The EU trade deal provides confidence as we navigate a difficult first quarter

We enter the New Year with a Brexit deal finally in place and at least one uncertainty removed.

The free trade agreement is good for the UK’s long-term prospects. It is especially welcome that there will be no trade tariffs to add to costs, particularly as businesses are already under severe pressure from Covid-19.

But there is much work still to do in financial services, data, and mutual recognition of qualifications.

As a service-based economy, the UK must press on to secure an agreement with the EU for financial services. Both sides have earmarked March as a deadline. AAT believes the Government must make strong progress towards this. We will be closely monitoring developments on behalf of our many members employed in this sector.

Meanwhile, businesses face the prospect of a stormy first quarter.

They need to adjust to new customs processes, higher administration costs and VAT changes.

Aside from Brexit, there is the continuing lockdown, CBILS and BBLS loans being called in, deferred VAT bills, and a potential rise in company failures.

Businesses, particularly SMEs, will be relying on their accountants to help them work through all this.

It will be painful. But that’s not to say there aren’t reasons for optimism. We have one of the biggest vaccine rollouts in history, which will bring the pandemic to an end.

While the early months will be tough, the economic recovery will begin in 2021. Some sectors will most likely see a real bounce. There are also longer-term changes that are to be celebrated as well.

The crisis has accelerated the evolution of work, with tech adoption, a greater focus on wellbeing, and the high-value, real-time work that we have been talking about for the last few years.

The recovery will also move the green agenda forward, which accountants have a crucial role to play in.

I often find myself talking about both cost and carbon. If we’ve taken costs out and carbon down as a result of the switch to remote working, don’t just put it all back in again when restrictions end. Accountants are ideally placed to use their skills to look at a wide range of business data and to consider what carbon-heavy costs the business can do away with for good.

Use this as an opportunity and do things differently, with an eye on a greener sustainable future. So we have some reasons to look forward to 2021. And while we face some challenging days in the nearer future, there is plenty of light at the end of the tunnel.

Further reading

• Opinion – the deal provides some confidence as we navigate a difficult first quarter
• A guide for accountants to the Brexit deal and life after the transition period

Mark Farrar is the Chief Executive of AAT.