The current noise around Brexit makes me think the PM must be getting it right given she is being attacked from both extremes of the debate.
The reality is that we are in a long process (but with the distinct possibility of a crash-out hard exit early next year), with limits to any real clarity before its end, and as retailers we should be focusing on the things we need to sort out rather than expect any help.
A three-year process
We leave the EU formally on March 29, 2019, which in planning terms is no time at all; indeed, many retailers have buying plans already locked down for then.
The most likely outcome is we’ll have a two-year period after that, during which a) not a lot changes and b) we negotiate all the enormous amount of detail on the trade deal.
This all assumes, however, that we see agreement this March on the framework deal. If that fails then we head for crash-out, not ideal but not impossible, as nothing is concluded until everything is concluded.
Expect a lot of heat and noise in March and bumps in the road after that.
There is no master plan
Many people seem to assume that we are being kept in the dark and there must be a master plan that is locked in Number 10.
The reality is a) this is a hugely complicated negotiation – and you don’t want to disclose your bottom line publicly; and b) there are over 300 workstreams identified by the Civil Service on themes and industries which are ramping up now.
“There is no Civil Service plan to scupper Brexit, and with Labour supporting it, it will happen – even if we don’t know exactly how.”
Sir Ian Cheshire, Debenhams
The need for new borders (trade and immigration) is probably the most discussed, but examples such as energy are vital – Northern Ireland gets all its power from the Republic; how is that going to work next year?
There is also the press comment that no one is running this top-down, making the trade-offs. First, it’s too early to get those trade-offs in detail, and secondly there will be someone in charge, and it will be Number 10.
Finally, there is no Civil Service plan to scupper Brexit, and with Labour supporting it, it will happen – even if we don’t know exactly how.
Act on what we can control
We know some things are going to change even if the dates are unclear. Many of us have already felt the impact of Brexit in the abrupt drop in sterling, affecting our intake margins, even if recent data is making that less severe.
My assumption is we will remain about this level rather than recover to $1.55, and we should start making plans for tariffs from the EU, and looking for more non-EU suppliers.
“Whether we crash out next year or have three years of business as usual, the exit will come and we have to play what’s in front of us”
Sir Ian Cheshire, Debenhams
Secondly we will see the impact of EU labour withdrawal in key sectors such as hospitality – the city centre coffee shops are the most obvious, but this could also really hurt the agri supply chain.
Investing in labour productivity will be a no-regrets strategy for all of us.
Finally, those of us with Irish businesses should all be planning a detailed solution for the supply chain there, as that is the biggest cross-EU challenge most of us will face.
Whether we crash out next year or have three years of business as usual, the exit will come and we have to play what’s in front of us, rather than make unrealistic demands of politicians who are grappling with the biggest challenge of the past 50 years.
Hang on tight, it’s going to be bumpy.