Brexit is once again supposedly just weeks away. Whether it’s the new Prime Minister’s insistence that the UK will depart the European Union with or without the deal on 31st October, or the fact that Brexit Day now somewhat fittingly falls on Halloween, it could be that the months of uncertainty for businesses will be over sooner rather than later.
However, millions of small businesses in the UK, as well as some large firms, are still less than ready for a hard exit from the EU.
Some support is on hand, however, with the government announcing a new £10 million Brexit Readiness Fund to help businesses prepare.
The grant scheme, unveiled by new Business Secretary Andrea Leadsom, is designed to help organisations, as well as trade associations, organise training courses, webinars, events, workshops and any other strategies to boost levels of readiness ahead of Brexit.
Firms can apply for up to £25,000 each which is funded as part of the £108 million announced earlier in August by the Treasury.
Commenting on the grant launch last week, Leadsom commented that: “The UK will be leaving the EU on 31 October. For businesses that still feel unprepared, I am determined to do everything I possibly can to ensure they are fully ready for Brexit.
“We know that companies often rely on the wider business community for help and advice with planning. Business groups will now be given the necessary tools to engage with this crucial task, communicating with non-members and businesses of all sizes.
“The funding we are announcing today will mean business organisations from all sectors across the country can stand resolutely behind businesses large and small to support them in preparing for and seizing the opportunities of, leaving the EU.”
Businesses have until the 30th of September to apply.
Too little too late?
There have been calls from all sides of the business community arguing that the government hasn’t done enough to support UK businesses, either through grant support funding or the availability of information to auto-enrolment in new required documentation or certification schemes.
Only this month the Department of Agriculture warned that the pattern of trade will change following Brexit with the agri-food sector unlikely to be ready to implement Export Health Certificates should there be a crash-out exit.
The CBI also released a report in the last few weeks that suggested 24 of 27 critical economy areas are underprepared or have next to no plans in place at all, including tariffs, the Irish border and free trade agreements.
However, the number of Authorised Economic Operator applications have increased this year with firms looking to prove their exporting credentials.
For many small businesses, however, grant money won’t be enough. Many firms lack the in-house time and expertise to formulate a comprehensive pre-Brexit threat analysis and post-departure strategies to cover both an agreed and no-deal exit.
If your business is one of these, find out more about Go Exporting’s Brexit audit and consulting here.
The number of permanent staff hired by UK companies has dropped at the quickest rate in more than three years.
Research by the Recruitment & Employment Confederation, alongside a report from KPMG, has uncovered that the number of full-time recruits fell for six consecutive months to August, suggesting that ‘many firms [are] delaying hiring decisions due to Brexit-related uncertainty’.
And it’s not just companies tightening their belts as political and economical uncertainty continues. Candidates are also bedding in and staying put at their current organisations, whilst the number of available opportunities in the temporary employment market has also slowed – now at a six-year low.
However, new starters are enjoying higher salaries as competition for top talent continues to increase.
Businesses lacking confidence
Chief executive at the REC, Neil Carberry noted that: “The figures are a sobering reminder to politicians of all parties that national prosperity relies on businesses creating jobs and growing careers.
“Britain’s record on jobs is world-leading. It’s a key part of our economic success, with recruiters at the forefront of it. And there are still great opportunities out there for those looking for a new job and a boost in earnings.
“But all this rests on business confidence – the confidence to invest, to hire someone, to try something new – and it’s clear that things are getting harder. Permanent placements have now dropped for six months in a row and vacancy growth is slowing.
“While we continue to benefit from the flexibility of our jobs market as demand for temps holds steady, today’s survey emphasises the real-world impacts of the political and economic uncertainty businesses are facing.
“The first priority should be avoiding a damaging no-deal Brexit and giving some stability back to British businesses, so they can drive the prosperity of the whole country.”
Employees concerned by Brexit
As mentioned above, employees are also feeling the added worry as the Brexit saga rolls on.
A poll by Gartner found that on average, employees spend almost an hour each day worrying about how Brexit will affect them, their families and friends.
That’s 12% of the working day which will directly affect productivity rates and employee wellbeing.
If your business is falling behind in Brexit planning, see how our Brexit consultancy can help.
The Department of Agriculture has suggested it expects the pattern of trade to change following Brexit and warned that ‘not all exports can comply with new post-Brexit rules’.
