VIEW: On mitigating Brexit-related uncertainty

We often hear that political stability is essential for business continuity, yet we find ourselves in a position where we are having an election for a new prime minister while MPs in the candidates’ own party are openly questioning the immediate viability of their most fundamental commitments. It seems that political stability will not exist for a long time to come.

Anything other than an ‘off the peg’ solution to Brexit is likely to come with lengthy periods of uncertainty. A ‘no deal’ scenario will lead to a multitude of temporary agreements, all of which will be less easy to enforce than long-standing agreements. It will be some time before these temporary arrangements turn into a coherent, stable trading relationship with the rest of the world. Alternatives that involve going back to the electorate, either in the form of an election or a referendum will be equally difficult to navigate.

So how do businesses deal with uncertainty, when the very institutions who are supposed to facilitate this are doing the exact opposite? Most serious analysis of the trade risks in an uncertain environment show that regulatory barriers are more significant than tariffs, so for any business that exports from the UK, a strong risk approach has to get back to the basics: understanding the regulatory environment in the markets they export to, understanding the rules they have to comply with, and being able to provide strong evidence of compliance.

Where relationships with overseas regulators have been managed by UK officials, businesses will have to engage and manage relationships themselves. Asking key clients and suppliers to facilitate these conversations and relationships may become a vital tactic – the more local regulators understand the harm a reduction in trade is doing to their own market, the more likely they will be to make life more possible for exporters.

Good relationships are at the heart of most businesses, and uncertainty is another word for a weakening of these relationships. The best mitigation to business uncertainty is for business to take on the task of building those relationships with overseas regulators for themselves.

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