Frequently Asked Questions about Brexit

Find answers to the most pressing questions you have about the UK’s exit from the EU.

This is an uncertain time for businesses, so we’ve compiled common queries raised by our business customers into a series of FAQs and tried to detail clear answers and links to more information where relevant.

The questions cover general enquiries, business strategy, operations and business practices, supply chain management, financing and investments.

If you have a question not covered here, please speak to your Relationship Manager or Business Relationship Team.

1. General FAQs

1. If the draft Withdrawal Agreement published in November 2018 is adopted, how will this impact business?

The draft Withdrawal Agreement sets out a Transition Period that would run until at least December 2020. Until then, there would be no change to current trading arrangements between the UK and the EU, no changes to regulation or the free movement of people, and therefore no direct impact on business in the short term.

Accompanying the Withdrawal Agreement is a political declaration on the future relationship between the UK and the EU. The final terms of our future relationship would be negotiated and agreed during the Transition Period, but the declaration sets out what the intentions are for this.

The declaration proposes separate rules for goods and services. If adopted, these proposals will have different impacts depending on which type of business you operate.

Under the proposals, there would be a new ‘free trade area’ for goods, in which Britain would continue to observe EU rules. This means that goods could pass seamlessly through the EU-UK border, including the border with Ireland.

However, the declaration proposes new arrangements for services, which, it says, will offer more flexibility but not the current levels of access to each other’s markets that the UK and EU currently enjoy. It includes a new economic and regulatory arrangement for financial services, among other areas.

The draft Withdrawal Agreement and the accompanying declaration on the future relationship have yet to be passed by the UK Parliament or fully ratified by the EU.

See the full text of the declaration on the future relationship.


2. I don’t trade with Europe, so Brexit won’t affect me, will it?

Even if you don’t trade with the EU, you may experience the knock-on effects of any impacts on your suppliers and customers. Brexit is also likely to impact your employees if they are from the EU.

To prepare, you may want to review your supply chain and your customer base, identify any risks and take steps, wherever possible, to mitigate them. You might want to make more use of domestic suppliers, for example.

Whatever your current trade arrangements, review your business strategy in light of Brexit and consider any opportunities it presents too – such as international trade beyond Europe.

You may also want to reassure your EU workers that they are welcome and that they have a future in the UK – Freedom of Movement will continue up to December 2020 during the Transition Period, and workers who are resident in the UK at that time will be able to apply for ‘settled status’ after five years.

The Government has indicated that the same proposals and timeframe around ‘settled status’ would also be implemented in the event of a no-deal exit.

For more on supply chain preparation, see the Lloyds Bank report, The Future of the UK and Europe.

To find out more about the opportunities for international trade visit the Lloyds Bank International Trade Portal.


3. How will business travel to Europe be affected by Brexit?

Under Article 45 of the Lisbon Treaty, UK citizens can currently travel and work freely in the EU.

These rights will remain until at least 31 December 2020 under the Transition Period outlined in the draft Withdrawal Agreement negotiated in November 2018. What will happen after this for people travelling to work in the EU would be negotiated during the Transition Period as part of the future relationship.

In the event of a no-deal exit in March 2019, the UK has indicated that the Citizens’ Rights section of the draft Withdrawal Agreement will pass into UK law regardless, protecting EU visitors and residents in the UK. However, it is not yet known if the EU and its members will reciprocate this if there is no deal.

Additionally, if the UK leaves the EU without a deal, rules around passports are likely to change.

Currently, although the UK is not part of the Schengen Area where there are no border controls, if you have a valid UK passport you can enter this area. After March 2019, if there’s no deal, you’ll need to have a passport that’s been issued within the last 10 years of the date of arrival in a Schengen country, and be valid for at least three months. Different rules will apply in EU countries that aren’t in the Schengen Area.

Passport rules for travel to Ireland won’t be affected.

British citizens may also need to need to obtain authorisation for travel into the Schengen Area from the European Travel Information and Authorization System (ETIAS). This new body, set to launch in 2021, will carry out security checks on travellers from countries where a visa isn’t needed for travel to the EU. ETIAS authorisation will cost €7.

It isn’t yet known how the ETIAS scheme would apply to Britons travelling to Ireland.


4. If we go to WTO rules what does this mean for my imports and exports?

A ‘no-deal’ scenario means the UK will cease to have a free trade agreement with the EU, so World Trade Organisation (WTO) rules will apply. These rules are complex, but at their simplest they set out that nations must apply the same tariffs on goods and services to all countries that they trade with under WTO rules.

