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Brexit planning: Practical tips for businesses

Brexit tips for SME’s

Less than 10% of firms apply for TSP status – Many UK businesses “are not even close to being ready for a no-deal” Brexit, figures suggest. HMRC launched the Transitional Simplified Procedures (TSP) scheme in February, aimed at easing imports in the event of the UK leaving the customs union and single market abruptly, but less than 10% of the 240,000 firms estimated to require the status had applied for it as of 26th May. TSP measures would allow UK firms to import goods from mainland Europe without filling out new customs declarations at the border. UK businesses would also be allowed to postpone the payment of import duties for one year. Mike Spicer from the British Chambers of Commerce said: “If it really is this low we’re far, far away from being day one no-deal Brexit ready – it’s a very low number.” (Source: The Times, 13/06/19)

Pound falls amid rising no-deal threat – The pound is at its lowest in almost six months on heightened fears of a no-deal exit, points out Neil Wilson, chief market analyst at Markets.com. “The calculus is simple – failure to take Britain out of the EU this year risks a General Election and wipe out at the polls at the hands of the Brexit Party, potentially handing Jeremy Corbyn the keys to Number 10,” he says. “The EU says it won’t renegotiate (it may have to), MPs won’t accept the existing deal, and Parliament has limited scope to stop this train. Sterling is increasingly reflecting the no-deal risk.” The pound has stumbled quite badly against the dollar over the past three months, currently at $1.2531, down 0.02% on the day, and is now getting close to a year low. Professor Costas Milas, of the University of Liverpool’s management school, thinks there is a good chance that the pound could rebound if Rory Stewart goes through to the next round of the Tory leadership race, due to his firm stance against a no-deal Brexit. (Source: BBC News, 19/06/19)

Bank freezes rates – The Bank of England has kept interest rates on hold at 0.75% amid heightened no-deal Brexit fears and as UK growth falters. The MPC voted unanimously to keep rates unchanged as it cautioned the “downside risks” to growth had increased since its last set of forecasts in May. The Bank also trimmed its expectations for second quarter growth, predicting GDP will remain flat against a previous forecast for 0.2% expansion, after official data showed the economy dipped by a worse-than-feared 0.4% in April. However, the Bank reiterated that “gradual” rate hikes would be needed over the next three years to keep inflation to its two per cent target. (Source: Financial Times. 21/06/19)

SMEs resilient despite low confidence, study finds – The latest SME health check index by Clydesdale Bank owner CYBG found sentiment among SMEs dropped by 6.6 points to 48.5 in the first quarter of 2019, its lowest rating for a year. The fall was driven by lower SME borrowing and an increase in businesses operating below capacity. Gavin Opperman, group customer banking director, at CYBG, said: “The latest SME Health Check Index paints a picture of resilient SMEs despite low confidence and a reluctance to borrow.” (Source: Yorkshire Post, 13/06/19)

Global slowdown will continue into 2020 – Fitch Ratings has warned that the global slowdown will continue into next year as mounting trade war uncertainty forces businesses to rein in spending and Chinese consumers turn cautious. Fitch trimmed its 2020 global growth forecast to 2.7% from 2.8%. It added that growth would slow a further 0.4 percentage points to 2.4% if President Trump carried out his threat to slap tariffs on the remaining $300bn of Chinese imports and Beijing retaliates. (Source: The Daily Telegraph, 18/06/19)