News & Insights

‘No Deal’ - Get real, cats will not eat dogs, planes will not fall out of the skies!

26 Jul 2018

London

According to the Times, Doug Gurr, Head of Amazon UK, told participants at a meeting organized by Brexit Secretary Dominic Raab that the online retailer is planning for the worst-case scenario in the event of a 'no deal' Brexit.

The Times also reports that Gurr told the other guests, among them chiefs of Barclays, Lloyd’s of London and Shell, that the possibility of civil unrest is being considered as part of Amazon’s contingency planning.

An Amazon spokesman declined to confirm or deny the comments but told media: “Like any business, we consider a wide range of scenarios in planning discussions so that we’re prepared to continue serving customers and small businesses who count on Amazon, even if those scenarios are very unlikely.

“This is not specific to any one issue – it’s the way we plan for any number of issues around the world.”

The warnings come as Raab refused to set out details of the government’s 'no deal' plan, despite him insisting the UK would “thrive”. He condemned “hair-raising stories”, about food being stockpiled and motorways turned into lorry parks if the UK crashes out of the EU without a trade deal.

Brexit Partners Opinion

Planning for a 'no deal' is good business practice at this stage. Comments like civil unrest within two weeks of Brexit are not particularly helpful and are inconsistent with current public and investor sentiment.

It is Brexit Partners view that a 'no deal' scenario requires careful definition. A 'no deal' is being portrayed by some as a doomsday scenario. It is true, there may be major social and business issues which need to be addressed especially if firms, state agencies and other organisations fail to plan.

A 'no deal' is likely to result in an uncoordinated approach over an unspecified period of time to normalising processes and relationships. Priority is likely to be given to those areas of greatest immediate pain. Likewise neither the UK or EU are likely to exacerbate issues if they can be avoided.

In other words... a 'no deal' equals a gradual series of formal deals with additional complexity and uncertain timing.

Corporations, state agencies and other organisations need to factor into their 'no-deal' contingency planning what we know, for example:

  • Britain leaves the EU at the end of March 2019 without a transition period.
  • Britain does not contribute to the EU budget.
  • Trade will continue but with tariffs and customs duties.
  • The Irish government will establish border posts with Northern Ireland.
  • Residency rights will disappear for EU citizens.

They also need to make some informed predictions or assumptions. These might include:

  • Britain will maintain regulatory alignment with the EU for as long as is practically possible to minimise disruption.
  • Other than financial services, the services industry will continue to trade largely as normal.
  • Short term investment by UK firms in the EU and vice versa will fall considerably.
  • Significant business concerns over double taxation and withholding tax on dividends until bi-lateral tax agreements are put in place on a country by country basis.
  • UK trade with the EU will initially rise in the absence of bilateral trade agreements with other countries. Think about that one!
  • Residency issues will be overlooked where citizens are already settled.

This article was written by Dr. Ray Nulty, Managing Partner of Brexit Partners. For more information on how to get in touch with Ray or any of the leadership team, please visit www.brexit-partners.com. 

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