Britain’s vote to leave the EU stunned the world and sent shockwaves through the global financial markets. While the initial shock has faded, it's still unclear the impact Brexit will have on global commerce.
The decision – the first of its kind – calls for Britain to renegotiate all new international agreements, and will have substantial implications on the movement of people, products and money around the world. The UK & EU have 2 years to agree to the terms of the split, so it is still unknown what kind of deal they will strike when it comes to the flow of people and goods. British and EU laws will need to be disentangled and new trade agreements and immigration laws signed.
Here are the 5 things enterprises need to do today to prepare for the final split:
1: Audit your contract portfolio
Audit your contract portfolio and determine the effect Brexit will have. Things like increased trade barriers, movement of people, currency fluctuations and jurisdiction may all be impacted.
2: Concentrate on your staff
The supply of labor seems to be the most immediate issue as freedom of movement may be restricted. Given immigration was one of the driving forces of the vote it is unlikely expats will have the right of free movement and employment post-Brexit. Other British employment rights such as healthcare, benefits and pensions will need to be rewritten as EU laws will no longer apply.
3: Investigate force majeure clauses
Investigate all force majeure clauses to renegotiate contracts that are impacted by Brexit.
4: Prepare for foreign exchange and currency issues
Prepare for foreign exchange and currency issues that may affect commercial contracts. If a contract is pegged to the Euro or Sterling, be aware of swings in the market following Brexit negotiations. Parties may want to renegotiate or include re-price or switch currency clauses.
5: Understand data protection risks
The General Data Protection Regulation (GDPR), set to reform the rules on May 25th, 2018, aims to give citizens back control of their personal data and is said to be one of the most significant privacy laws enacted yet. The new protection act will take place before the 2-year expiration, so it will be law in the UK until Brexit and potentially even afterwards. With over 50% trade going to the EU, the UK may have no exit from the GDPR.
Considering 80% of business transactions are tied to contracts, visibility and knowledge of the entire global contract portfolio is necessary. Until Brexit takes effect it's business as usual, but isn't it better to be prepared?