by Daniel Theron of Giambrone Law

Businesses operating in the UK are well aware that they are facing the double challenge of Brexit and coronavirus whilst treading the shifting sands of an ever-changing British Government’s stance on these twin perils and the consequential effect on their ability to do business. 

The recent Government announcement increasing the level of restrictions in an attempt to control the spike in the transmission of covid demonstrate more than ever that the key factor for business survival is agility, particularly when even sound contingency plans have the potential to be derailed unexpectedly. Only businesses that are fast on their feet and establish variable contingency plans are likely to get through without any major risks to survival, providing their industry sector is not one that has its hands tied due to the nature of its category. 

The stop/go covid rules imposed together with a brinkmanship Brexit strategy make it almost impossible for the majority of businesses to find a guaranteed way of planning for the future whilst attempting to find a way of doing business facing the challenges in the immediate future. It is unsure what the terms of the final Brexit deal will be, whether deal or no-deal, but the response from commentators generally suggest the British government’s stance may be an attempt to refocus the minds of the EU negotiators and demonstrate that Britain will not blink first.  

Regardless of the marginally fading likelihood of a no-deal Brexit, such an eventuality is still possible and would result in the UK trading on World Trade Organisation terms, with significant tariffs on many goods imported and exported with its former European Union trade partners will almost certainly result in the collapse or near collapse of many cross-border UK based businesses that are, like the rest of the world, also wrestling with the effects of diminished trade due to the covid pandemic. 

The scenario opens the door to commercial opportunities for businesses with access to other trade routes to step in and fill the gap in the supply of commodities that were previously easily sourced from Europe and now possibly face a lorry log-jam and a paperwork storm at the ports. UK must look further afield to find trade deals; earlier this year Alok Sharma, Secretary of State for Business, Energy and Industrial Strategy, stated “I want the UK to be the investment partner of choice for African nations, by creating new and lasting partnerships that benefit businesses and people in Africa and the UK alike. UK businesses are already leading the way in investing in Africa.”  A closer relationship between the UK and South Africa in the shape of investment opportunities should lead to the building of a closer and stronger trade relationship to maximise the unique opportunities that Brexit provides.

Astute business owners will recognise a “once in a generation” business opportunity that Brexit affords and will be first in the queue to take advantage of the commercial possibilities.

Daniel Theron

Daniel Theron, a partner who works between London and Glasgow, commented, “business owners must work to find the best model for them. It is in everybody’s interests to keep trading in such challenging times. There will never be a better time to re-ignite a commitment to trade between the UK and South Africa.”  

The 2018 UK business delegation to South Africa, the first for some years, aimed at promoting economic ties with Africa, confirmed an agreement with the Southern African Customs Union and Mozambique, which will roll over the terms of their trade deal with the EU to apply to the UK after Brexit.

Business owners will not need to be told that the struggle to maintain sufficient trade to combat the effects of the measures imposed to deal with the transmission of coronavirus will be ongoing and continuous effort is required to find ways to keep going or to find ways of doing business differently. The Furlough Scheme, paying 80% of wages will be continued in light of the present situation.  The Job Support Scheme will be introduced as soon as the extended period of the CJRS ends.  Should a business need to add a member or members of staff to the Furlough Scheme such additions should be made in writing.  Many organisations, particularly in the hospitality sector that has been so badly affected, are employing imaginative solutions to keep at least some business coming their way. 

A key factor for businesses in the current circumstances is their commercial insurance policy, in particular, the terms relating to business interruption. The recent successful case brought by the Financial Conduct Authority (FCA) against eight insurers aimed at clarifying the wordings in the policies to make clear whether or not the business interruption clauses can be relied on has brought a degree of clarity to several aspects, however there are still areas of liability that will be subject to robust discussion and there are a number of clauses that may provoke disputes between an insured and the insurer in the future. Any business that challenges their insurer would be well advised to do so with the advice of a legal expert who can navigate through both their policy and the High Court judgment to ensure that there are no escape hatches or loopholes the insurers can slip through.

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