For importers and exports, this could mean costs will go up as imports and exports to the EU will no longer be tariff-free.

However, the UK could choose to lower tariffs or get rid of them altogether, which could present opportunities for businesses. The UK could also enter into agreements that give developing countries preferential access to our markets. Again, this could open up opportunities.

Another issue to consider is non-tariff barriers – these are things like safety regulations and product standards. If the UK and the EU can’t agree a system for recognising product standards, this is likely to mean more checks at the border.


5. How will regulation change in a post-Brexit Britain?

Things won’t change overnight, as the vast majority of existing EU laws and regulations will become UK laws and regulations after Brexit, under the EU Withdrawal Act.

The longer term future of UK laws and regulation is not clear, however. The Act makes provision to amend, repeal or remove laws as necessary. And it is possible that some rules, such as those on Free Movement, will change after the Transition Period proposed under the draft Withdrawal Agreement published in November 2018. Passporting – under which finance companies can sell their services across the EU rather than needing to get a licence for each country, could also come to an end in its current form at the end of the Transition.


6. Will the same GDPR regulations still apply post Brexit?

Yes, they will. The General Data Protection Regulation, which came into force in May 2018, covers companies that have EU citizens as customers. Therefore, it will still apply when the UK is no longer a member of the EU.

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2. Business Practices

1. Which sectors are most likely to be affected by Brexit? And will the impact on the service sector be different from that on manufacturers?

Businesses that trade heavily in goods or services with the EU, that are heavily regulated, or that employ substantial numbers of staff from the EU are likely to feel the most significant impact from Brexit.

These are thought to include agriculture, financial services, food and drink, automotive and chemical engineering - however any impact will depend on an organisation’s own circumstances.

Uncertainties around Brexit have also been a factor in the currently de-valued pound. This could make UK product and services more competitive abroad, and offer potential opportunities for international trade.

You can find a copy of the ‘declaration on the future relationship’ between the EU and the UK here: https://www.gov.uk/government/publications/progress-on-the-uks-exit-from-and-future-relationship-with-the-european-union.

Understand tariffs and how they work


2. What is the government doing to help businesses prepare for Brexit?

While the Government is hopeful the draft Withdrawal Agreement published in November 2018 will be agreed, it has published guidance for businesses on how to prepare for Brexit in the event of a no-deal scenario.

In August 2018, it began releasing a series of technical notices that set out detailed advice on a wide range of topics aimed at different industries and sectors. They’re designed to help businesses make informed decisions ahead of 29 March 2019, when the UK is scheduled to leave the EU.

The documents cover areas such as farming, fishing, seafaring and medicines, and provide important information on changes to business regulations if there’s no deal. More broadly, they include implications for companies that import and export and what will happen if the free circulation of goods between the UK and EU ends.

See technical notices at GOV.UK


3. What are technical notices and how can they help my business prepare for Brexit?

Technical notices are Brexit-related documents published by the UK Government. They set out, in considerable detail, how leaving the UK without a deal would impact different issues and business sectors.

The documents cover everything from farming and fishing to satellites and space and should be of use to businesses in planning for no-deal scenarios. From importing to exporting and meeting regulations, there is advice and guidance if there is no Brexit deal.

See technical notices at GOV.UK


4. What is a UK Economic Operator Registration and Identification number and will I have to register for one?

An Economic Operator Registration and Identification, or EORI, number is a unique ID code required by businesses that trade goods with countries outside the EU.

In the UK, an EORI number is allocated to an importer and exporter by HMRC. It provides information to customs authorities as part of EU security measures on shipments.

Under a no-deal Brexit, UK businesses shipping goods to or from the EU would need to follow the same customs procedures as currently apply when trading with a country outside the EU. That means you would need to register for an EORI number.

You can apply online at https://www.gov.uk/eori.


5. How will employment rules change for UK-based EU citizens after Brexit?

Around 3.6 million non-UK EU nationals live in the UK. Theresa May has pledged that no EU citizen currently residing in the UK will have to leave, even if freedom of movement ends following Brexit.

EU nationals already working in the UK will be able to apply for ‘settled status’ to remain indefinitely if they’ve been here for five years or will have been by 31 December 2020 when the proposed Brexit transitional period ends.

Those who have been in the UK for less than five years by the end of 2020 can apply for pre-settled status, and qualify for full settled status once they’ve lived in the UK for five years.

These rights will also apply in the event of a no deal exit, as the Government intends to pass the Citizens’ Rights section of the draft Withdrawal Agreement into UK law, even if the deal fails.

