The UK officially left the EU on January 31st which kick started an 11-month long transition period that will end on until 31 December 2020.
What does the transition period involve?
During the transition period, the UK will remain in both the EU customs union and single market. This means travelling to and from the EU, freedom of movement and UK-EU trade will remain unchanged during this time.
However, the UK will no longer be a member of the European Parliament and European Commission so we won’t have any voting rights. Although during the transition period, we’ll still be governed by the European Court of Justice in legal matters.
The transition period gives businesses time to adjust and to make plans for when we fully leave the EU.
What can businesses expect after the transition period?
The EU Market
Because the UK won’t be part of the EU, the privilege of free trade, free movement of goods and services with the 28 country members will be gone. This is likely to have a huge effect on companies who are currently trading with EU member countries.
Customs and duties & export costs
Another issue could be for ecommerce businesses, as goods from the UK to the EU won’t be sold in the internal market, but from a third country to the EU. This would mean that customs duties may apply, making EU trade more expensive for UK retailers in both importing and exporting.
Small and medium size retailers could therefore struggle as they are less able to absorb this cost compared to larger retailers. As a result, imports to and exports from the UK could suffer and the retail sector in general, which is already going through a turbulent time, could struggle.
Consumer and competition laws
The Consumer Rights Act 2015, is a harmonisation of UK and EU laws, as is competition law. It’s likely that these laws will remain intact even after the transition period ends. However, because the UK will not be required to consider the rulings of The European Court of Justice, interpretations of these laws could be subject to change.
What should business owners be doing now?
With all the changes that have been happening in the UK over the last few years, the uncertainty is making things really difficult for company directors.
Some companies are having cashflow problems as a direct result. If you are the director of a company that is finding things tough, we have the experience and expertise to help you decide what the best thing is for you to be doing now. Contact us today.