A new report has suggested that Brexit has cost the UK economy £550m in lost growth since the referendum in June 2016 – £66bn worse off in just three years.
That’s according to Standard & Poor’s Brexit report, which noted the fall in the value of sterling as one of the primary factors affecting potential economic growth.
Senior economist at S&P, Boris Glass noted that: “Uncertainty over the shape and form Brexit will take has increasingly paralysed any forward-looking decision making.
“This is reflected in particular in a contraction of business investment in 2018.”
S&P’s analysis was actually more favourable than Goldman Sachs and The Bank of England, who estimate lost growth to be £600m and £800m per week respectively.
However, major businesses are still more than optimistic about the trading conditions in the UK and the ease of doing business. CEO of Made.com noted the UK has the best location in Europe to do business, ahead of Berlin and Paris… despite Brexit.
Read more: Germany increasingly concerned by lack of SME Brexit readiness
In an interview with The Telegraph, Philippe Chainieux commented that: “The UK has been, and I think, still is, a more international hub, attracting money first of all, and talent from across the world.
“Berlin, Stockholm and Paris are far behind from that perspective.
“The merit of London is that it’s easier to build an international business here because the capacity to attract people from everywhere, to attract talent, culture, world understanding in one single hub is absolutely huge.
“In fact, it’s so much easier to do it here than anywhere else in Europe.”
The head of bathbomb and scented soap retailer Lush has given an insight into the potential damage a no-deal Brexit could cause to his business.
Mark Constantine has lambasted the government’s approach to negotiations and its attitude towards businesses as the firm’s financials took a swung from a £23m profit to £4m operating loss last year.
He commented that: “Brexit is the most impactful thing on our business because of the sheer incompetence of the government.
“You can’t be the party of business and be anti-immigration. I believe we are heading into a recession and a lot of that has been caused by the government.”
Read more: Three-quarters of UK manufacturers report Brexit is damaging business planning and prospects
Constantine also gave an insight into the potential damage that no-deal Brexit could cause to the business, estimating a £2.6m World Trade Organisation tariffs bill whilst product stockpiling could cost another £1.3m.
The company has already set-up a new factory in Germany to handle EU orders which had previously been serviced from the UK.
Small businesses in Germany are being warned that too many are unprepared for Brexit and the potential disruption the UK leaving the EU will cause native firms.
The warning primarily centres on financial services and access to financial products.
Banks on the continent have been shifting market-related activities for some of their EU clients, such as currency swaps, away from London in preparation for Brexit to avoid disruption.
However, some banks have warned that they can only move clients’ businesses if they give the green light to do so which can require the renegotiation of contracts.
Some have admitted their advice is falling largely on deaf SME ears.
“Too many clients do not react at all”
Central bankers at Deutsche Bundesbank have issued a warning to small businesses and reminded them that they are ready to help them prepare – should they choose to take the time to do so.
Board member Joachim Wuermeling said: “The banks are approaching their clients which might be affected by Brexit. The snag is that the response is very limited.
“Too many clients do no react at all.
“Even if Brexit will be postponed, all EU companies, be them small or large, are well advised to check hidden financial links to the UK.”
However, the disruption should only cause small-scale gridlock, with Commerzbank’s head of corporate client development and digitalisation, Jan-Philipp Gillmann stating that: “Only a small number of new or existing trades will need to be transferred or migrated to another subsidiary or branch due to Brexit.”
Perhaps unsurprisingly, the general notion on this side of the Channel is that businesses have been preparing for Brexit, especially as the potential for a no-deal appears to be increasing.
Read more: Fishing industry urged to avoid no-deal exports catch
Around 40% of businesses said they were ready to enact on Brexit contingency plans at the start of 2019 according to the CBI, whilst data from OFX suggested that UK SMEs are planning to press on with EU exports despite Brexit this year.
If your business has little contingency planning for Brexit, deal or no deal, it’s not too late to put in place emergency measures and plans to negate where possible the potential short-term damage and disruption.
Contact Go Exporting today to find out how we can help, or read more about our Brexit consultancy.
UK fish exporters are being urged to sign-up to a new digital catch certificate service to ensure they’re able to continue selling to the EU in the event of a no-deal Brexit.
Advice published by the Department for Environment, Food & Rural Affairs this month said that businesses should take action now to avoid issues from 29th March onwards should a deal or article 50 extension not be reached, with the new digital catch certificate applying to most fish and fish products.
Catch certificates prove that fish have been caught within conservation and management measures for which all non-EU countries must present when trading into the European Union.