For anyone who arrives after 31 December 2020, there will be a new immigration system in place.

After Brexit, the Migration Advisory Committee has recommended that the UK’s current points-based system for immigration should be extended to EU migrants, to give more skilled workers more permits.

If you currently employ EU workers, you should consider how the new migration rules are likely to affect your business.

For more information see: https://www.gov.uk/settled-status-eu-citizens-families.


6. Is it too late to start planning for Brexit now? And where should I start?

Planning for Brexit may seem like an impossible task when there is so much uncertainty. However, it is important to consider how different scenarios will affect your business, and what contingency plans you can put in place to deal with these now.

The first step is to consider how exposed you are to any risks associated with Brexit. Look at the possible impact on your supply chain, customers and customer demand, stakeholders and workforce. At the same time, explore any opportunities Brexit presents, including to further trade with countries outside of the EU.

The British Chamber of Commerce has put together a Business Brexit checklist highlighting key areas to consider, including future staffing requirements and any potential delays at borders. This can help you put in place measures to mitigate the risks, ensuring you have the skills needed, the correct customs documentation and provisions to cope with currency volatility.

The Government’s technical notices also offer detailed information on what would happen in different industries and sectors in the event of a no-deal situation.


7. Who do I need on a business task force to plan for Brexit?

In the same way you would plan for a major incident or takeover, you should consider establishing a core team to manage your Brexit strategy.

According to the CBI, 82% of large businesses – and a third of firms overall – have set up an internal Brexit task force or steering group to project-manage preparations.

To be most effective, your task force should be made up of representatives from key functions across your business, not just senior management. This includes people who deal with the supply chain, procurement, marketing, sales, governance, HR and financial planning.

Smaller companies that don’t have as many resources may wish to bring on board experts from legal firms and business associations to help them gain a greater understanding of what Brexit means for them.


8. Should I plan for both Brexit under the draft Withdrawal Agreement, and for a no-deal scenario?

While a draft Withdrawal Agreement has been published, it remains to be seen if this can be finally agreed by both parties. The deal may be altered further before it is ratified, it may be replaced by an alternative deal, or agreement may fall down completely and the UK may leave the EU with no deal in place in March 2019.

This presents a range of different scenarios to plan for.

You can access an ‘explainer’ that details the main points of the draft Withdrawal Agreement to help you plan for its implementation. The British Chamber of Commerce also has a Business Brexit checklist advising on areas to consider. The Government’s Technical Notices and the European Commission’s Preparedness Notices give information on what will happen in a no-deal scenario.

See Technical Notices on GOV.UK

See the European Commission’s Preparedness Notices

See the Explainer for the agreement on the withdrawal of the UK from the EU


9. What are the HR and employee issues I need to plan and prepare for?

It’s unlikely that there will be immediate changes to employment law as a result of Brexit. Much of the regulation is enshrined in domestic law, and powers from EU Directives have been brought under UK law in the EU Withdrawal Act.

However, businesses that employ EU nationals will need to understand the implications of Brexit for workers.

Brexit won’t have an immediate effect on EU citizens’ rights to live and work in the UK. Their rights to healthcare, pensions and other benefits are protected in the Withdrawal Agreement. And Freedom of Movement will continue up to December 2020 during the Transition Period. The Government has also indicated that the section of the draft Withdrawal Agreement concerning citizens’ rights would be passed into UK law if there is a no-deal exit.

Workers who are resident in the UK at that time will be able to apply for ‘settled status’ after five years under the EU Settlement Scheme. The Government has produced a toolkit that employees can use to communicate the scheme to employees.

See the EU Settlement Scheme Employer Toolkit on GOV.UK


10. My business is with the public sector. What impact is Brexit likely to have on my market?

Public procurement rules will stay the same immediately after Brexit under the draft Withdrawal Agreement published in November 2018, but after the proposed Transition Period ends these may change as the UK introduces its own ‘common frameworks’.

It’s possible then that the market will be opened up to other countries, which may affect businesses in this country, but in that circumstance UK businesses too may have opportunities to bid for public contacts further afield.

In the event of a no-deal Brexit, the Government plans to bring forward legislation to implement the UK-wide common frameworks with greater urgency.

According to Deloitte, public sector bodies are likely to be affected by any tariffs on goods in the same way as private sector bodies. Another impact they are likely to feel is in staffing – there has already been a steep decline in EU applications for nursing positions, for example. These potential issues may have knock-on effects for companies that do business with the public sector.

