Brexit requires extensive preparations by Swedish companies
Swedish companies with any form of exposure to the UK will be affected by Brexit. How an individual company is affected is dependent upon the company’s operational area.
However, what is common for most companies is that the consequences of Brexit and the UK’s exit will be extensive, both in the short-term and long-term. Accordingly, it is necessary to analyse how the UK’s exit may affect the individual business. Only then will it be possible to consider what types of risks and possibilities the company faces.
On 23 June 2016, the United Kingdom voted to leave the European Union. The decision by the UK to leave the EU has resulted in uncertainty, speculation and several issues concerning the result. Following both protracted and difficult negotiations, a withdrawal agreement has been negotiated which is intended to govern how the parties will go their separate ways. The agreement is a condition precedent for an ordered UK withdrawal, although the agreement’s status is currently uncertain. There is a significant risk that the United Kingdom will leave the EU on 29 March 2019 without an agreement, a so‑called “no deal Brexit” with extremely serious consequences as a result. Substantive negotiations concerning how future relations between the EU and the UK will be handled have not yet commenced. However, it is already possible at this stage to assess the possible alternatives.
Swedish companies with any form of exposure to the United Kingdom will be affected by Brexit and in many cases these consequences can be significant. How an individual company will be affected is of course dependent upon the company’s operational area. However, what is common for most companies is that the consequences of Brexit and the UK’s withdrawal will affect both the short-term and long-term. In addition to the completely new regulatory framework which is intended to handle the relationship between the EU and the UK, Brexit will also entail changes within the EU. In order to handle these changes, it is necessary for companies to analyse how the UK’s withdrawal from the EU can affect their operations. By understanding the situation in more detail, it will be possible to consider the risks and the possibilities which follow from the withdrawal.
The majority of business relations which in some way involve the UK will be affected by Brexit. The consequences of a UK withdrawal can be extremely far‑reaching and will affect, in principle, all parts of a company’s day‑to‑day operations including:
For companies with some form of exposure to the United Kingdom, this means in turn consequences for their clients, customers, suppliers, subcontractors and other relations which are significant for the company’s operations. Not least, all contracts which a company has entered into with a UK counterparty will be affected. For example, the following aspects may be affected:
In addition to the immediate effects which Brexit may entail for Sweden’s relations with the UK, the UK’s withdrawal will also cause a change of the EU. Sweden’s chief ally and defender of free trade is in the process of leaving an organization which risks becoming more protectionist and more bureaucratic. This is completely contrary to what many Swedish companies desire.
In addition, these consequences can occur within the immediate future. If the United Kingdom leaves the EU on 29 March 2019 without a withdrawal agreement – a “no deal scenario” – then we are facing a potentially devastating state of affairs. Even an ordered withdrawal can have far‑reaching consequences and time is short. The preparatory work must be commenced, or at least intensified, as soon as possible.
Preparations in three stages?
In order to avoid a catastrophic scenario for the company’s operations, it is necessary for all companies which are exposed to the UK to handle the changes which Brexit may entail. It is necessary to understand the consequences and to prepare for the risks or the possibilities which the UK’s withdrawal from the EU entails. There are three overall stages to take into account in this preparatory work.