'Yellowhammer' leak shows need for business Brexit planning

Clare Francis of Pinsent Masons, the law firm behind Out-Law, said food retailers and manufacturers are among those that should be considering how to best protect their operations from potential disruption.

Francis was commenting after the Sunday Times reported that a classified government document contained warnings about the potential impact a 'no deal' Brexit could have on businesses and the public.

The 'Operation Yellowhammer' report contains the government's planning assumptions for what will happen if the UK exits the EU without a withdrawal agreement on 31 October 2019. According to the Sunday Times, the report warns of the return to a hard border on the island of Ireland, as well as shortages in the supply of fuel, food and medicine, disruption at UK ports, and public protests.

Francis said: "The report highlights that businesses should continue to prepare for a 'no deal' Brexit given the potential consequences and disruption. Of particular importance is the need for businesses to look at their logistics and supply chain operations. There will be practical challenges for businesses that have cross-border supplies need to address in order to continue to be able to move goods required by their business."

"This disruption may be most severely felt by businesses such as food retail that have goods with a short shelf-life or those operating a just in time manufacturing process. Taking as many practical steps now and engaging with logistics providers will help to ease these strains on the supply chain. This will be particularly critical for retailers with the October Brexit date being a critical time for them in the run-up to Christmas," she said.

The government's new policy to end freedom of movement for EU citizens in the UK from the point of Brexit in a 'no deal' scenario could also "cause immense short-term difficulties for employers" if those plans become law, said corporate immigration expert Euan Smith, also of Pinsent Masons.

"At present, EU nationals living and working in the UK have the opportunity to apply for settled status, or pre-settled status, which would secure their ability to live and work in the UK indefinitely," Smith said. "In a no-deal scenario that status is only available to those in the UK by Brexit. Those arriving from 1 November onwards will require permission to do so."

"Recognising the difficulties that such an abrupt closing of the borders would cause, the UK government’s position had been that a temporary 'European Temporary Leave to Remain' (ETLR) status would be created: permitting EU nationals free access into the UK for up to three months, and the opportunity to apply to stay for up to three years beyond that. With that comfort in place, employers took the view that existing movement of workers around and into the EU could in effect continue unchanged, at least until the introduction of new immigration rules, expected to be in force on 1 January 2021," Smith said.

Smith said that the change of position implied by home secretary Priti Patel would remove the ETLR option. Instead, EU nationals "would presumably be treated the same as other overseas nationals, requiring specific permission to live and work in the UK", he said, warning that EU countries could impose reciprocal restrictions on UK nationals wanting to live and work in the EU. 

"That’s a frightening prospect, for any UK company that relies on staff from other EU countries coming to the UK for work, and equally for those companies whose UK staff often have to travel to and within the EU for business purposes," Smith said.