UK Company Formation

Brexit’s Long-Term Impact on UK and EU Businesses

Following the Brexit referendum in 2016, the United Kingdom officially left the European Union on 31st January 2020 and since then, the landscape of business has undergone significant transformations. Brexit not only redefined trade relations but also altered the legal and operational frameworks, impacting businesses of all sizes in both the UK and EU. 

Although we are now four years on, the UK’s departure from the EU has continued to impact the business environment and it’s important to consider the long-term impact of leaving the world’s largest trading bloc. How Brexit has affected businesses and will continue to affect operations differs from one industry to another, and some will be more effective than others. In this post, we have explored Brexit’s ongoing impact on UK and EU businesses, providing strategic insights for businesses aiming to adapt and thrive.

Imports and Exports

Brexit marked the end of the UK’s participation in the EU’s single market, impacting the movement of goods, services and capital. Whilst it was hoped that although it would become harder to trade with the EU, it would be easier to trade with other non-EU markets, this hasn’t necessarily been the case. The implementation of tariffs and trade barriers that were previously non-existent has had a significant impact on businesses. 

  • Increased Costs and Delays – Businesses face higher costs and longer waiting times for the import and export of goods due to new customs borders between the UK and EU, resulting in border checks and documentation. The Trade and Cooperation Agreement (TCA) has forced businesses to explore alternative logistics solutions to streamline customs processes and reduce waiting times.
  • Supply Chain Disruptions – The complexities of cross-border trading have resulted in businesses reassessing and sometimes, restructuring their supply chains to maintain efficiency. Following Brexit, some businesses are adopting more localised supply chains or diversifying their supplier base to enhance resilience against future disruptions, ensuring a more stable and reliable flow of goods and services.

Legal and Regulatory Changes

One of the main reasons why the Conservative Party wanted to leave the European Union and become a fully independent, sovereign country was to be less restricted by EU regulations. However, the TCA has increased the red tape for many businesses and made it more difficult for them to operate. The divergence between UK and EU legal frameworks presents some opportunities for businesses, yet many remain concerned about the challenges they face. 

  • Regulatory Divergence – Many businesses continue to comply with European-wide standards for a number of product categories, especially when trading EU-wide. However, the UK now has no control over the way new EU standards are developed. When trading in different areas, businesses must navigate differences in things like product standards, data protection laws and industry-specific regulations, requiring additional resources for compliance. 
  • Market Access – The loss of passporting rights means that UK businesses must comply with the different requirements or establish a presence within the EU to continue operating freely across the market. This is where the role of a European company formation agent becomes invaluable. Establishing a presence in the EU not only allows for continued market access but also provides an opportunity for businesses to reassess and potentially expand their operations.

Business Operations and Workforce Mobility

Brexit has significantly impacted the day-to-day operations of businesses in the UK and resulted in employment problems for many sectors. Not only have the changes in laws and regulations impacted the way businesses work, but also who can work for them. This has had a knock-on effect on ongoing success and the growth trajectory of many businesses. 

  • Workforce Challenges – The end of free movement between the UK and EU affects the recruitment of talent, with visa requirements now in place for employees wanting to work across borders. This shift requires a more strategic approach to recruitment and many businesses are having to invest more in local talent and employee development in the workplace. Flexible, remote working models have become essential for many too. 
  • Operational Adjustments – Businesses have had to adapt their operations to mitigate the impact of new trade barriers, including setting up subsidiaries or partnering with local entities in the EU to maintain market access. These adjustments have caused businesses to reassess their market strategies, focusing on strengthening relationships with existing customers and exploring new markets to compensate.

Strategies for Adaptation and Growth

More so than before, businesses need to adopt a proactive approach to navigate the complexity introduced by Brexit. Some strategies have proven to be impactful for growth across a range of sectors and markets; 

  • Leverage Expertise

Working with a European company formation agent can provide businesses with the necessary guidance and support for establishing or expanding their presence within the EU. This expertise not only simplifies the process but also ensures that businesses can take advantage of the most favourable market opportunities.

  • Diversify Supply Chains

Businesses should explore the option of diversifying their supply chains to mitigate risks associated with border delays and tariffs. By having multiple sources for materials and components, businesses can reduce potential bottlenecks and maintain steady production flows, ensuring customer demands continue to be met promptly.

  • Stay Informed

Keeping up-to-date with regulatory changes is crucial. Businesses must maintain a good understanding of the evolving legal landscape to remain compliant and competitive. Regular consultation with legal and trade experts can help businesses anticipate and prepare for changes, minimising disruption to operations.

  • Embrace Digital Transformation

Digitising operations can enhance flexibility, allowing businesses to respond more effectively to the changing trade and regulatory environments. Investing in digital tools and platforms can also improve efficiency, reduce costs and provide new opportunities for business development and customer engagement.

Working with a European Company Formation Agent 

It’s fair to say that Brexit presents ongoing challenges for businesses operating between the UK and the EU. However, with challenges come opportunities for adaptation and growth. By understanding the new trade and regulatory landscape, and implementing strategic changes, businesses can continue to navigate the post-Brexit landscape. 

The role of a European company formation agent is more critical than ever, offering businesses the support and guidance needed to adapt, grow and thrive in this new business environment.

Our team at Company Formation Org is here to help. With many years of experience, we offer a vast range of services and we’re here to support you every step of the way. There’s nothing we can’t arrange for you and our multilingual staff can streamline many key processes for you. If you have any questions about how we can help, don’t hesitate to contact us today.