• Brexit
  • June 17, 2020

An uncertain Brexit future for businesses

Xero has recently published a study which finds that 44% of small and medium businesses (SMEs) are concerned about Brexit uncertainties. Why is this, and what are the main factors driving these concerns?     

The political climate

There has been significant political uncertainty in recent times, partly due to the Brexit timelines continuing to extend, and partly due to the early December election. On the lead up to the election, the level of uncertainty for UK SMEs was significant; not only did we not know when and how Brexit would happen, but we also had no clarity on who would actually lead the country to leave the EU. Now, with the landslide victory for the Conservatives, businesses at least have some clarity as to the policies that will impact the economy, and a rough plan for Brexit. However, this hasn’t eradicated all uncertainty. The Brexit deadline has been pushed back so many times now, it’s difficult for businesses (or anyone else, for that matter) to have any kind of faith in these deadlines. This makes it increasingly difficult to plan for Brexit (without a timescale, how can we know what we are aiming for?). While we have certainty that the Conservatives will lead the UK out of the EU, the promises made in their recent election manifesto suggest that this will be done the quickest way possible, rather than the approach that is most beneficial for the country. This creates the potential for there to be a ‘hard Brexit’ or a ‘no deal’ scenario, both of which would cause significant issues for UK businesses trading throughout the EU. There has been progress with the withdrawal agreement, which will hopefully lead to greater certainty as to how the economy will look after Brexit. Fundamentally, however, we still just don’t have enough answers.   

Businesses don’t know where to start

A recent survey, carried out by the British Chamber of Commerce, found that 41% of British firms (of 1,500 sampled) but not yet undertaken a Brexit impact assessment. The reason? They have no idea where to begin. There are a few things we know for sure: 
  • UK businesses need to obtain an EORI number if they import from the EU
  • EU workers must apply for settled status to remain in the UK after Brexit
  • UK businesses will need to start considering paying VAT in other EU countries
Aside from the above, we know very little else, and this makes it increasingly difficult for businesses to carry out any kind of impact assessment. Take GDPR, for example. We know that GDPR doesn’t allow transfers of personal data outside the EEA without adequate safeguards being put in place. UK will be outside the EEA. We know UK businesses, therefore, probably need to put those safeguards in place for Brexit but, as part of the deal negotiated with the EEA, personal data may be able to be transferred from the UK to the EU (as we have implemented GDPR, just like every other European country). This has resulted in UK SMEs operating on a “wait and see” basis, expecting more clarity to come from the Government but not, as yet, receiving it.   

A pessimistic outlook

The issue with uncertainty in the economy is that it creates a generally pessimistic outlook. What does pessimism lead to? Decreased activity. And decreased activity results in a slower economy. We have seen that the uncertainty over Brexit has weighed significantly on business spending and productivity – businesses are not clear on the level of funds they will have available in the next month or the next year, and so are more cautious about making decisions to plan for the future. The most significant step businesses can be taking right now is to carry out an impact assessment. It is extremely difficult to know which issues to focus on, and how matters are going to be played out, but carrying out this exercise will at least highlight the most important matters for each business to focus on. This will allow some clarity in a particular unclear time.

The author of this blog post is Barbara Jamieson. Barbara Jamieson is qualified in Scotland, New York and California, and has worked at top Scottish law firms Maclay Murray and Spens LLP and Brodies LLP. Barbara also spent three years working in-house at investment management firm Martin Currie, advising on financial services and commercial contracts.

In closing

Nothing in this article constitutes legal advice on which you should rely. The article is provided for general information purposes only. Professional legal advice should always be sought before taking any action relating to or relying on the content of this article. Our Platform Terms of Use apply to this article.

Related Articles

Read more of our latest blog posts, featuring all the latest legal news, analysis and opinion from our expert lawyers.

blog image
  • By LawBite Team
  • February 16, 2022
New rules for doing business with the EU

It has now been more than a year since Brexit and theoretical questions are now practical issues of the day-to-day activities of entrepreneurs that...

blog image
  • By LawBite Team
  • October 01, 2021
What Business Opportunities will Brexit Bring?

With the UK drawing the first anniversary of the Brexit transition period ending, some short term effects of Brexit (positive and negative) have al...

blog image
  • By LawBite Team
  • February 18, 2022
Guidance On The eCommerce Directive After Brexit

From 1 January 2021, the Electronic Commerce Directive (ECD) ceased to apply to the UK.  The ECD laid out how EEA online service providers (retaile...


LawBite can help you

LawBite is on a mission to provide business legal advice that is easier to access, clearer to understand and much cheaper. Our on-line legal advice platform can quickly connect you with expert business legal advice. Our friendly, highly qualified business lawyers, solicitors and mediators will give you the guidance and reassurance that comes from customised legal advice for small and medium sized business.

Whether you are bringing or defending a legal claim, outsourcing work, want a business contract review to ward off disagreements, talk to an expert trademark lawyer, resolve a contractual dispute with methods like mediation and arbitration, or getting your new company set up and on the right footing with a robust shareholder agreement and GDPR standards, we can help you succeed.

defend a claim

Talk to a Lawyer

Book a Call
defend a claim

Essentials Plan

Join for Free