Dec 01 2020
Over the past year, Brexit and COVID-19 (coronavirus) have forced businesses to adapt and change their strategies to uncover new opportunities. While some may be familiar with IBISWorld’s COVID Impact Tool, released in response to the pandemic, IBISWorld has also created the UK Brexit and COVID-19 Impact Tool to assist companies in identifying new markets, protecting their position, and developing and strengthening their strategic plan as the end of the transition period approaches and the pandemic continues to threaten global economic performance.
The first step in using the tool is to familiarise yourself with the Descriptions & Definitions tab in order to fully understand the exposure factors and how they are calculated. Of note is the IBIS Exposure Factor, which is a qualitative factor assigned by our industry analysts that link back to the Brexit impact statements of IBISWorld UK industry reports. This captures any effect on an industry that cannot be measured quantitatively.
The data used within the tool is updated alongside our industry reports, meaning that the tool will always use the most up-to-date data. The tool itself will be updated on a monthly basis, which will bring new and improved features.
It is important to note that this the tool is not intended to forecast change or determine an explicit measure of any impact, but is intended to identify structural factors that expose an industry to potential impacts.
Industry Exposure tabs
The primary feature of the tool is the three tabs that enable the user to see industries’ exposure to a variety of different factors related to both Brexit and COVID-19, as well a joint exposure tab to explore the impact of both at the same time. Within the Industry Exposure tabs, the model is set at a standard weighting for the various factors, with high weighting given to the IBIS Exposure Factor and Supply Chain for Brexit, providing a balanced approach to the structural concerns surrounding either Brexit or the coronavirus pandemic.
The weighting given to each factor can be altered to test a hypothesis on both events and to a company’s own needs, particularly in strengthening its strategic plan. For example, if the Poultry Meat Processing industry is set to the standard weightings for Brexit, it displays a high level of total Brexit exposure. However, for the specifics of an individual company operating in the industry, such as that it is based in Northern Ireland and therefore trades heavily with Ireland, the weightings can be changed to reflect its current circumstances. When balanced for the company’s trade, it may result in a very high level of total Brexit exposure and therefore indicate that the company should dedicate substantial resources to mitigating the impacts of the end of the transition period with no EU trade deal. Similar methods can be used to explore the impact of the coronavirus pandemic; weightings can be adjusted based on assumptions on the length of restrictions or severity of another peak. If wishing to look at the impact of both Brexit and COVID-19, after inputting the weights in the individual tab, the impact of both can be explored in the Combined Industry Exposure tab.
Specific exposures can also be used by firms to identify new opportunities to expand their business. The Industry Exposure tabs can be filtered to highlight the effect of Brexit or COVID-19 on specific sectors of the economy or to see industries with a specific level of exposure to a certain factor. For example, a customs broker could filter for industries with a very high level of exposure to EU trade, which would provide a list of target industries for which they could proactively seek to help with any impact of the end of the transition period with no EU-UK trade deal.
Drill Down tab
If seeking to explore the impacts of Brexit, the coronavirus pandemic or both on an individual industry, the Drill Down tab can be used to see more details. In particular, it is useful for exploring the industry’s supply chain exposure and can be used by procurement teams to assess supply chain risk and direct questions to the correct suppliers. This section details each of the exposure factors of the industry and the industry’s supply chain. It also provides a table of the industry’s key external drivers. For a more in-depth analysis, each industry and key external driver is hyperlinked to its full report on MyIBISWorld.
Following the end of the transition period, on 1 January 2021, the UK Global Tariff (UKGT) regime is set to be implemented on imports from countries with which the United Kingdom does not have a trade deal, replacing the current EU Common External Tariff regime. The Drill Down tab also allows you to explore the impact of the new tariffs on an industry. When selecting an industry, the table populates with tariffs faced by the industry and can be used in a variety of different ways. First, there is the Change column, which details how import tariffs will change with the introduction of the UKGT, with the next two columns showing the old CET value and the new UKGT value. This can be used to see difference of tariffs faced on imports from non-EU countries, as well as the tariffs implemented on EU imports if no trade deal is reached. This can also be used in reverse, to show what tariffs will be faced by an industry exporting to the European Union if there is no deal in place.
To access the UK Brexit and COVID-19 Impact Tool, click here.
For a video walkthrough of the UK Brexit and COVID-19 Impact Tool, click here.