More Uncertainty, Less Storage Space Following Brexit Extension
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Finding vacant warehouse space in southeast England is difficult these days. Nervous companies preparing for a no-deal Brexit and the resulting supply chain disruptions are cramming stockpiles of products into most of the available storage spots.
Alessandro Galtieri
“If you find one, it’s three times the cost. And if you need a chilled refrigerated warehouse, then you’re out of luck,” said Alessandro Galtieri, deputy general counsel of global telecom company Colt Technology Services in London.
As part of its Brexit prep, Colt spent during this quarter what it would have spent in an entire year on commercial routers, according to Galtieri. He noted that the ramped-up spending hasn’t hurt Colt, primarily because the company started getting ready for Brexit about two years ago.
The European Union has agreed to allow the U.K. to extend the Brexit deadline from March 29 to October 31. But the U.K. could be forced out of the bloc if it refuses to vote in the European Parliament elections on May 22.
Reid Whitten
“That really bifurcates how you plan for it,” said Reid Whitten, a London-based partner at Sheppard, Mullin, Richter & Hampton who has an international business practice. “You’ve got one short-term possibility and one long-term possibility, and plenty of uncertainty in each of those.”
There’s a third possibility: that the U.K. will reach a Brexit agreement before the upcoming election, or ahead of the Halloween deadline – a scenario that embattled Prime Minister Theresa May supports. But Whitten, who said Brexit talk still dominates pub conversations, at least in his circles, wasn’t betting on an early Brexit deal.
“I suspect they’ll be like students with a deadline for homework,” he said of the members of parliament. “I don’t think anyone’s trying to turn it in early.”
Galtieri also was doubtful, noting that “there was talk today Wednesday of bringing this to Parliament for the fourth time”.
“They might,” he said, “but I still don’t think it will pass.”
And that’s not necessarily a bad thing, said Whitten. He believes that the odds of ending up with a soft Brexit, one that “looks a lot like remaining” in the EU, increase as the clock ticks and the “initial fervour of the Brexit wave” fades.
Still, Galtieri – like many other in-house and business leaders in the U.K. – continues to brace for the worst-case scenario of a no-deal Brexit. And even if there is a withdrawal agreement and a transition period, he said he’ll be left guessing at what happens next.
“What are the areas in which the U.K. laws will differ from the EU?” he wondered.
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