Underestimating Brexit Uncertainty: The Risks of Trading Without a Ratified Deal
Recent developments indicate an 80% chance that the Brexit trade deal may not be ratified. As a Google SEO expert, I'd like to delve into the implications of this scenario and highlight the preparedness of businesses operating under World Trade Organization (WTO) rules.
Current Trading Under WTO Rules
Businesses have already adjusted to the WTO rules due to the UK's status as a third country. This means that regardless of the trade deal's ratification, these businesses will face additional tariffs on shipped goods, necessitating more paperwork.
While some companies might feel they have been caught off guard by these changes, the reality is that the UK has been no stranger to unpredictability in its Brexit negotiations. The software and systems used for trade regulations have been updated, but at a cost, as my boss once called it, a "piece of mind" expenditure.
The Unlikely Scenarios
The assertion that the trade deal will not be ratified is somewhat misguided. Historically, such agreements are often finalised at the last moment, and it is to the advantage of the majority of EU countries to honour the deal rather than revert to WTO terms. The likelihood of the deal failing ratification is lower than initially suggested.
Moreover, the UK government has a history of displaying unreliable behaviour throughout the Brexit process, which could lead to necessary monitoring and enforcement actions if the UK fails to comply with the terms.
Scientific Evidence and Business Preparedness
However, it is vital for businesses to remain prepared for the possibility that the trade deal may not be ratified. The UK government's track record of attempting to sabotage agreements is concerning. It has already shown the capability and willingness to exploit loopholes or introduce new regulations, even as the deal was being considered.
For instance, after initially agreeing to the terms of the deal, the UK government proposed unilaterally changing the terms, a move that would have had detrimental effects on the agreement's validity.
Future Impact on Business Strategy
The uncertainty surrounding the trade deal results in a constrained business environment. Small and medium-sized enterprises (SMEs), in particular, may struggle to plan long-term due to the fear of additional tariffs and increased paperwork. This added uncertainty can significantly impact their ability to commit to future projects or expand their operations.
The situation is further complicated by political dynamics. Prime Minister Johnson's willingness to backtrack and potential political infighting in the UK government may create additional uncertainty, making it difficult for EU partners to trust the UK's commitment to the terms of the trade agreement.
Conclusion: Planning for the Worst
In summary, while the actual chance of the trade deal not being ratified might be lower than 80%, businesses must remain vigilant and plan for the worst-case scenario. This approach, although pessimistic, ensures they are better equipped to navigate any potential obstacles and maintain their business operations smoothly.