Businesses exporting agri-food products into the EU which are not member states will require an Export Health Certificate – an official document which carries an authorised signature such as from a vet which proves that food or animal exports meet quality and health requirements of the importing country.
Trade cannot happen without an EHC and it’s estimated nearly two million will be required to accompany every agri-food export into the EU.
The Department of Agriculture stated that: “The best thing agri-food businesses can do is to prepare for these changes – as not all businesses will be able to meet the new Export Health Certificate requirements.”
However, some experts have warned that the resources don’t exist to deal with the extra paperwork – let alone enough vets to carry out the checks – and could severely disrupt Northern Irish trade in particular.
And it could see the competitiveness of local businesses in the EU market take a hit.
Peter Hardwick of the British Meat Processors’ Association told the BBC that: “I think you have to draw the obvious conclusion that you can’t do the business, that you will lose that business.
Read more: UK exporters step-up Brexit preparations as AEO applications surge
“There will be competitors in the EU who are no doubt chomping at the bit, who don’t have to jump through those hoops and they’ll be in a prime position to take it away from us.”
The CBI has launched a report with some 200 recommendations and actions for businesses and governments to take as the likelihood of no-deal Brexit increases.
The report, titled ‘What comes next?’, unveils a detailed analysis of advice for its members and the wider business community, covering everything from the movement and regulations of goods to Northern Ireland and data.
The report introduces by stating that: “The CBI has analysed the no-deal preparations of the UK, the EU and businesses in 27 key areas of the economy and we have concluded that – despite existing mitigations – disruption is likely in 24 of those areas immediately after no deal.
“At the moment, this analysis shows there are no areas of relevance to the economy where the UK, the EU and the business community are all prepared well enough for no deal. In all 27 areas analysed, negative impacts are anticipated in either the short or long-term.”
Of the 27 noted key areas, areas the CBI deem the UK is ready are a common travel area in Northern Ireland, broadcasting regulations, competition within the people market and security of current residents.
Red flags include tariffs, the Irish border and free trade agreements.
The report suggests that the EU is even less prepared, with 15 key areas rated as wholely unprepared including customs, haulage, financial services and people mobility.
Overall business-readiness fares slightly better than both the UK government and the EU, although four key areas remain unprepared, 10 areas where some preparations have been made, nine areas of good short-term planning and four areas with sufficient long-term strategy to mitigate Brexit-related issues is in place.
Read more: 500 new Brexit laws passed in H1 2019
The report also goes on to make four critical suggestions for businesses, which are:
- Immediately resume no-deal preparations
- By the start of September, if resource allows, have made plans to communicate additional needs for mitigations to the UK and the EU governments
- By the middle of October, have agreed and reinforced communication routes into government
- If no-deal occurs, prioritise people
If your business is lagging behind on its Brexit preparations or needs expert guidance and roll-out plans for whatever the eventuality, talk to Go Exporting about or Brexit audit and consultancy.
UK businesses are stepping up Brexit preparations and looking to prove their exporting credentials as the number of AEO applications surge.
Authorised Economic Operator (AEO) status shows that a businesses role within international supply chains as being secure – compliant and up-to-speed with customs controls and procedures.
UK firms have lagged far behind in AEO applications, just 537 in February 2017 compared to 6,031 in Germany in the same month.
However, with 31st October Brexit deadline fast-approaching and political rhetoric strongly suggesting an exit from the EU come-what-may, registrations have increased 26% – albeit to just 679 compared to 6,330 in Germany and 1,556 in the Netherlands.
Despite lagging far behind European partners, this increase indicates a clear step-change and that some firms have started to get their act together and cover as many Brexit bases as they can.
Lesley Batchelor, Director General of the Institute of Export & International Trade, commented that: “UK businesses are now realising that they will need to prove their competency in customs procedures when Brexit comes around – whatever form it may take.
“This surge in applications is encouraging, but there’s much more to be done before we catch up with our European counterparts, who will soon be our competitors.
“Attaining AEO status will be a useful exercise for exporters, whatever our future arrangement with the EU will be. The application process allows businesses to fully examine and ensure that its customs regime is up-to-scratch.
“Doing this will also put businesses in a strong position for other customs arrangements, including the Trusted Trader scheme.”
Read more: 500 new Brexit laws passed in H1 2019
Businesses are hopeful that applying for an AEO will ‘safeguard their attractiveness in the supply chain post-Brexit’.
