Preparing Leaseweb for Brexit

Like many global companies active in the UK, Leaseweb is also preparing itself for the impending Brexit. In the last few weeks some progress in the Brexit negotiations has been made, although it is still not certain what kind of Brexit will actually happen (hard Brexit, soft Brexit, no deal Brexit, delayed Brexit, or maybe even no Brexit at all).

Recently, Theresa May’s cabinet approved “her” Brexit deal (let’s call this the soft Brexit), although some ministers left the cabinet straight afterwards. Even more recently, the EU leaders approved this deal as well. On the 11th of December it’s up to the MP’s in the UK to approve it, and I don’t dare to predict the outcome.

Although the outcome of the Brexit deal is still very unclear, it is important to prepare your business for Brexit and its potential scenarios.

For Leaseweb itself, we expect that Brexit will at least impact us on:

1. Logistics

Currently, we keep pretty low stock levels in the UK, and if more equipment or parts are needed, we are able to ship them quickly from the Netherlands, or directly from our UK suppliers. With the above soft Brexit in mind, it is to be expected that this will still be possible, but maybe with slight delays at customs immediately after the Brexit date of the 29th of March 2019.

However, if we end up with a hard Brexit, it might become pretty hard to import equipment and parts from Amsterdam, specifically in the months straight after Britain has left the European Union. In the hard Brexit scenario, it won’t be possible to easily ship parts to and from the EU to the UK – it will become the same process as importing from non-EU countries.

It is to be expected that in the hard Brexit scenario queues will arise at customs, specifically in the first months right after 29th of March. Because of this, BMW, for example claims to even shut down their UK based plant for the first month after Brexit. These queues will take place due to the fact that a lot of logistics companies and customs itself will not be completely sure how to import or export goods from the EU into the UK or from the UK to the EU.

This means that if a hard Brexit takes place, Leaseweb UK will keep higher stock levels to make sure we can provide our customers with the equipment and parts they need. And it might be even smart to have slightly higher stock levels in case of a soft Brexit as well, just to be sure customs will not delay deliveries.

2. Employees

Even in the case of a soft Brexit like the current Theresa May plan, it is to be expected that workers from the EU won’t be able to get access to the UK labour market as easy as it currently is with the UK still inside the EU.

In this scenario it will be the case that employees from the EU who came into the UK before 29th of March 2019 will be able to stay under similar conditions, but for employees from the EU coming to the UK after March 29th, it might be different, and they will probably need to get a working permit before they can start working in the UK.

In case of a hard Brexit, all EU citizens who live in the UK should immediately acquire a visa, but it is very unlikely this will be forced, and the UK government has already stated this. However, in that scenario, it will create a lot of uncertainty for EU employees in the UK.

3. VAT and Tax

In the soft Brexit scenario of Theresa May, we don’t expect a lot of change in terms of VAT and duty tax at the borders. However, Leaseweb is preparing itself for tax payments when importing goods from the EU in case a hard Brexit will kick in.

4. Privacy data and hosting needs

As the UK is stepping out of the EU, it is to be expected that some privacy data of UK citizens, which is currently hosted somewhere in the EU, will need to move to the UK, due to new laws and regulations. Next to that, Leaseweb expects the UK regulators will create new regulations around privacy data of UK citizens, to boost the economy, but also to make sure that privacy data of UK citizens will stay under UK laws.

 

The main takeaways

The above aspects will definitely impact our business in the UK, but we believe that it should not hurt our business too much, even in case of the less likely option of a hard Brexit.

December 11th will be an important day, as this will give more clarity of which scenario will take place. On top of that, as Leaseweb hosts lots of privacy data, Brexit might even become an interesting business opportunity for Leaseweb. We already see an increased amount of questions from our customers, about moving assets (mainly servers) from EU based data centers towards our UK based data centers. So Brexit might be a business opportunity for us as well!