Retailers in the UK have warned the government that supply chains and trade flows are being affected by new post-transition customs and trade requirements.
M&S was one of the first retailers to take action by temporarily suspending sales of hundreds of items in Northern Ireland stores as it fears food would be blocked due to new rules. Many other firms have spoken out about delays fuelled by increased paperwork at ports too.
The trade agreement between the EU and UK was designed to preserve zero-tariff and zero-quota access, but retailers which use the UK as a distribution hub for EU business operations are facing the possibility of tariffs when re-exporting goods back into the European Union.
The most prominent example so far has been M&S’s popular Percy Pigs which is manufactured in Germany, shipped into the UK and then exported once more into Northern Ireland – something which chief executive Steve Rowe suggests should, under the new trade agreement, incur tax.
“Tariff-free does not feel like tariff-free when you read the fine print,” he told Reuters.
“For big businesses, there will be time-consuming workarounds but for a lot of others this means paying tariffs or rebasing into the EU.”
Read more: 5 issues UK businesses face despite the UK/EU trade deal
Elsewhere, John Lewis has said it will scrap overseas deliveries into the EU due to confusion surrounding post-Brexit trading rules. Debenhams, Fortnum & Masons and ASOS are just three further examples of UK retailers suspending deliveries onto the continent.
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After years of political wrangling and to-the-wire negotiations, Brexit for real has finally happened. For many in the general public, that’s it. Brexit is done. But for UK businesses returning to work from a well-earned festive break, the real work is yet to begin.
The end of the transition period and arrival into a new era of UK/EU relations arrived with little fanfare. No great rip appeared in the waters south of Dover and supermarket shelves haven’t emptied overnight.
Of course, the ongoing pandemic continues to take up much of the public and news bandwidth and, probably not until summer holidays come around and UK holidaymakers are no longer allowed to join the EU queue at airports – and when they return home to a roaming data bill – will many really notice the effects of Brexit.
But businesses reeling from pandemic mitigations now have very real, but also very actionable, challenges ahead.
Here’s a look at just some of the key issues for UK firms:
Added bureaucracy
Customs, origin, VAT, safety, livestock health… there’s a raft of extra red tape that exporters now have to deal with to continue trading relatively seamlessly with the EU.
The government itself has admitted that there could be ‘bumpy moments’ in the weeks ahead as both businesses and hauliers get used to new rules and requirements.
Business travel has a new set of rules
The good news for fans of international meetings is that short-term business visits to the EU can continue, up to a limit of 90 days in a six-month period.
However, the scope of what a business visit now covers without the need for a work permit has changed. Meetings, consultations, research, training and trade shows are all good, but selling goods or supplying services to the public are not.
The government advises that business travellers check what visas and permits may be required for specific trips into the EU.
What’s happening with data?
Much like with the introduction of GDPR, there is still some confusion and large grey areas around the use of handling of personal data between UK and EU businesses. The EU has yet to decide if the UK’s personal data protection rules are tough enough to allow continuous flow, something which if altered could leave British firms less competitive than their EU competitors.
A temporary arrangement to continue allowing data flow for the next six months has been agreed, but the lack of detail on financial services and the potential requirement for a legal data representative on the continent are just two big future potential stumbling blocks.
Firms may accidentally break the law
There may be a raft of UK firms that accidentally break the law or, in the very least, the new trade agreement rules over the coming weeks.
The IfG gave some examples where this could take place, noting that: “Some industries, especially food, will simply be unable to do this: cane sugar imported from the Caribbean and refined in the UK will not qualify for access to the EU tariff-free, nor will basmati rice imported from India and milled in the UK.
“Any meat product must contain only meat from animals born and raised in the UK or the EU.”
Businesses that aren’t aware of new requirements within the trade agreement may continue trading as normal but be in violation of the new agreement.
Whilst there will no doubt be a certain level of understanding and a grace period to cover issues like this, that won’t last forever.
