Brexit is official - the UK left the European Union on 31 January 2020. But what does it mean for businesses? We take you through what you need to know for trading in 2020 and beyond.
Put simply, not much has changed at this stage. The UK is now in an 11-month transition period until 31 December 2020, so all current rules and deals are still in place. The government is negotiating with the European Union around what deals can be made, particularly around trade and travel. Whatever is negotiated and agreed on in these talks will come into effect on 1 January 2021.
That means throughout 2020, the UK is still in the EU Customs Union and single market. Businesses can trade with EU countries without any extra charges or checks and there are no restrictions on people living and working in other EU countries.
However, businesses are advised to start preparing for 2021 and beyond. The UK will leave the single market and the Customs Union, and Brexit is likely to have an impact on almost every business – even if they do not trade internationally.
Business owners will need to think about their workforce, tax changes, supply chains and, of course, if they trade with other countries.
The Government has produced a tailored guide for people running businesses. Read here for up to date advice from the Government and prepare for Brexit.
So what happens in 2021?
At the end of this transition phase, there will be three possible outcomes:
A new UK-EU trade deal is reached
The government says it is optimistic it can negotiate a new trade deal with the EU. It would like it to be similar to trade deals the EU has struck with Canada and Japan, although the EU has said these deals are different due to those countries not being in such close proximity to EU members.
No deal is reached
If negotiations fail, the UK will exit the transition phase with no trade deal. This means the UK would trade on WTO (World Trade Organisation) terms with EU members, with most goods subject to new taxes and import checks until a deal could be agreed on and subsequently implemented. Current rules on trademarks would also end overnight.
Negotiations continue and transition period extended
If negotiators feel they are close to agreeing a deal, the government could try to extend the transition period – though this would need the agreement of the EU, too. This period could be extended by either one or two years but could be ended early if a deal was reached during that time. However, Prime Minister Boris Johnson has said this is unlikely.
For up to date details on trade negotiations and how Brexit could affect your business, visit the government’s dedicated website.