On March 29, UK Prime Minister Theresa May triggered Article 50, marking the official start of negotiations between the UK and the European Union (EU) over the UK’s exit.
Business analysts have been debating what the different possible outcomes might mean and the one that strikes fear into most is the possibility of no deal at all.
‘No deal is better than a bad deal’. These were the words uttered by Prime Minister May before invoking Article 50.
That would mean leaving the single market as well as the customs union and potentially falling back on the trade terms laid out by the World Trade Organization (WTO), but that is far from a certain outcome either with the UK still having to settle its position within the WTO once it does leave.
Uncertainty makes it difficult for businesses to plan investments and it makes it hard for procurement to invest in the supply chain too.
Indeed, evidence suggests this uncertainty is already beginning to impact confidence in the UK.
A survey from Wax Digital, an eProcurement software company, found that 37% of more than 200 senior business executives in mid-size firms, believe Brexit will restrict their ability to do business in Europe. Meanwhile, 35% said it will make EU trade more costly and complex. A further 26% said they expect to reduce their business operations on the continent and 24% indicated they will look at alternative opportunities.
“Mid-market firms are the lifeblood of the UK economy, and only through constant adaptation to the global political environment can they continue to grow,” said Daniel Ball, director at Wax Digital.
Whether a deal is reached or not, Ball emphasises that businesses need to plan now, or at the very least be using this time to examine and streamline their business models.
“Businesses are right to see the passing of Article 50 as an opportune time to address any issues that Brexit could bring," he said.
Whether the UK leaves the EU with or without a deal, businesses and procurement itself needs to ensure it has plans in place to deal with all eventualities. Waiting to see what will happen is simply not an option if procurement wants to weather this economic storm.
Image provided by Jane Campbell / Shutterstock.com
This article is a piece of independent writing by a member of Procurement Leaders’ content team.