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3. Business Strategy

1. Which export markets are most likely to look favourably on the UK after Brexit?

The EU and countries with which the EU has Free Trade Agreements currently account for 56% of UK exports. However, exports to the US have risen by more than 26% between 2011 and 2016.

Theresa May has announced that the EU’s Economic Partnership Agreement with the Southern African Customs Union (SACU) and Mozambique, will be carried over after Brexit. That represents about £2.4bn worth of exports.

Other countries that may offer export opportunities for the UK post-Brexit include the English-speaking nations, like Canada and Australia, as well as Turkey and the Middle East.

Looking for exporting opportunities? See the Lloyds Bank International Trade portal


2. What can I do to protect my business from Brexit?

The first step you may want to take – if you haven’t already done so – is to carry out a Brexit risk assessment to see where your business’ vulnerabilities lie. This may also uncover opportunities for your business when Britain leaves the EU.

You might want to look at how different scenarios would impact your business – reverting to World Trade Organisation rules in a no-deal scenario, or maintaining some tariff-free trade under a negotiated future trading arrangement, for example.

Areas to look at include impacts on importing and exporting, your supply chain, taxation, regulation, and your employees.

The British Chambers of Commerce has a Business Brexit checklist showing areas to consider.

You can then do whatever is possible to mitigate risks: for example, ensuring all your customs documentation is in order, making adjustments to your supply chain, and doing what you can to retain your EU employees.

The Government’s Technical Notices and the European Commission’s Preparedness Notices give information on what would happen in different industries and around different issues in a no-deal scenario.

See Technical Notices on GOV.UK

See the European Commission’s Preparedness Notices

Preparing is difficult in a situation that is constantly changing. To keep up with events, you can sign up for the Government’s Brexit email alerts.


3. What is the Bank of England forecasting will be the likely impact of Brexit?

The Governor of the Bank of England, Mark Carney, spoke of the consequences of the UK leaving the EU without a deal when answering questions from the House of Commons Treasury Select Committee in July 2018.

Among his warnings were that a no-deal Brexit could drive up costs for consumers and could require emergency interest rate cuts.

At a speech at the Central Bank of Ireland in September, he said: “The Bank of England is well-prepared for whatever path the economy takes, including a wide range of potential Brexit outcomes. Our job, after all, is not to hope for the best but to plan for the worst.

“The Monetary Policy Committee will respond to any persistent change in the outlook to bring inflation sustainably back to the 2% target while doing what it can to support jobs and activity.”


4. The European Regional Development Fund has invested heavily in our region, what is going to happen now?

If the Withdrawal Agreement between the UK and EU is adopted, the UK will continue to take part in European Regional Development Programmes until they end in 2023.

If there’s no Brexit deal, UK organisations will no longer be able to access EU funding for European Regional Development Fund projects. However, the Government has agreed to guarantee these projects, including those funded under the 2014-2020 programme.

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4. Supply Chain

1. How can I make sure my supply chain is ready for Brexit?

No one knows exactly how Brexit will impact supply chains, so you can’t ensure you are 100% ready. However, there are some sensible steps you can take.

First, you may want to conduct a thorough review of your supply chain in order to get a full understanding of your network and where the risks lie. For example, if your supplies cross the EU-UK border, what will happen if there are delays after Brexit?

You can then test for risks in different Brexit scenarios and identify mitigating actions – such as working with different suppliers, or building in contingencies for any delays.

For more on supply chain preparation, see the Lloyds Bank report, The Future of the UK and Europe.


2. How can I minimise delays when supplying goods post-Brexit?

Delays at the UK-EU border are felt to be one of the biggest potential difficulties of a no-deal Brexit. If the UK leaves the EU without a deal, you will need to follow different customs controls when exporting to Europe to the ones you currently use.

These include registering for a UK Economic Operator Registration and Identification (EORI) number.

You may also need to get an export licence or provide supporting documents to export certain types of goods from the UK.

For detailed information on changes at the UK border, see the Government’s Partnership Pack.


3. Will I have to change my packaging after Brexit?

Like many post-Brexit issues, it depends on the future relationship agreed and what business sector you’re in. For example, the Government has said that even if there is no deal, EU-based food labelling will more or less be rolled over, although there may need to be changes in labelling related to the origin of food.

There are also plans to set up new geographical indication (GI) schemes with a new UK logo for products like Cornish clotted cream and Whitstable oysters, regardless of whether there’s a deal agreed or not.

However, the pharmaceutical industry may be more impacted in a no-deal scenario with new packaging required if drug makers have to reapply for a marketing authorisation.


