Our team: Tim Wright
It is the last week of June 2019. The UK referendum took place three years ago in June 2016. In March the following year, Prime Minister May wrote to Donald Tusk triggering the Article 50 process and the UK looked set to leave the EU on 29 March 2019. The date was enshrined in law by the European Union (Withdrawal Act) 2018, then hastily amended by the statutory instrument when the UK didn’t Brexit at the end of March.
The EU27 subsequently agreed to the UK’s extension requests, first to 12 April, then to 31 October 2019 although if the UK and the EU were to ratify the Withdrawal Agreement before then the UK would leave sooner. Today, that seems unlikely. MPs have already rejected the withdrawal agreement three times. The Conservative party is now preoccupied with the contest to see who will replace Theresa May as prime minister. Boris Johnson, who leads the contest, has said that the UK will leave on 31 October, “deal or no deal” even though a no deal Brexit would result in “some disruption”.
A no deal Brexit would mean that the transition period which is part of the Withdrawal Agreement would not come into being. The UK would sever its ties with the EU with immediate effect and significant disruption might be expected in particular at the channel ports, adversely impacting food and medicinal supplies, as well as cross-border supply chains and logistics.
At the same time, the Facilities Management (FM) outsourcing sector is grappling with reputational issues (Interserve’s financial problems, Kier’s decision to exit its FM business etc.), low margins and staff shortages as well as increased government scrutiny in the fallout of Carillion’s insolvency.
One key takeaway from last week’s Facilities Show at the Excel Centre in London’s Docklands was that despite the uncertainty posed by Brexit, the FM sector continues to be quite buoyant. However, there remain some very real concerns which FM providers would be advised to consider carefully and, where appropriate, raise with their existing customers and factor into new bids and contract negotiations:
Whilst the country is experiencing Brexit-induced economic weaknesses, alongside concern that Brexit, in particular, the apparent failure of our political system to deliver more certain directional outcomes, which business leaders have long been calling for, is causing sustained damage to the UK’s reputation as a place to do business, opportunities still remain for the FM sector. This is particularly the case for smaller FMs in UK or Ireland should larger FM providers hold off on going after contracts whilst the Brexit uncertainty remains. Further opportunities include developing education, training and skills in FM sector as well as developing technologies to address some of the workforce and other issues arising.
As much as Brexit hangs with some uncertainty over the FM sector, FMs can seek to proactively tackle issues such as addressing cost and pricing issues with their existing customers, as well as being smart about how they price and contract in the future.