By Geoff Percival
Irish companies have been advised to plan for the “worst case scenario” regarding the outcome of Brexit.
With less than a year to go until Britain formally leaves the EU, a so-called hard Brexit remains the most likely outcome, PwC has warned.
“The UK’s current unwillingness to consider a customs union, and continuing talk of cherry-picking which arrangements it does or does not want to retain, means that a hard Brexit remains too likely for businesses to ignore,” said PwC Ireland’s managing partner Feargal O’Rourke.
“The only thing we can be sure of is that disruption and change is inevitable — firms need to prepare now for additional costs, border issues, disruption to supply chains and people mobility issues. We, therefore, strongly advise Irish businesses to plan for a hard Brexit scenario taking effect at the end of March 2019,” he said.
Companies need to immediately start assessing their Brexit readiness, in terms of cash flow, Vat, intellectual property, supply chain and authorised economic operator (AEO) status requirements, said PwC.
PwC’s warning came as UK Brexit minister David Davis warned that the British government could veto any final deal negotiated with the EU unless it has a “substantive” idea of what the future trading relationship will look like.
Britain is aiming to secure a comprehensive free trade deal with the EU and wants it to be signed shortly after next March, although there is scepticism about how much can be agreed by then.
Britain’s parliament will vote on a formal withdrawal treaty later in the year — covering issues such as the divorce bill and citizens’ rights — in a potential flashpoint in the Brexit process.
Mr Davis said members of parliament would insist on “a lot of detail” before signing off on any deal because Britain will have to make a payment of about £39bn (€45bn) to the EU to honour its financial obligations to the trade bloc.
“The withdrawal agreement is... a lot of money, and parliament is unlikely to sign off on it unless we can be pretty substantive about what is going to be there in the long run,” said Mr Davis.
Elsewhere, Central Bank deputy governor Ed Sibley said, in a speech at DCU, that Brexit could be one of the most significant events to affect the Irish economy and Irish financial services firms in a generation.
“As regulators, we see enormous challenges ahead, both for ourselves and for the firms that we supervise,” he said.
Additional reporting Reuters