Your businesses can apply for an AEO on the HMRC website and will be eligible if your firm is involved in the international trade of goods with non-EU countries.
The pace of the government’s legislative preparations for Brexit has surged in the first half of this year with four times as many Brexit-related bills passed compared to H2 2018.
Thomson Reuters reported that 488 legislative pieces were passed from January to June, compared to 112 in the latter stages of last year.
The first six months of 2018 saw just one Brexit-related bill passed.
The increase in activity shows how much is being done to prepare for Brexit, but there is a lot more left to do.
Key legislative pieces, such as The Trade Bill which would enable the government to roll over existing EU trade deals still need to be passed, as well as The Financial Services Bill which would grant powers to implement future EU financial service regulations.
Establishing settled status for EU nationals living in the EU is also yet to be passed in The Immigration Bill.
Legislation department manager at Thomson Reuters, Charlotte Brady, commented that: “The uncertainty around the timing and manner of the UK’s departure from the EU has led to a significant proportion of drafters’ time being directed towards preparing UK legislation for Brexit, which has resulted in a reduced focus on the domestic agenda.
“This trend looks set to continue as even after Brexit, there will still be Brexit-related legislation which needs to be passed in the immediate aftermath of the UK’s departure.”
Read more: UK businesses reliant on EU imports ‘not even close to ready’ for no-deal Brexit
The surge in legislative action from the government should carry a warning for UK businesses about just how much work is needed to ensure as seamless a business and trade environment as possible following Brexit – especially those who are yet to begin preparing.
According to the FSB, only around one in seven small firms are ready for a no-deal Brexit, despite over 40% believing it would have a negative impact.
If your business needs support as 31st October approaches, find out more about our Brexit consultancy.
Irish exporters to the UK are facing a ‘severe threat’ as sterling hit a two-year low.
With the arrival of new Prime Minister, Boris Johnson and a more steadfast approach to 31st October as Brexit day, the pound saw its value slide with the possibility of no-deal becoming increasingly likely.
Marry that with comments from Michael Gove that the government is assuming that no deal will happen, and the markets were more than a little concerned that the UK really could crash out of the European Union without a transitional agreement in place.
The Irish Experts Association has said that they are deeply concerned that the impact no deal would have on Irish exporters into the UK and the adverse effect of a weakening Euro-Sterling exchange rate.
Simon McKeever, chief executive commented that: “We note with deep concern the trajectory in the Euro-Sterling exchange rate over the past 36 hours. The profitability of Irish companies exporting to the UK is heavily dependent on the exchange rate, particularly at these levels.
“This recent sharp adverse movement, caused by the increased likelihood of a no-deal Brexit, is a serious threat to many Irish exporters if not sufficiently recognised, managed and mitigated.”
Read more: UK businesses reliant on EU imports ‘not even close to ready’ for no-deal Brexit
With Halloween fast approaching, many commentators have urged businesses to prepare now with figures suggesting just 23% of businesses have activated contingency plans.
Interim director-general of the IoD, Edwin Morgan said that: “With business costs rising in many quarters, and management time precious, it’s understandable that firms don’t want to put resources towards preparing for something we still hope won’t happen.
“But the risk of no deal is very real and so we’d urge all businesses, if they haven’t done so already, to carefully consider their exposure and draw up mitigation plans now.”
If your business is yet to fully prepare for Brexit, especially a no-deal outcome, then time really is running out to make sufficient progress. Find out more about Go Exporting’s Brexit consultancy and help to mitigate the risks – and capitalise on the opportunities.
An alarming number of UK businesses reliant on imports from the EU to operate are falling behind in their Brexit planning and would not be ready for a hard exit from the European Union, with a leaked Cabinet note warning it would take ‘at least four to five months’ to improve the readiness of British firms trading with the EU.
Research by Newsnight has found that just 10% of UK firms importing from the European Union have prepared for a hard exit and aren’t taking advantage of new government schemes to support trade with the EU.
The data hinges around the new Transitional Simplified Procedures scheme, launched by HMRC in February, which is designed to make it easier for businesses to import in the event of an abrupt exit from the single market and customs union.
The new scheme (TSP) would allow UK firms to import goods from Europe without the need to complete new customs declarations, whilst also affording a 12-month import duty payment delay.
According to Newsnight, just 10% of businesses for which the scheme would be applicable have signed-up, meaning nine in 10 UK firms that import from the EU would not be best positioned in the event of no-deal and would likely experience heftier delays.
