As it stands right now, a no-deal Brexit is looking like the most likely outcome. Despite Boris Johnson saying he would attempt to seek a new deal which removed the Irish backstop arrangement which no one was a fan of, both sides appear now to be locked into a stubborn game of bluff.
The EU is saying that there is nothing to negotiate over. As far as they’re concerned, that is the deal on the table and there is nothing else to say upon the matter. The UK is saying that there will be no more talks with the EU until the Irish backstop is removed from the withdrawl agreement. Those two stances right there mean no meaingful progress is going to be made until one side decides to concede ground. At this moment in time, with neither side willing to look the weaker, thats not going to happen.
Question is: is this bluff and tactics? Are the two sides staying away from the negotiating table in a giant game of chicken hoping that the other side will cave in at the last minute and give in to the other side’s demands? If Theresa May was still in charge and using this approach, I would have said yes. However, we now have Boris Johnson, and he has assembled a cabinet that is genuinely geared towards leaving the EU by Halloween. So no, I don’t think this is all bluff and tactics.
I suspect that as we grind closer to October 31st, there will be talks between the two sides, but it will be about the future relationship rather than the withdrawl agreement. The Irish PM has already said that talks now need to focus on that part of the process, as it now seems almost inevitable that the UK will now leave the EU without a deal.
So, as we head towards the end of October, which will come around quicker than we think, what can we be doing in order to prepare for a clean break with the European Union?
Time to make preparations
The UK is currently undergoing preparations to ensure vital systems and infrastructure continues to function come 1st November. Billions are being spent to make sure businesses continue trading, food and medicine supplies are stable, security remains tight etc.
From a window industry point of view, our companies, especially those who manufacture, should also be making preparation for a no-deal Brexit.
The key factor is making sure they ensure continuation of material supply. That may involve changing suppliers to UK based suppliers and relying less on imported goods. If suppliers cannot be changed, then companies should be hedging now and buying in at least 6 months supply of whatever materials they need from their suppliers who operate on the contient. That should provdide time to make new arrangements once the UK has left the EU and continue to supply their own customers with products.
Staffing is going to be something to look at as well. Many fenestration companies will employ people from Europe. The Government has repeatedly stated that EU nationals will be unaffected by Brexit. That being said, some may decide that its time to go back to Europe, which may leave some companies short on staff. So they will need recruitment plans in place if they find themselves in that position.
Prices may also be affected. Sterling versus the Euro and Dollar is volatile right now, and Sterling has taken a leg lower against both. There is speculation that once a no-deal Brexit takes place parity with the Euro could be a possibility. I’m never wholly convinced on the parity argument, there have been so many predictions that have since proved false. But I do expect there to be a fall in the value of Sterling once we leave initially, so this would have to be factored in. In the longer term, Sterling should recover at least some of what it loses, but will take time.
In terms of business activity and GDP growth, I am not sure what to expect. Some say that the UK will get a short, sharp shock and then return to normal. Some expect a bounce in a no-deal Brexit scenario with the tens of billions promised to the EU able to be spent at home. Given that Christmas will be around the corner when it happens, I think we could see a quiet November as home owners may decide to prioritise Christmas a bit earlier than usual and leave the big ticket purchases like windows and doors on the back burner until at least after the New Year.
Whichever way you look at it, once Parliament returns from recess in September and we really do start to gear up towards a no-deal Brexit, its going to be a dramatic few weeks for the UK.
To get weekly updates from DGB sent to your inbox, enter your email address in the space below to subscribe:
By subscribing you agree to DGB sending you weekly email updates with all published content on this website, as well as any major updates to the services being run on DGB. Your data is never passed on to third parties or used by external advertising companies. Your data is protected and stored on secure servers run by Fivenines UK Ltd.