16.10.2019

It’s Past Time To Prepare For A No-Deal Brexit; Spend The Money And Hope It’s A Waste

Center-right politicians from Scandinavian countries aren’t prone to hyperbole. But on August 17, Danish Minister of Finance Kristian Jensen told the UK’s BBC Radio 4 that he pegged the odds of a “no-deal” Brexit at 50-50.

It’s Past Time To Prepare For A No-Deal Brexit; Spend The Money And Hope It’s A Waste

This, coupled with the UK government’s publication of its no-deal Brexit guidance on August 23, means that if you haven’t already begun planning for no deal, you should start immediately.

No-deal means that the UK and the EU fail to agree on the terms of the UK’s withdrawal from the EU and that the UK becomes a “third country” in relation to the rest of the EU at 23:00 UTC on March 29, 2019 without any transition period. Here are just two of the realities of no-deal on March 30: The 2.3 million EU citizens working in the UK are illegal workers, and goods moving between the UK and the EU face tariffs and customs delays (and permanently enormous queues of trucks at the Port of Dover), forcing manufacturers such as Airbus and Jaguar Land Rover to reduce investment in or move production out of the UK altogether.

When my colleagues and I published our initial advice for CIOs on the day after the 2016 Brexit referendum, I never dreamed that we’d be at serious risk of a no-deal. But with less than seven months left, it doesn’t matter what path of tortuous ineptitude we traveled to arrive here; all firms with operations that cross a UK border must prepare for the absurdly disruptive worst.

For CIOs, here are the critical priorities:

  • People. Prepare to transfer critical EU-citizen staff from the UK to other locations (at least temporarily) and the reverse for critical UK staff in the EU. Work with HR to know each of these employees’ preferences, and set up individual “if/then” procedures for each, as in: “If there’s no deal by November 2018, begin preparations to move Amy and her family to Frankfurt.”
  • Import and export processes. Work with your line-of-business colleagues to understand what cross-border (UK-EU) dependencies you have (for everything from parts to payments), and be ready to move financial operations between tax entities, switch suppliers, pay newly applicable VAT, etc.
  • Data. If there’s no deal and no data adequacy decision by the EU, you can no longer legally transfer EU resident data to the UK. Be ready to move all EU data to a data center or cloud region based in one of the 27 EU countries.

Forrester will monitor the progress of negotiations between the UK and the EU and provide our clients with the best guidance we can in areas from online retail to cybersecurity.

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