The potential impact of ‘no-deal Brexit’ on facilities management services
The Implications of a ‘no-deal Brexit’: UK Providers providing FM Services into the Euro Zone in a No Deal Brexit Environment… What will it look like?
Analysts fear that if the UK government fails to reach an agreement that allows access for the UK service sector, then several successful companies in the lucrative service export industry will become incapacitated. That is because intricate regulatory frameworks govern market access for the services trade. In the case of ‘No Deal Brexit’, the services sector will have to rely on WTO rules which may be insufficient to grant service providers the legal right to access the EU market. Even if the UK wins favorable terms from a Free Trade Agreement (FTA), there is still the added burden and cost of administrative difficulties.
According to research published by the business intelligence provider MHR Analytics, over half of UK businesses presage a drop in revenue during 2019. The report was titled “Business Insight: The Data Surge” was and contained a survey concerning the opinions of 200 senior managers in large and medium-sized UK companies.
Tim Hopkinson, the President of the Building Engineering Services Association, warned that uncertainty surrounding the Brexit deal will be “hugely unhelpful” to the building services and construction industry.
Richard Steer, the Chairman of International Business Consultancy Gleeds, voiced serious misgivings concerning the potential dire repercussions of a ‘No Deal Brexit’ saying that contrary to liberating UK organisations from red tape, the move might burden UK firms with onerous bureaucratic procedures and impede them with potential barriers to trade. He said that much greater effort will be necessary to export professional services to the EU which is responsible for producing much of the current trade surplus. Facilities Management sector will face much greater uncertainty and difficulty in hiring EU-born professionals who have a significant presence in the FM sector. There may be a significant fall in contracts as a result of ‘No Deal’.
EU workers comprise a big proportion of the workforce in the FM industry, so the devaluation of the pound sterling as a consequence of ‘No Deal Brexit’ will reduce the value of their wages and motivate them to migrate, thus creating a skill shortage in the sector.
Ingo Borchert, fellow of the UK Trade Policy Observatory at the University of Sussex, said that the EU is definitely the best market worldwide for services by a big margin, so leaving this market will be ‘very disruptive.’
In the case of a ‘No Deal Brexit’, WTO rules that allow cross-border exchange of services will be applicable, according to “General Agreement on Trade in Services” principles. British export services will likely be subjected to EU’s standard position towards third countries. The ability of overseas persons to provide services could also be directed by the laws of the relevant EU member state depending upon the state’s competency. A meticulous evaluation of the laws of each state would be required to assess the legal requirements that service providers must fulfill. It is quite possible that service providers may face barriers in the form of quotas and maximum duration of stay.
The Confederation of British Industry, a chartered non-profit advocacy group comprising of over 190,000 businesses, expressed concern that several successful service export companies may be unable to export certain categories of services.
One prime issue concerns the mutual recognition of qualifications prior to Brexit. The 2005 Qualifications Directive meant that EU countries recognized most British qualifications therefore allowing British service providers quick access. No further training or qualifications were necessary. However, the EU said that it will only recognize those British qualifications that were gained prior to the March 2019 deadline. This includes only those British qualifications that gained recognition under the aforementioned 2005 Qualification Directive. The qualifications gained after the deadline will not be recognized. This can pose potential problems for new service providers seeking access to the EU.
Ingo Borchert warned that ‘no-deal Brexit’ could result in non-applicability of the 2005 directive, thus resulting in potential non-recognition. He states that, “the impact of this could be really severe.