4. Will my business still have to meet EU safety standards for goods post-Brexit?

To be sold on the EU market, many products have to meet safety standards set out in EU regulations. The CE mark is used on certain goods to show that they meet these standards.

After Brexit, the UK Government wants to keep trade frictionless by maintaining a ‘common rulebook’ covering standards for goods within the EU.

However, if there is no deal, products tested for conformity with EU standards by a UK body may not automatically be recognised in the EU – so they may have to be retested in the EU. Obviously, this would involve time and cost.

See the Government’s technical notice on regulated goods in the light of no deal.

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5. Finance and Investments

1. What is likely to happen to sterling and how can I manage my financial risk?

The pound fell to its lowest level in over 30 years after the Brexit referendum, and has fallen 12% against the euro and 5% against the US dollar since just before the vote. It may recover, but economists forecast a sharp fall if there is a hard Brexit.

If you are importing or exporting, you might want to consider hedging in order to manage currency risk. You may also want to do some contingency planning around a potential rise in the cost of importing raw materials, if sterling falls further.

Another consideration is what currency you are paid in. If you are exporting, you could try to agree prices in advance to protect yourself from any further volatility.

Other financial risks to consider, and plan for as far as possible, include rises in the costs of making payments.

To discuss your business needs, speak to your Lloyds Bank Relationship Manager or Business Relationship Team.

2. What effect will Brexit have on cards and payments?

In a no-deal scenario, the time and cost of processing card and other payments between the UK and the EU could increase. This is because UK-based payment services providers would no longer be able to directly access central payments infrastructure. This may include the Single Euro Payments Area (SEPA).

If the draft Withdrawal Agreement published in November 2018 is implemented, then existing payments frameworks would continue until the end of the Transition Period in December 2020, to allow time for any new arrangements to be negotiated.

You can get help to manage your payments efficiently with Lloyds Bank Payment Services.


3. Is now a good time to invest in my business despite the uncertainty around Brexit?

Rather than cancelling investment plans because of uncertainty, you may want to consider them in the light of the changes Brexit could bring about. What are your customers’ needs likely to be post-Brexit? Will Brexit offer you opportunities to explore new markets – by exporting, for example?

Our International Trade Portal can help you explore further.


4. Should we increase our reserves/cash position ahead of Brexit because of all the uncertainty?

Consider whether it’s reasonable to expect trade to be affected by Brexit in the short term. If your business is often immediately influenced by consumer confidence, if you trade significantly with the EU currently, or if you rely on supplies from the EU which may be delayed, then it is reasonable to expect some disruption.

Working to improve your cash position will give you some resilience to short-term shocks, but also potentially allow you to invest in any new opportunities – such as to establish an alternative supply chain, or to step up trade with countries outside of the EU.

This could be a good opportunity to review your cash flow as part of a wider financial health check. Even during periods of so-called stability, the Federation of Small Businesses advises holding cash reserves that would allow your business to operate for three months.


5. What will be the likely impact of Brexit on cross-border mergers and acquisitions for businesses?

Levels of merger and acquisition (M&A) activity are difficult to predict. On the one hand, possible divergence between the UK and the EU around anti-trust laws, potentially separate competition supervisory bodies to be cleared, and generally volatile markets, are all likely to decrease activity.

However, currency fluctuations (notably a weaker pound) and the desire by businesses to establish new geographical bases could see a rise in tactical M&A activity. Share price volatility can also trigger opportunities for some aggressive bids.

Due diligence is expected to take longer post Brexit, and if an agreement cannot be reached between the UK and the EU on aligning competition regulation and anti-trust legislation, mergers and acquisitions could be subject to parallel processes.

Corporate restructuring within a group of companies that crosses borders is expected to become more complex too.

The Government and the House of Lords have created publications in the area of competition regulation and State Aid post Brexit.

The Government has also published a paper on the anti-trust role of the Competition and Markets Authority in the event of a no-deal Brexit.


6. What support is available from Lloyds Commercial Bank to help with Brexit?

You can talk to your Relationship Manager or Business Relationship Team for support around financial planning.

We have also published a series of reports on the UK exit from the EU, looking at different scenarios and how to plan.

For support widening trade beyond the EU you can make use of a range of resources on our International Trade Portal.

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6. Legal Information

While all reasonable care has been taken to ensure that the information provided is correct, no liability is accepted by Lloyds Bank for any loss or damage caused to any person relying on any statement or omission. This is for information only and should not be relied upon as offering advice for any set of circumstances. Specific advice should always be sought in each instance.

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Important legal information

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