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Brexit: we're not in Kansas anymore

May 28, 2018
by Eamon Murphy

This Brexit Odyssey is starting to feel more and more like The Wizard of Oz  a yellow brick road to the Emerald City in the company of an uncertain leader and a cast of yearning characters in need of a brain, a heart and courage. At the end of this yellow brick road, those now doing the seeking may eventually discover what they were looking for was what they had all along. 

The clock is ticking on Brexit. Almost two years after the schism, we are really no closer to knowing the final outcome of the trade negotiations. Next month, the EU leaders will convene to review the progress of discussions and try to make sense of the Brexit lexicon. Backstop and max fac; hard border and trusted trader; customs partnership and, most recently, the emergence of a shadowy third option. It’s a mess and businesses are already starting to get stuck in the quagmire of slow growth and delayed investment decisions. For many Irish and UK companies, Brexit has already arrived under a shroud of uncertainty. 

Not for the first time in our history, the Irish border, rendered soft and virtual under the Good Friday agreement, is asserting a powerful hold on political discourse. (It hasn’t gone away, you know.) All sides have agreed that they do not want to return to the bad old days of customs and a border infrastructure, and that sentiment is reflected in the fudge-y backstop agreement. 

It is difficult, however, to see how this can be achieved without the UK remaining part of the customs union  or perhaps a newly-named union that replicates most elements of the old one. Words matter. Utterly. Perhaps then we might end up a very modern partnership but without a union. Everybody wants to go to Brexit heaven but nobody wants to die. 

Businesses do not have any more clarity on the trade arrangements than it had on the morning of 24 June 2016. They can, of course, do nothing and hope to wake up one morning in Brexitland to find (like in The Wizard of Oz) that nothing has changed. It’s possible but unlikely. With all the prevailing uncertainty, we can, however, be sure that business is going to get more complicated but there will also be opportunities as companies seek to relocate from Brexitland. Each business needs to act now and take control of its own Brexit strategy. 

Start with the following: 
  1. 1. Seek help: Talk to government agencies, Enterprise Ireland, trade organisations.
  2. Tariffs: Find out what rates will apply to goods and services produced by your business in the event of no deal.   
  3. Suppliers and customers: Take a look at your supply chain and customer base, and seek to reduce reliance on the UK. This will be easier for some and impossible for others. 
  4. Exchange rate risk: Forget about predicting the market. Devise a hedging policy for foreign exchange and stick to it. For example, always have forward cover in place for the next [x] months' sales. 
  5. Be lean: Take care of the things you can take care of in your own business. Margin, costs, overheads and wages. Conquer your numbers. Prepare a budget and update your forecasts regularly.
  6. Innovate: Stay relevant to your customers - because you can and you must.
  7. Practise céad mile fáilte: because tá siad ag teacht.
Eamon Murphy is a member in business.