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Bend It Like Brexit: Navigating Uncertainty in a Post Brexit World

 

In a post Brexit world, there’s no such thing as a sure thing. The speculation on business outcomes as a result of Britain’s split from the EU reaches far and wide affecting every nook and cranny of European business models. It’s causing Finance and executive teams everywhere to ponder the uncertain future of the business and what trials and tribulations are about to come their way. Internal market changes, tax, deregulation, financial regulations, and trade agreements are all facing a tidal wave of change, positioned to affect Europe’s economy drastically, especially as other countries embark on their own referendums.

 

While the split itself is mired in protocol, amongst the conditions of the split and negotiations of trade agreements, there’s a slew of projected consequences and potential outcomes facing European businesses. In a series of reports PWC has broken down these speculations.

 

They speak of market volatility which could spark at any moment, of recession, and economic shrinkage. In one report, they cite a Bloomberg study conducted after the vote where, “almost three quarters of the respondents said they expect the economy will slip into a recession. Of the 25 economists consulted by Bloomberg about the timing of a recession, about half indicated this will take place this year, while the remainder expects the recession to start next year.”

 Deal with the uncertainty of Brexit

 

 

While death and taxes remain the only certainty at this point, trade in the EU will surely take a hit. PWC played out a two scenarios that could come to fruition.

First, with regards to trade there could no new agreement, which would mean any trade with Britain would follow the same WTO guidelines as any other third country. If this is the case, PWC reports, “In the event of the WTO conditions applying, the CPB predicts a 13% increase in trading costs for goods. The costs for the trade in services will also increase by about 13%.”

There is, of course, the possibility that a new trade agreement could be drafted allowing the UK to circumvent standing EU rules, but this could take time - a lot of time, especially considering the EU is currently conducting negotiations with the US, Japan and India, amongst others.

 

The coming months will reveal a lot, especially with the election of a new Prime Minister and as the protocol and logistics behind the UK’s withdrawal play out. In the meantime, PWC suggests that businesses start asking themselves to analyze their organization’s relations with the UK and how those channels could be affected by every any possible scenario. Does your company use the UK as a gateway? Where is your largest customer base in Europe? How will your revenue be impacted? How does your supply chain function in Europe?

 

Only time will tell how Brexit plays out. From revenue models, to supply chains, to finance and treasury structures, HR, legal compliance, regulatory, data protection, and taxes - we can be sure it will leave no aspect of European business untouched.

 

How can your business get out unscathed? As PWC recommended: through understanding. Now more than ever, visibility into your business’ operations and financial inner workings is paramount. But even more than that is using that visibility to play out risks and forward looking scenarios to better understand how factors like increased taxes, talent models, outsourcing and trade will be affected, and what you can do to prepare for or minimize the impact. What-if scenario planning, business modelling and driver based planning capabilities have never been more important to the resilience of businesses in a time where change isn’t a probability, it’s a guarantee.

 

When the only certainty is uncertainty, the best way you can prepare is being certain that your financial processes and business operations will help you prepare and support you in your decision making before any maddening changes come to fruition.

 

Learn more about how Tagetik can help you become more resilient in a post-Brexit world.

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