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Moving forward

What does the UK’s new post-Brexit relationship with the EU mean for your business?

The post-Brexit transition period has ended, marking the start of a new trading relationship between the United Kingdom and the European Union.

On 24 December 2020 a Trade and Cooperation Agreement between both parties was announced, one which governs trade relations from 1 January 2021.

Barclays is here to help you navigate any changes to your business that may arise as a result. Anyone involved in importing and exporting will probably see the most obvious and immediate differences, but the implications of the agreement are likely to be felt in at least some way by many UK businesses. It’s therefore important to understand how yours may be affected, in order to be fully prepared to take advantage of opportunities that may emerge in a new era for UK-EU trade.

While some aspects of the trade agreement are likely to affect all businesses, others are specific to certain industries. We've examined the likely impacts across several key industry sectors, and have also outlined some steps that may help you to adapt. Click on the tabs below to find out more.

All businesses should think broadly about how they might be affected, considering both opportunities and potential challenges. The trade agreement could give you confidence to push into new markets, for example, or to firm up investment plans. On the other hand, the need for additional customs formalities could create some additional costs. 

Businesses should also consider how their supply chain could feel any knock-on effects. Even if you don’t trade directly with the EU, your suppliers may incur additional costs or experience longer lead times. These could have implications for your own business, so ensuring sufficient cashflow should be a priority and you may wish to consider the additional protection that invoice insurance could provide.

EU workers employed in the UK might be affected by the new immigration and residency rules, so the businesses in question should understand how they can help their existing employees or act as an approved employer sponsor for new arrivals. 

GDPR will remain in UK law and the transfer of personal data to and from the EU can continue as before until at least 1 May 2021. We await further clarification of how data will be treated in the future, but businesses may need to take additional steps to ensure cross-border transfers of data remain lawful.

If operational changes are required in your business now that the transition period is over, you may want to consider how these can be designed to take advantage of the opportunities created by the UK’s new trading outlook. The UK government is likely to issue updated guidance in the weeks ahead, so businesses should continue to check the latest advice on Gov.uk.

Talk to your Business Relationship team to discuss how we can help. We can provide access to financial products, such as asset financeinvoice finance, invoice insurance and ongoing guidance on the changing requirements of cross-border trade. Our Business Banking team can also advise on working capital arrangements that might help deal with any cashflow or supply chain disruption. Times of change typically foster creativity and innovation. With the right support, UK businesses can continue to thrive.

Hannah Bernard, Head of Business Banking, Barclays

  • SMEs

    Ian Workman, Co-Head of SME Business Banking, Barclays

    There will be direct and indirect impacts from the UK’s new trading relationship with the EU – and it’s crucial that businesses consider both. Direct impacts are easier to assess. If you’re importing goods from Europe, the need to make customs declarations on those imports is a clear direct impact. But there will be many more businesses who are affected indirectly, such as those who deal with a wholesaler that imports from the EU. 

    Increased border checks might mean supplier lead times will be longer, or the price of imported goods might increase, which could have a knock-on effect on margins and cashflow. That might require mitigation but may also create opportunities for UK businesses. If European goods become more expensive, home-grown goods could become comparatively cheaper. Consumers may increasingly choose to buy British.

    The starting point for understanding any impacts of the trade agreement is a review of your cashflow forecast and working capital cycle. If goods will take a week longer to be delivered, you can work out how much cash is going to be tied up in that delay. Some businesses will be able to cover that with savings. Others may need to think about arranging an overdraft or a loan. That’s where Barclays can help. Our relationship managers can talk to you about cashflow, working capital cycles, and what options are open to you to mitigate any risks.

    Businesses that are directly involved in importing and exporting will have to ensure they comply with the new customs procedures. For some businesses, those new requirements could mean hiring additional resources – a cost to be considered. Our Specialist Client Solutions team can offer guidance on importing, exporting, and trade documentation. We’re also running webinars to help customers understand the new requirements. 

    Businesses that adapt quickly will be well placed to capitalise on the UK’s new global outlook. There will be an increasing number of international markets to explore as trade agreements are struck with non-EU partners. Businesses will be able to draw on skilled labour in the UK while attracting talent from the rest of the world. The end of the Brexit transition period will no doubt create some costs, but there will also be plenty of opportunities for British SMEs.

  • International

    Pam Bryant, Head of Specialist Client Solutions, Barclays

    With the Brexit negotiations finally concluded, those businesses trading abroad should assess how the new trading relationship will affect the flow of goods, services, money and data across borders. There may be cost implications to consider, but the trade agreement also opens up new markets and could pave the way for international growth.

    In the short term, the need for customs declarations and any border delays could create additional costs which require changes to business pricing models. Some exchange rate fluctuation may take place now the Brexit transition period has ended, although markets will have priced most concerns into rates before the end of 2020. Any fluctuations can be mitigated with an effective FX strategy based on incoming and outgoing currency flows and budget rates. If necessary, there are further steps that can be taken. The right strategy will depend on a business’s risk appetite. Currency accounts are one way to manage FX risk. Hedging products and services are also available.

    Businesses will need to make sure their arrangements for managing personal data remain lawful. GDPR requirements have been retained in British law, but may be reviewed by the UK government at some point in the future. The EU is yet to complete its data adequacy assessment of the UK, but transfers of personal data between the UK and EU will be allowed until at least 1 May 2021 without any additional legal requirements. We await further clarification of how data will be treated in the future, including whether UK businesses that send or receive data to or from organisations in the EU will need to have additional safeguards in place.