It’s the latest in a string of official advice published to guide the UK fishing industry and navigate the choppy Brexit waters, including advice on health and customs regulatory compliance in the event of a hard exit.
Read more: Strong appetite for British food and drink overseas
Export documentation that may be required following the 29th March include:
- catch certificates
- processing statement
- storage document
- prior notification form
- pre-landing declaration
Fish export businesses can find all the information they need on the digital catch certificate service and how to apply on the government website here.
The number of UK firms exporting, and the value of exports, has increased once more year-on-year according to the latest DiT data.
Figures from HMRC showed 110,800 VAT-registered businesses exporting last year, whilst the exports of goods across all four UK regions also increased.
Scotland led the export growth charts with a 5.6% rise in goods sold abroad, followed by 4.2% in Wales, 2.1% in England and 1.9% in Northern Ireland.
The value of goods sold over the last 12 months was a combined £305 billion, made up of £248.6 billion in the UK, £30.3 billion in Scotland, £17.2 billion in Wales and £8.9 billion in NI.
The average worth of exporting to UK businesses for the last quarter of 2018 stood at £780,000.
International Trade Secretary Dr Liam Fox said of the latest results that: “The continued rise in British exports across the country highlights the true exporting power across all UK regions.
Read more: 71% of UK manufacturers have an export-based growth strategy
“This is fantastic news for British businesses, who should be encouraged by these figures to take advantage of the clear opportunities available for growing their business overseas.”
If your business is yet to start exploring the proven benefits of exporting and the business growth opportunities it provides, find out how Go Exporting can help open a world of opportunities here.
Over 70% of UK manufacturers have an export-based growth strategy for their business.
That’s according to the latest Annual Manufacturing Report data from The Manufacturer, whereby 71% of manufacturers are actively seeking new markets to penatrate.
The news is positive and highlights the resilience and optimism of exporting manufacturers in the UK in the approaching wake of leaving the European Union, although it should also be considered that many UK exporters trade outside of the EU – over 50% in fact according to the Office for National Statistics (2016).
The report really highlighted a split in outlook and sentiment when it comes to future business, and that split, unsurprisingly, was Brexit.
As we reported here, some 71% of businesses who answered the survey say that Brexit uncertainty is damaging strategic planning and business prospects. A further 54% reported that Brexit would cause severe issues for their business.
But when focusing inwards at their own business and capabilities, the sentiment is far more positive.
For example, nearly 80% of respondents say they have confidence they have the capacity for growth. Also, 67% say they are confident overseas trading conditions are good for promoting business growth.
The report also noted that businesses aren’t quick to lavish praise on the government’s support of exporters, with 55% saying it should do more to promote exports and exporting firms.
And on one of the ways the UK government could do more, especially after 29th March, subsidising any future trade tariffs was noted.
Read more: Three quarters UK manufacturers report Brexit is damaging business planning and prospects
As Andrew Bennet, managing director of Allan & Bertram told The Manufacturer: “If we end up with tariffs on exports to Europe, I assume there would be similar tariffs applied to imports from Europe, so I expect the government to allocate this revenue to exporting businesses to compensate for the export tariffs and allow us to remain competitive.
“Not only does the government need to support the business economy in practical terms, it needs to be seen to be doing so.
“If the government worked with businesses to get us all prepared, that could send a very powerful message to the UK and the EU negotiators – ‘We are ready!’”
Almost three-quarters of UK manufacturers have reported that Brexit is causing damage to long-term strategic planning and future business prospects.
That’s the Brexit headline from the latest Annual Manufacturing Report produced by The Manufacturer in which 71% said Brexit uncertainty is damaging strategic planning and business prospects.
Commenting
“Post-Brexit, a triple blow of higher import costs, added paperwork, and a likely recession.”
And the number of manufacturing firms who believe Brexit will cause severe disruption for the manufacturing sector in the UK has grown. In last year’s report, some 54% of respondents felt that Brexit would cause severe issues for their business.
That figure has now grown to 64% over the last 12 months.
However, and interestingly, 35% of firms don’t believe Brexit will cause any chaos and that leaving the EU will trigger a period of growth and further investment.
Read more: Nearly half of UK forms not prepared for chaotic Brexit
And in the face of adversity, manufacturing heads are optimistic about the industry’s ability to pull through, with 77% saying that, whatever the outcome of Brexit or the type of Brexit we will see, the UK as an industrial nation has the drive to succeed.
