Brexit delay presents uncertainty for clients and practices
Philip Fisher considers how the impact of a Brexit delay will hit some clients hard and what practices can do during this time.
The one thing we all knew about Brexit from two years ago when Theresa May forced through an act of Parliament was that whatever happened, stage one of the process would be completed by 29 March 2019.
It seemed impossibly far away at that point but, on the plus side, the deadline gave the United Kingdom plenty of time to resolve all of the significant issues which were likely to cause conflict and consternation.
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It seems unlikely that anybody -- whether in UK, Europe, government, industry or even our own very perceptive profession -- could have imagined that less than a week from the original doomsday or freedom (depending upon how you voted) we would have little more idea of what was going to happen then we did in June 2017. Nor that the EU would present Theresa May with alternative extension dates, both of which might well be overridden by events in the next three weeks.
This continued uncertainty presents its own series of problems for clients and, by extension, our own practices.
Looking at extreme situations, some businesses are literally going to fail as a direct consequence of the continued lack of clarity. Even if there really is a delay of only three weeks, there is likely to be an ensuing economic slowdown in coming months that will hit some companies very hard. A longer delay is only likely to make matters worse.
The writer of this series cannot be the only person holding off on purchasing certain high ticket items, waiting to see what is going to happen next, though he has refrained from stockpiling anything, even sardines.
It is clear from news reports that many businesses are doing exactly the same and that is preventing others from making sales, which could be terminal in the cases of those that were already close to the precipice.
It is also possible that banks may run out of sympathy for those that have been desperately trying to hold on for months as politicians played silly games.
If the Brexit delay becomes considerably longer, which has to be a possibility while the opposing factions in Parliament fight each other rather than Europeans who (not quite) half of them appear to regard as the real enemy, it can only make matters worse.
From an accountancy perspective, some of our clients will be holding off on prospective deals, leaving consultancy teams sitting around waiting for some of the action on which they thrive.
That is not good for business and, if it continues for too long, could mean making difficult decisions about redundancies. In the past, one solution to this problem was to switch corporate finance staff into recovery or insolvency teams and, given the foregoing paragraphs, that may help to ease the blow.
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More generally, what can we do during this period of phoney war?
It is accepted that for firms with clients not directly affected by the Parliamentary shenanigans, life can go on exactly as normal. That is most likely to be the case for practices that primarily deal with clients’ personal tax returns, with a portfolio including none of the superrich who happily skip the country when times get tough.
For others, the most common solution has probably been sticking their heads in the sand and praying that it all goes away or, failing that, a resolution is achieved in the relatively short-term.
More positively if, by any chance, despite the efforts of Speaker Bercow and his old friend Erskine May, a third “meaningful vote” takes place and decisively supports the Prime Minister’s deal, that could open the floodgates and provide vast amounts of work for all and sundry.
If work is drying up at partner level, which is quite likely since clients are likely to be less active and it may not be easy to arrange meetings with new prospects who have more important issues than a change of auditors or tax advisers on their minds, other strategies might prove worthy of consideration.
Should there really be free time, this could be a perfect opportunity to consider business strategy, particularly given the prospect of a rapidly changing market. Are staffing levels right? Where on earth can we manage to recruit all of those managers who don’t seem to exist? Is this the time to consider a merger, either upwards or downwards?
More directly, partners ought to be looking at their client lists to see if any might need help or, conceivably, should be chased for fees before they go out of business.
Generally, this is a time to keep abreast of developments on at least a daily basis, since as soon the blockage clears there could be wonderful opportunities.
If nothing else, we should all use this period of reflection and relative inaction to start building a stronger future.