Planning for the future
There’s no doubt that the agreement of a trade deal has brought some certainty for the future. Businesses now know that tariffs and taxes won’t be levied on their goods, and Rules of Origin is far less restrictive as it could have been.
But there are still gaps in the agreement, and we don’t know how fast or how expansive the new Global Britain will be.
The Department for International Trade has been sprinting to form new trade and continuity agreements with a host of countries, and there will no doubt be more to come.
The advice for UK businesses right now would be to get to grips with the new trade deal, make the required changes as soon as possible and then, once some stability has been restored, make preparations to be able to capitalise on new global opportunities as they arise.
Growing into the future
At Go Exporting, we help business just like yours plan for the future, research new markets and helping you to plan and implement your export strategy for profitable growth.
Learn more about our international trade consultancy here.
Queues at UK ports, especially Dover, Felixstow and Southampton, have been increasing as pre-Brexit stockpiling efforts from businesses on both sides of The Channel were compounded by a new strain of Covid-19.
Some tailbacks have been longer than 10 miles last week as companies had been buying and selling additional components and goods in a bid to avoid increased levels of bureaucracy at the end of the transition period – now just 10 days away.
What started as queues relating to business activity has been compounded by health and political action, with France closing its border with the UK for 48 hours to assess the new strain of Covid found in Southern England. The move means no lorries or ferry passengers are allowed to sail from the port of Dover. Operation Stack, the post-Brexit plan to create a lorry car part in Kent, has been put into operation early as a result.
Unaccompanied freight in the form of containers can still be transported, but there are fears in the UK that French drivers won’t make the journey if they could get stuck, whilst exported goods and empty lorries returning to the continent face lengthy delays.
Read more: Business groups urge Brexit negotiators to find compromise and agreement
Elsewhere, the Confederation of British Industry has called on the EU to delay introducing new customs checks immediately after Brexit as firms are still unprepared due to the pandemic.
In a report published on Friday, the CBI stated that: “With time so short, both sides need to take steps to minimise disruption no matter the outcome.
“Without them, much of the progress made recovering from the pandemic will be lost.”
If your organisation is one of the thousands who have been unable to fully prepare for Brexit, then our Brexit FastTrack service could help you #BeBrexitReady, and fast. Find out more here.
UK Export Finance has launched a new financial support product for small exporters in a radical shake-up of governmental international trade support.
In partnership with the UK’s leading commercial banks, the new scheme aims to give SME exporters access to working capital to support Covid recovery.
The new scheme is backed by government, providing an 80% guarantee on financial support given by lenders. It’s hoped the General Export Facility will encourage more small businesses to explore exporting their products and services and take advantage of new and future trade agreements.
Minister for exports, Graham Stuart, said on the launch of the scheme that: “UKEF’s support for smaller businesses is shifting up a gear. The new General Export Facility will make a huge difference for entrepreneurs who need the financial backing to go global and benefit from our free trade agreements. It will help us bring genuine optimism back to exporters.
“We were the only top ten exporting nation to grow exports last year. I’m determined for that success to continue as we recover from Covid-19. By transforming access to the world’s best export credit agency, we can unlock the entrepreneurial energy needed to make that a reality.”
Read more: Business groups urge Brexit negotiators to find compromise and agreement
Businesses will be able to apply for finance through the UK’s give largest banks backed by a UKEF guarantee to free up working capital which can be used to support everyday costs associated with exporting, including fulfilling contracts, paying staff and building inventory.
Those banks are:
- HSBC
- Lloyds Bank
- Natwest
- Santander
- Barclays
Other lenders will join the scheme in the months ahead.
If your organisation is one of the thousands who have been unable to fully prepare for Brexit, then our Brexit FastTrack service could help you #BeBrexitReady, and fast. Find out more here.
Food and drink exports from the UK have fallen by 12.9% so far in 2020 as manufacturers struggle to deal with the Coronavirus pandemic and uncertainty surrounding Brexit.
The data, released by the Food and Drink Federation, showed that exports to key markets including Spain were significantly down (almost 34% into the Spanish market), whilst sales of the otherwise export success story of whisky dropped the most – down 19% to just over £900 million.