    Businesses that can remain flexible and responsive will be at an advantage as the full impact of the new trading relationship becomes clear. We run regular webinars on both trading abroad and how to make your business digital and you can also get in touch with our Specialist Client Solutions team to discuss how Barclays can help your business.

  • Manufacturing

    Andrew Lawrence, Head of SME Banking for the North East and Cumbria, Barclays

    According to trade body Make UK, 97% of all UK manufacturers that export send their goods to the EU1,  so a new trading relationship with our main export partner will affect almost every manufacturing business. It’s important to think broadly about how your operations might be affected, and where opportunities may arise, in areas ranging from access to skills and talent through to data and cybersecurity.

    Barclays can help as you adapt to these changes. In the first instance, understanding cashflow should be a key focus for any manufacturing business. Change always has the potential to cause disruption and even the most profitable businesses can face problems if cash dries up. Cashflow forecasting is therefore now more crucial than ever, and should take into account the potential impact of more stringent border checks and enhanced customs requirements. Talk to us if you need guidance on how best to do this.

    Now is a good time to talk to your other partners and discuss how the trade agreement may change how you do business. Effective supply chain management will be crucial, particularly for businesses operating on a just-in-time model. Check in with suppliers and discuss their operational plans for the coming months. 

    There is still much we don’t know about how cross-border trade will be affected. Fluctuations in exchange rates may affect costs and the competitiveness of imports and exports. Trade agreements struck with non-EU countries could open up new international markets for many businesses in the manufacturing sector. But the end of the Brexit transition period at least provides some certainty about the UK’s relationship with the EU. We’ll be on hand to discuss options to help you mitigate any risks and plan for the future with confidence. 

  • Agriculture

    Mark Suthern, National Head of Agriculture, Barclays

    One of the key things any agricultural business can do to avoid post-Brexit disruption is to examine its own supply chain. Whatever you are growing, rearing or producing, it’s helpful to know where it’s going. It’s also important to know where your raw materials are coming from. Really understanding your supply chain can help you mitigate cashflow risks and identify opportunities. 

    Many farmers deal with third parties and do not export goods directly to the EU. Those that do export directly should review the new export requirements for changes to certification and other documentation. Exports to the EU will now be subject to customs declarations, which can be prepared in-house or by a third-party courier, freight forwarder or customs agent. From a practical perspective, any business exporting to the EU must register for an EORI number if it has not done so already. As the UK strikes trade agreements with other countries, there will also be new rules to consider when importing and exporting to and from the rest of the world so it’s worth keeping up to date with the latest guidance on Gov.uk.

    We began to see the impact of Brexit on agricultural labour in 2020 and those issues are likely to become more pronounced throughout 2021. Businesses should examine the UK’s new points-based immigration system to understand where they can attract labour from. 

    It’s worth noting that the government is to allow farmers to bring in 30,000 seasonal workers from overseas in 2021 – three times more than 2020 – to help pick and pack fruit and vegetables2

    The extension of the seasonal agricultural workers’ scheme, which will apply to EU and non-EU workers, comes after a difficult harvest in 2020 during which farmers feared fruit and vegetables would rot in the fields as they struggled to employ enough workers. A Pick for Britain campaign attracted about 8,000 local people. This was about 11% of the total workforce, according to the National Farmers’ Union, a massive increase from the 1% of pickers and packers who were British citizens in 20193

    And taking the sector as a whole, there will be many people in the UK that may welcome the opportunity to have meaningful careers in agriculture and there will be some exciting opportunities to explore – now and in the future. 

    There are, however, some significant financial changes on the horizon for agricultural businesses. As part of its post-Brexit farming strategy, the government plans to phase out subsidies paid through the Basic Payment Scheme. Instead, it intends to replace these with initiatives such as the Environmental Land Management system, which will incentivise outcomes including biodiversity and climate change mitigation. Now is the time for farmers to review their business plans and talk to us about the financial support they might need.

  • High growth

    Juliet Rogan, Head of High Growth & Entrepreneurs, Barclays

    Access to funding is crucial to the high growth sector. Many equity-funded businesses will have sought to close off funding rounds before the end of the transition period. If that wasn’t possible, businesses should seek to understand the likely impact on cashflow if investors choose to sit back and assess the detail of the UK and EU’s post-Brexit trading relationship.

    If your funding plans are affected, Barclays may be able to help. An overdraft or loan is one way to tackle a short-term cashflow problem. Our partnerships with MarketFinance and Propel mean customers can also access invoice finance and asset finance services. Speak to your relationship manager for support on the right solution for you.

    Access to global talent is a priority for high-growth businesses. The UK’s new points-based immigration system will limit access to the EU workforce, but will also create opportunities to hire talented individuals from the rest of the world. The responsibility for compliance with immigration rules lies with businesses, rather than individuals, so be sure to understand visa requirements if hiring from overseas. 

    This is an opportunity for all businesses to assess their growth strategies. For some businesses that may mean reining in expectations, at least for the short term, but others will find ways to accelerate their expansion. For many high-growth businesses, disruption isn’t something to be feared – it’s integral to their plans. Now is the time to reflect, consolidate and grow.

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This article has been prepared by Barclays Bank PLC ("Barclays") and is for discussion purposes only.

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