Spokespeople from the British Chambers of Commerce commented on the figures that: “If it really is this low we’re far, far away from being day one no-deal Brexit ready – it’s a very low number.
“The TSP data is terrible. The top-level lesson is that most small firms are not even close to being ready for a No Deal scenario.”
In total, around 240,000 UK businesses would be affected and are eligible for the TSP scheme, but just 17,800 have so far applied.
In order to get TSP status, a company must first register for an Economic Operator and Registration Identification number from the HMRC.
Read more: UK firms trading with EU urged to apply for EORI number in preparation for No Deal
HMRC commented on Newsnight’s findings that: “Many businesses have already registered with HMRC as international traders – accounting for around two-thirds of the trade carried out by UK VAT registered businesses that only trade with the EU.
“HMRC’s plans include actions and easements to ensure that as many traders as possible are ready on day one to keep trading.”
If your organisation is unsure what crucial preparations and procedures should be put in place to ensure readiness for a hard exit from the European Union, talk to us today about a Brexit audit for your business.
New data has shown that 66% of the UK public supports free trade deals, with just 3% opposing them.
That’s the findings of the Department for International Trade’s first ‘public attitudes to trade’ tracker, a survey of 2,400 people across the UK that aims to calculate people’s changing attitudes to trade over time.
Giving reasons why they supported free trade, respondents most often cited cheaper goods, greater choice and improved opportunities.
Those who had greater knowledge and experience of international trade reported the highest favourability towards free trade agreements.
“This national survey shows overwhelming public support for free trade agreements, which puts us in a strong position as we leave the European Union,” commented International Trade Secretary, Liam Fox.
The UK government is currently working on a host of new free trade agreements in the run-up to Brexit, and with a no-deal exit from the European Union seemingly becoming a real possibility, new trade deals with the US, Australia and New Zealand could be crucial for British businesses to remain competitive on the international stage whilst also opening the door to new opportunities.
Public sentiment towards trade agreements is also mirrored in the British businesses community with a number of high-profile firms publicising the potentially devastating impact a no-deal exit from the European could have, including the car manufacturing industry which warns of a £50,000-a-minute hard-Brexit bill should a trade deal not be reached.
And with the UK economy having missed out on up to £550m a week since the EU referendum according to some calculations and three in four manufacturers reporting Brexit has damaged their strategy planning and prospects, businesses and the general public alike will be pushing for a favourable agreement and outcome to Brexit negotiations as 31st October looms large.
The performance of UK exports and goods over the last twelve months has continued to rise, reaching a new record high despite a challenging global trade environment and impending departure from the European Union.
In the 12 months to May 2019, overall exports increased by 4% to £647.1 billion with goods exports alone increasing by 4.7% to £357.1 billion, supported by an ever-increasing demand for British food and drink products abroad.
Total service trade surplus grew to £107.3 billion following a 3.3% rise, whilst in goods exports, the fuels sector contributed the most significant sector growth at nearly 26% to £39.3 billion.
These are the latest figures released from the Department of International Trade which this month celebrated its third anniversary to a 38th consecutive month of export growth on a year-to-year comparative basis.
International Trade Secretary, Liam Fox commented on the latest data that: “Despite the global headwinds getting stronger, today’s record-breaking statistics highlight what a real international trade policy can deliver for the UK as people from around the world continue to express their appetite for British goods and services.”
Read more: Scottish food & drink exports rise to record £1.4 billion
Continued export success for the UK comes at a time when weaker global growth, political uncertainty and of course Brexit have all held the potential to seriously weaken UK firm’s abilities to continue growing international sales.
Earlier this month, the World Bank announced in its Global Economic Prospects report that global economic growth is forecast to slow to 2.6%, below expectations, with no significant growth expected in 2020 either.
Citing restrained investment in emerging and developing economies, as well as weaker exports and investment within the EU, World Bank Group President, David Malpass commented that: “Current economic momentum remains weak, while heightened debt levels and subdued investment growth in developing economies are holding countries back from achieving their potential.”
“It’s urgent that countries make significant structural reforms that improve the business climate and attract investment. They also need to make debt management and transparency a high priority so that new debt adds to growth and investment.”
The report forecasts regional growth within Europe and Central Asia to steady at 2.7%, an increase on a sluggish 1.6% this year.