Q3 2020 saw an 11.6% exports decline compared to the same period last year, with both exports to the EU and non-EU markets falling.
Head of international trade at the Food and Drink Federation, Dominic Goudie, commented on the findings that ensuring a quick return to growth will be essential to the industry as the UK looks to continue its economic recovery from the pandemic.
The UK’s food and drink sector is also struggling to find enough vets, an issue which could cost up to 75% of trade volume into the EU from next year.
Export health certificates must be signed by an official veterinarian to confirm that certain food or animal products meet import requirements, but a lack of qualified and available official vets in the UK could see delays.
In September this year, the British Meat Processors Association warned that Britain simply doesn’t have enough vets to deal with export inspections post-Brexit, with chief executive Nick Allen commenting that: “We have been pressing the Government for three years now to lay out the details of exactly how these barriers to trade will be dealt with. They have known since the beginning that we will need an army of extra qualified vets to cope with the 500% increase in workload.”
Read more: Brexit offers ‘best chance’ of banning live animal exports
“All the guidance in the world is useless if we are not able to complete required export paperwork because of a chronic shortage of vets. If this is not addressed, £175 million per month of meat exports will be at risk.
“The bottom line is that British companies cannot prepare effectively for Brexit because the UK Government is not keeping to its side of the bargain by putting in place the right measures and resources and failing to give us the answers we desperately need.”
If your organisation is one of the thousands who have been unable to fully prepare for Brexit, then our Brexit FastTrack service could help you #BeBrexitReady, and fast. Find out more here.
The UK and Kenya this week signed an economic partnership agreement which will ensure all companies operating in Kenya can continue to benefit from duty-free access to the UK market.
The deal is, in essence, a translation of the terms previously agreed between the EU and the East African Community and has scope for further EAC states to join in the future.
Worth £1.2 billion last year, the agreement seeks to support jobs and economic development in Kenya whilst also ensuring tariff-free access for key imports into the UK including tea, coffee and spices, vegetables and flowers – worth a combined £250 million alone.
The UK is a key market for Kenya, accounting for 43% of all vegetable exports and almost 10% of cut flowers, whilst 2,500 UK forms currently export goods into the Kenyan market, including machinery, electronics and technical equipment supplies.
Ranil Jayawardena, the UK’s international trade minister who signed the deal in London alongside counterpart Betty Maina, commented on the agreement that: “I am delighted that today we have signed a trade agreement with Kenya. This deal makes sure businesses have the certainty they need to continue trading as they do now, supporting jobs and livelihoods in both our countries.
Read more: Signed, sealed and delivered: UK signs first major independent trade deal in 47 years
“Today’s agreement is also a first step towards a regional agreement with the East African Community, and I look forward to working with other members to secure an agreement to forge ever-closer trading ties.”
Over the last two years, 55 new trade agreements have either been signed or agreed in principle as the UK continues the countdown to Brexit proper on January 1st.
For the latest Brexit news and opinion, visit our Brexit Knowledge Bank.
Company bosses from some of the UK’s leading firms have warned UK Brexit negotiators against brinkmanship as talks look set to resume following a stand-still earlier this week.
As Boris Johnson and Ursula von der Leyen were called in to bridge a gap both negotiation parties were struggling to close, business leaders have warned that firms are already overwhelmed by dealing with the ongoing pandemic and that clarity on trading arrangements with the EU are urgently needed with just weeks to go.
Deputy director of the CBI, Josh Hardie, commented on the latest talks: “We always knew the political leaders would have to step in. It is essential they do that. The political brinkmanship and delay is paid for by communities.”
Less than a month ago, leading UK business groups from across industry sectors urged Brexit negotiators to find compromises and find agreement in a bid to avoid a no-deal exit on January 1st.
Over 70 groups, representing millions of workers from across automotive, aviation, chemical pharma, tech and FinTech sectors have been alarmed by the stop-start nature of talks, and have warned that securing an agreement with just days until Brexit for real ‘matters greatly for jobs and livelihoods’.
