Poland tells businesses to prepare for extra costs and disruption as Brexit approaches

Poland tells businesses to prepare for extra costs and disruption as Brexit approaches
By bne IntelliNews September 12, 2018

The outcome of UK negotiations to leave the European Union is uncertain even in the base case scenario of a so-called “orderly Brexit” and Polish companies should prepare for extra costs and disruption in doing business with Britain, the Polish government said in a guidance document on September 12.

The “Brexit. What an entrepreneur needs to know” document is the first publication by the Polish government addressing problems that might emerge for the Polish companies after March 20 next year, the date the UK leaves the EU.

In the “orderly Brexit” scenario, Polish companies will continue to benefit from a no tariff regime in trade but will also need to face a number of inconveniences or costly obstacles, the document says. 

For example, businesses will need to conform to UK rules in order to have their products accepted post-Brexit or account for disruption of logistics chains because of border controls.

That will continue at least until the end of the post-Brexit transition period on December 31, 2020, by which time the EU and the UK are expected to have struck a brand new relationship deal, including trade.

The “hard Brexit” scenario, however, which the document says cannot be ruled out, will bring about much more adverse business conditions. 

The EU and the UK will trade under WTO rules, meaning a thorough shake-up of the current rules, including introduction of tariffs, tightened border controls, or conforming to UK’s own – and possibly different from the EU’s – tech or sanitary standards.

“It is worth using the remaining time to prepare for possible scenarios in the best possible way and customise your business model to the new circumstances,” the document said. 

“Regardless of the final shape of future relations between the EU and the UK, every entrepreneur should reckon with difficulties in trade exchange. Those could be bigger business costs, lengthened and complicated procedures or the necessity to meet specific requirements,” the document warned.

The UK was Poland’s third most important export destination at the end of July, data from stats office GUS showed, also on September 12. Exports to the UK made up 6% of Poland’s overall sales abroad, a drop of 0.5pp y/y. In nominal terms, exports to Britain were worth PLN32bn (€7.6bn) in January-July, a reduction of 2.3% y/y.

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