BREXIT - Surprises Still to Come?

Some time ago, we wrote about Brexit and said that it is likely that the UK and EU will find a common ground for a deal between them. It remains to be seen what happens throughout 2020, but one thing is clear - there will be plenty of work for procurement professionals to either re-confirm, re-negotiate and adjust the current supply agreements, or find completely new suppliers, depending on final agreements on regulations and taxation. This, in turn, means that there will need to be strategic decisions made by the heads of procurement organisations on how to adjust to the changing environment. Although most companies have already provided consideration to Brexit and taken action to mitigate effects (throughout the past two years many businesses have moved out of the UK to Germany), then further steps are more than likely to be needed following agreements on outstanding details between the EU and the UK throughout 2020.

Procurement organisations in the UK are keen to find out what new opportunities open for them that might be more beneficial to pursue than the ones they had as part of the EU. At the same time, procurement organisations in the EU countries who will still need to rely on buying from the UK, are similarly interested to have the final detail settled to understand if they are able to retain the supply chain or need to re-think part of their business and cost base.

What considers the procurement regulations, then the expectation of many procurement practitioners in the UK has been that following Brexit the level of bureaucracy, that comes from the EU directives, would reduce. It remains to be seen if there will be any significant impact, as the EU directive aligned practices are already deeply rooted in the UK. Even if, as it seems, there is no desire by the UK government to align with the EU regulations, then to completely re-write the procurement governance seems unlikely in the very near future. It is more likely to become a gradual process of diversification over the years to come and most likely the UK will remain as a separate party under the WTO Global Procurement Agreement.

There are still many unknowns, but at the same time business owners need to have certainty in order to make investment decisions and to effectively and efficiently run their businesses. This is one key aspect that has driven many businesses to move out of the UK or to seek certainty by other means to detach them from the possible impacts of Brexit.

We, at Procurement Experts, will be keeping an eye on the developments throughout 2020 what considers possible impact to business and procurement practice.