A poll last month by the Institute of Directors showed nearly one in four companies would not be ready for the end of the transition period, whilst only half said they were fully prepared. Preparations have without a doubt been hampered by the ongoing pandemic, with smaller firms, in particular, struggling to juggle both the immediate threat of Covid and the upcoming impact of Brexit.
Read more: Over 40% of importing & exporting SMEs have made no preparations for Brexit
Richard Torbett, CEO of the Association of the British Pharmaceutical Industry, commented then that: “With each day that passes, business resilience is chipped away.”
“It is absolutely clear that it’s in nobody’s interest — and certainly not patients — to face the future with uncertainty around how medicines will be regulated, tested and moved throughout Europe and the UK.
If your organisation is one of the thousands who have been unable to fully prepare for Brexit, then our Brexit FastTrack service could help you #BeBrexitReady, and fast. Find out more here.
At the time of writing, there are just 33 days until the end of the transition period. And whilst 2020 has been incredibly difficult for businesses across sectors, Brexit will wait for no company.
Research recently released from Aldermore found that 47% of SMEs who import goods and services from the EU have made no Brexit preparations, whilst 43% of small firms who export into the EU have yet to act either.
Group managing director of business finance at Aldermore, Tim Boag, commented on the findings that: “2020 has been an extremely difficult year for SMEs, as many have been profoundly impacted by the Covid-19 pandemic.
“With the Brexit transition period coming to an end on 31 December, businesses who trade with the EU now face a new set challenges, particularly if there is no-deal. Tariffs could be introduced on many imports and exports, which will have an impact on costs for businesses, and even if a trade deal is agreed there’s still likely to be significant changes to prepare for, such as additional checks and documentation on goods as required by both the UK and the EU.”
The average SME derives around 30% of their revenues from business and customers in the EU, and one in four small business owners say the think Brexit will worsen the economic trauma already faced in mitigating the pandemic. However, only 15% think there will be supply chain issues, despite some UK ports already struggling this winter to deal with Christmas demand.
Read more: Visit our free Brexit Knowledge Bank for free Brexit downloads, webinars and advice
“Our research reveals that many SMEs are generally unprepared for Brexit or are delaying plans to address the impact until after the end of the transition period. Whilst the delay in preparing for Brexit is understandable given the ongoing impact of the pandemic, the potential wide-ranging effects of Brexit on many businesses means it’s crucial that SMEs begin to take steps to prepare,” Boag continued.
“Businesses should consult the Government’s guidance for SMEs post-Brexit and work out how VAT, tax and duty, and other regulatory changes will impact them and their supply chain. Aldermore has created a Brexit hub with key information for businesses to help SMEs best prepare for the transition and the challenges and opportunities that lie ahead.”
If your business is one of the many who has yet to properly prepare for Brexit, now really is the time to act. At Go Exporting, we’ve developed a Brexit FastTrack service which will deliver a comprehensive Brexit impact review and transition plan for your business. Prices start from just £950 – find out more here.
This month (November) we hosted a webinar as part of Business Wales’ Excelerator Consortium’s growth programme looking at how the Brexit Transition will affect business strategy.
Watch the full webinar below, and learn more on the Excelerator Consortium’s YouTube channel here.
Learn more about preparing your business with our free Brexit Knowledge Bank, or seek a fast, cost-effective audit with our Brexit FastTrack service.
Over the last few months we’ve joined Business Wales for a webinar series supporting local companies to navigate Brexit and the road ahead.
This episode looks at the upcoming end to the EU transition period and asks whether your business is ready.
What are the implications at the end of the transition period?
How do you identify the specific challenges to your business?
How do you address the challenges and maintain your exports, and what are the opportunities and how can you make the most of them?
Watch the webinar in full below and watch even more great business advice content over on Business Wales’ YouTube channel here.
Watch more Brexit webinars and learn more about how your business can prepare in our free-to-access Brexit Knowledge Bank.
