UK to leave the single market

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Summary
In a speech today, the UK Prime
Minister Theresa May acknowledged
that the Government might have to
accept a so called 'hard Brexit'. If that
is the case, and the UK withdraws
completely from the European Single
Market and the Customs Union it will
have a major impact on the UK's
trading relationship with the Union.
Under the single market and customs
union, very few formalities are
required when goods move across
international borders. However, a
'hard Brexit' is likely to mean that the
UK will revert back to a system of
imports and exports with a customs
entry required for each movement of
goods.
Affected businesses need to
understand the implications and take
appropriate steps now to prepare for
this potentially huge change.
17 January 2017
UK may be heading for a 'hard Brexit'
The benefits of the single market and customs union for UK businesses are many. As an
example, a business selling goods to another business established in a different Member
State is, under the current system, able to move goods without having to make an export
declaration or have the goods cleared by Customs. Similarly, a business purchasing goods
from another Member State can bring the goods to the UK without the need for an import
entry. The formalities of import and export procedures will be lost if, as the UK's Prime
Minister indicated in a speech today, the UK is required to take a 'hard Brexit' from the
European Union.
The new import and export formalities are likely to have a major impact on affected UK
businesses and their respective supply chains. Not only will goods need to be declared for
import or export, but such movement of goods will also face the imposition of customs
tariffs and import VAT. Whilst the majority of businesses will be able to reclaim any such
import VAT, the addition of customs duty is likely to lead to an overall increase in costs
which, in turn, would be passed onto the final customer.
Mrs May has indicated that the Government could trigger Article 50 in the first quarter of
2017 with the UK, therefore, set to leave the EU sometime in Spring 2019. Affected
businesses cannot afford to wait until then to resolve the impact of a 'hard Brexit'.
Businesses that currently trade with other Member States of the EU should take a look now
at their systems and logistics. Ultimately, if Brexit is 'hard' and the UK leaves the single
market and customs union, businesses will need to hit the ground running on Brexit day. In
order to do that, businesses need to really get to grips with their international supply chain
now. Clearly, a 'hard Brexit' will have cost implications and the sooner those costs are
calculated and budgeted for the better.
Comment – Mrs May hinted that the UK may negotiate a deal to remain partially or
wholly within the customs union but made it clear that the UK will not remain
within the single market. It therefore seems quite clear that the UK will be
required to adopt a 'hard Brexit' strategy. This will have implications both
logistically and economically and all affected businesses need to take action now to
establish how a 'hard Brexit' will affect them.
Businesses urged to prepare for 'hard Brexit'!
Brexit Alert
Contact
Stuart Brodie Scotland stuart.brodie@uk.gt.com (0)14 1223 0683
Karen Robb London & South East karen.robb@uk.gt.com (0)20 772 82556
Vinny
McCullagh
London & South East Vinny.mccullagh@uk.gt.c
om
(0)20 7383 5100