Brexit

Uncertainty surrounding Brexit affects all publishers shipping to European Union and UK customers.

46% of our shipments go to the EU and are therefore subject to this uncertainty. 54% are entirely unaffected, whatever the outcome.

Assessing the uncertainty, our opinion is broadly unchanged from before: a smooth transition with lots of notice of change remains the most likely outcome. The possibility of a no-deal (sudden) Brexit has increased but it remains unlikely.

Any likely deal will see our EU shipping services continue much as they are. A sudden Brexit would cause inevitable disruption, but we expect it would be relatively short-term and Kixto is adaptable and well-placed to respond rapidly with our contingencies.

Background and recent Brexit developments

• In March 2017 the UK officially began “Article 50” proceedings to leave the European Union.
• The current deadline for agreeing the UK’s Withdrawal Agreement is 31 October 2019 (extended from March 2019).
• The UK Parliament repeatedly refused to approve the Withdrawal Agreements negotiated by Prime Minister May. This led to her resignation on 7 June.
• New Prime Minister Johnson argues that the EU will not change its negotiating position unless it believes Britain will leave on 31 October otherwise.
• Today, 6 September 2019, Parliament enacted a law to remove the threat of no-deal by requiring the Prime Minister to ask the EU to extend the Brexit deadline to 31 January 2020 or beyond if no deal is agreed by 19 October. The EU has indicated it will agree to this extension.

Kixto’s Assessment

Members of Parliament appear to have prevented a no-deal Brexit before 31 January 2020.

Both main parties want a General Election and this will probably happen in November. The extraordinary circumstances make the result and the future direction of Brexit hard to predict but most paths lead to a deal of some sort.

A sudden Brexit would cause inevitable disruption, but we expect it would be relatively short-term and Kixto is adaptable and well-placed to rapidly respond with contingencies.

Other possibilities:

• the various opposition parties (who collectively have a majority) organise themselves into a cohesive “government of national unity” to resolve Brexit, either with a deal or by cancelling it. This type of government would form before October 31 and could theoretically continue until May 2022 without a General Election;

• the Prime Minister finds a way to defy Parliament and leave the EU on 31 October.

Preparations

Kixto is in discussions to partner with EU counterparts, who will face the same problem in reverse in the event of a no deal Brexit, to pool capabilities.

If you are planning future projects, allow plenty of extra time to deliver EU orders. We suggest an extra month.

We cannot predict our future shipping costs and the possibility of additional customs charges. Consider forewarning customers of the possibility of extra costs beyond our existing rates and collecting shipping charges when you are ready to ship (e.g. through BackerKit). We will use our insight into the business of shipping to mitigate additional charges and offer advice on additional customs and bureaucratic burdens in the event of no deal.

This is archived content, written April 2019, replaced by our current assessment, September 2019.

April 2019

The EU agreed on 11 April to extend the deadline for Brexit.

Britain remains a full EU-member and Kixto’s European shipping services will be completely unaffected until there is a confirmed date for Brexit.

Britain remains a full EU-member and Kixto’s European shipping services will be completely unaffected until there is a confirmed date for Brexit.

Kixto is nimble and can react fast where necessary.

18 April, Kixto’s prediction in two lines:

Our view is unchanged from March: we think Britain’s trade with Europe will continue almost unaffected until 2021 and, after then, changes will be modest.

More fully

In June 2016, Britain voted to leave the European Union.  In March 2017, Parliament gave the EU two years’ notice that we would leave on 29 March, 2019.

The executive branches of the UK and EU then negotiated a “Withdrawal Agreement” that was a plan for negotiating a new trade deal, with 1 January 2021 as the planned switch-over date. However, Parliament has steadfastly rejected the Withdrawal Agreement. With no plan in place, the leaving date was delayed until 31 October, 2019.

Britain remains a full member of the EU until it officially leaves. That date has been moved into the future and the UK government is now trying to find a solution that Parliament will agree. In an indicative votes process, a customs union had most support but the government has so far ruled this out.

The UK will vote in European elections in late May. The results will be a good indicator of current voter opinion and we expect Parliament will avoid making concrete decisions until after the results are in.

Kixto’s opinion

The final outcome, in order of probability, will be one of:

1. Parliament finally accepts the Withdrawal Agreement. If this happens, Britain will continue trading with the EU on current terms until 2021 at least.
2. The UK proposes an alternative plan that has majority support within Parliament. A confirmation referendum or a customs union are the possibilities with most support currently, the European elections will add more information.
3. Britain leaves without a deal. In a non-binding vote (13 March, 2019) Parliament rejected this, though it remains possible.

While “No deal” cannot be ruled out, we think is a very unlikely outcome. Either of the alternative options, a Withdrawal Agreement or some other agreement, has more support in Parliament and both options would leave our access to the EU unchanged until 2021, with lots of notice of the new trading arrangements that will come into effect after then

Two weeks until Brexit, Kixto’s assessment in two lines:

We think Britain’s trade with Europe will continue almost unaffected until 2021 and, after then, changes are likely to be modest. We have contingency plans and can react fast if we need to.

More fully

In June 2016, Britain voted to leave the European Union.  Parliament set this in motion on 29 March, 2017 by giving the EU two years’ notice that we would leave on 29 March, 2019. Until then, Britain remains a full member of the EU.

Two weeks to go

The UK and EU have negotiated a “Withdrawal Agreement”. This sets out a plan for negotiating a new trade deal and an intended date of 1 January, 2021 to switch over. However, the UK Parliament is currently refusing to approve it.

Kixto’s opinion

The outcome on 29 March 2019, in order of probability, will be one of:

1. Parliament gives way and accepts the Withdrawal Agreement in preference to leaving without a deal. If this happens, Britain will continue trading with the EU on current terms until 2021 at least.
2. Parliament asks and the EU agrees to delay Britain’s leaving date while another solution is developed. A delay of at least six months, possibly a year, would be required.
3. Britain leaves without a deal. In a non-binding vote (13 March, 2019) Parliament rejected this, though it remains possible.

For “no deal” to be completely ruled-out, Parliament must accept (1) the Withdrawal Agreement or (2) a significant delay. We expect MPs will blink at the 11^th hour and accept the Withdrawal Agreement, with the effect that our access to the EU will remain unchanged until 2021 and we’ll get lots of notice of the new trading arrangements that will come into effect after then.