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KPMG: “Businesses are not making the necessary preparations for Brexit”

Businesses are not making the necessary preparations ..

The date on which the United Kingdom will definitely leave the European Union, March 29, 2019, is fast approaching. At this point in time, the shape of the future trade relationship between the European Union and the United Kingdom is still unclear however.

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KPMG: “Businesses are not making the necessary preparations for Brexit”

According to Wesley Willemse from KPMG: The date on which the United Kingdom will definitely leave the European Union, March 29, 2019, is fast approaching. At this point in time, the shape of the future trade relationship between the European Union and the United Kingdom is still unclear however. “The longer this ambiguity remains, the less time there will be for businesses and regulatory bodies to prepare themselves for the new situation. The businesses that we surveyed for the Ministry of Economic Affairs all indicated that the current ambiguity means they have not been able to do much in the way of preparing themselves for Brexit. We not only heard this from the businesses we surveyed, but we are also hearing this from our clients.”

Act quickly

Despite this uncertainty, it is important that businesses quickly investigate the potential impact of Brexit on their organization.

Willemse: “They must, for example, ask themselves how many shipments are sent to the United Kingdom each year or how many arrive from the United Kingdom. And what type of goods are involved. Another question that also needs to be asked is whether additional measures apply to these goods. Are the goods dispatched in large consignments or in small shipments addressed to individual customers? The implementation of mitigating measures is very time-consuming.

Waiting to take action until Brexit is almost a fact, will mean that businesses will be pinched for time and it may then be too late to implement possible solutions. Such an analysis can already be performed and does not have to wait until the outcome of the negotiations between the United Kingdom and the European Union.”

Considerable increase in costs

KPMG’s survey shows that import and export costs will, in any case, each year increase by EUR 387 million to EUR 627 million. This is excluding customs duties and VAT expenses that have still be calculated and as yet unknown sector-specific market entry requirements.

Willemse: “Specific requirements per sector include having to obtain phytosanitary and veterinary certificates and having these inspected, CE marking obligations or obligations arising from REACH regulations.

There is a risk that EU and UK requirements and standards will diverge after Brexit. It is still unclear precisely how this will pan out.

The survey identified potential consequences, but the associated costs have not yet been translated into figures. For example, the business sector expects that supply chains will have to be redesigned as a result of Brexit. The one-off costs for this are expected to be far more than the cost estimates in the survey.

New external EU borders

Willemse points out that one important consequence of Brexit is the creation of new external EU borders in the Netherlands.

Willemse: “This will create a significant additional burden on government organizations such as Customs, NVWA (Netherlands Food and Consumer Product Safety Authority) and KCB (Quality Control Bureau).

Much of the physical trade with the United Kingdom is by ferry across the North Sea. The current infrastructure in the ports where the ferries berth, both in the Netherlands and in the United Kingdom, is not yet suitable to act as an external border. Also important in this respect is the physical space needed for car parks and waiting areas for motor vehicles and trucks.”

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