the EU than crash out. Others have said that, if the EU won’t budge, they’d take – or even force – a no-deal Brexit.
Rory Stewart is the only other pro-deal candidate. He wants to stick to May’s previous deal (the EU has said it’s the only one on the table), but thrash out a compromise in Parliament and through new citizens’ assemblies.
The leave-by-October candidates
Boris Johnson, Andrea Leadsom and Esther McVey have all committed to taking the UK out of the EU by 31 October. Johnson and McVey would pursue a no-deal Brexit, believing it would force the EU to offer a better deal. Leadsom wants to ramp up preparations from July, so the UK can have a “managed exit” in October.
What happens next?
The longlist of candidates will be whittled down to just two, during a series of votes among Conservative Members of Parliament (MPs) from 13 to 20 June. Conservative Party members will then vote on their favourite of the two, with the winner announced during the week starting 22 July.
At the time of writing, Boris Johnson was the odds-on favourite to make the shortlist of candidates, with Michael Gove, Jeremy Hunt and Andrea Leadsom best placed for the second spot.
What could the next Prime Minister mean for online retailers?
A recent survey suggested that “57% of British retailers still have no plans in place for Brexit.” It’s not much of a surprise, given how hard it is to plan for such fluid situations.
That said, the next few weeks should give some clarity for online retailers that import and export between the UK and EU.
If Gove or Hunt emerge as Prime Minister, retailers can expect a few more months of negotiations, with the prospect of an agreement, which enables frictionless, cross-border trade to continue, as a reward.
If Johnson or Leadsom are victorious, it’s probably wise to prepare for a no-deal.
As a minimum, that means applying for an Economic Operator Registration and Identification (EORI) number and registering for Transitional Simplified Procedures (TSP). It’s estimated that around 240,000 UK businesses need these, to reduce the disruption of customs charges and delays in the event of a no-deal Brexit. But at the time of writing, figures suggest that less than 30% of them have an EORI and less than 10% have registered for TSP.
You could also consider using a fulfilment partner to help you trade globally. For instance, our Ohio fulfilment centre enables UK-based companies to ship products in bulk to the US. We can then deliver individual orders to American consumers cheaply and quickly, without customs charges or delays.
In the event of a no-deal Brexit, we have contingencies in place to open a similar facility in mainland Europe. This would allow UK firms to maintain the close relationship with EU consumers that we’ve all grown accustomed to.