How prepared is your business for Brexit?
Whether you’re a big firm or small business, Brexit is likely to cause some level of upheaval, and every business needs a plan to ensure
If your business is yet to conduct a Brexit audit and format a post-EU membership
Find out more about our Brexit consultancy here.
In the event of a no deal Brexit, it could take seven years to re-establish frictionless, tariff-free trade between the UK and EU.
That’s the opinion of two leading EU law specialists who have warned that it might not be as simple as it sounds to simply default to World Trade Organisation tariffs should the UK crash out on 29th March.
Anneli Howard, EU and competition law specialist at Monckton Chambers and a member of the bar’s Brexit working group said to The Guardian that: “No deal means leaving with nothing.
“The UK will need to set up new enforcement bodies and transfer new powers to regulators to create our own domestic regimes.
“Basic maths shows that we will run out of time but any gap in our system will create uncertainty or conflict. Negotiating and ratifying international free trade deals with the rest of the world alone could take over seven years.
“The UK will have to start negotiating over 50 free trade agreements from scratch once we leave the EU. In the meantime we will have to pay tariffs.”
It’s a pretty dire assessment of what could be to come if Theresa May cannot convince the EU to backstop concessions and latterly Parliament to agree to whatever concessions she’s able to secure.
But, naturally, there are some with a more optimistic outlook. Professor of international economic law at City University of London, David Collins remarked that: “The UK can trade quite easily on an uncertified schedule.”
And it’s also worth noting that no deal is still, even at this late stage, possibly still an unlikely outcome. EU negotiations go down to the wire all the time, made apparent by the BBC’s Inside Europe documentary, so we could see a deal agreed at 11:55 pm on March 28th. We could also see an extension to the negotiation period should there be a serious impasse but some light at the end of the tunnel in sight.
You’d like to presume that the government wouldn’t take the UK out of the EU on the morning of the 29th March if both they and the Donald Tusk et al felt another two/three days of talks would see an agreement.
However, it wouldn’t be the first time, second time or even the 100th time that the Brexit process from the referendum to now would have both UK businesses and the population as a whole still clueless as to what’s going to happen next.
Where next for UK businesses
So put simply, we still don’t know where we stand as businesses who rely on the import of goods and export sales. The potential outcomes and routes through Brexit are the same as they were two years ago – deal, no deal or delay. It still seems evident that the prospect of remaining or a People’s Vote with the view to remaining are notions by the wayside as technical possibilities, despite vocal support.
So for businesses looking to prepare for exit, the playing field is pretty much as we were – just with an ever-nearing deadline.
But with nearly half of UK firms not prepared for a chaotic Brexit according to the Bank of England’s most recent inflation report, there is still much planning and preparations to be done for UK firms as Brexit day looms large.
How to plan for the no deal scenario
First port of call is to make sure your business has the right documentation and goods passports in place to continue trading with the EU.
One of these includes an Economic Operator Registration and Identification number, which some businesses will require in order to apply for customs simplifications and to submit import and export declarations.
Read more: UK firms trading with EU urged to apply for EORI number in preparation for No Deal
Secondly, make sure you have enough critical supply of key components should trade and customs disruption follow from the 29th March.
This approach has been labelled fearmongering by some, but for businesses, especially within the manufacturing, food production and pharma industries, it’s critical for operations to ensure that components and parts that are imported from Europe are readily available to ensure no hold-ups in output.
In fact, the same BoE inflation report found that two-thirds of firms it quizzed said they’d begun building up stock and taking out extra warehousing space – and that rate of stockpiling is increasing.
And it’s not just worried businesses that are ensuring key supplies are ready and waiting should disruption occur following the 29th March. After all, it was just this week that it was reported that the NHS was stockpiling body bags.
But perhaps the most important step, and the one you should carry out immediately if not already done so, is talking to your customers on the continent.
Whether you sell the final product or service, or you deliver key components across The Channel, they will be having the same concerns as you are… but they have close neighbours and a local marketplace to turn to for alternatives should they feel the need.
Come Brexit day, the last thing you want to see when opening your inbox, in the event of a no deal exit, is a tirade of emails from key EU customers saying they’ve found alternative arrangements.
So talk to your customers, let them know your own contingency plans and reassure them that your potentially decades of doing business together will not stop because of Brexit, and your company stands ready to make adjustments to ensure as seamless
As Go Exporting CEO, Mike Wilson wrote in an article for Cheshire Media; “It is imperative that you talk with them now to find out their concerns, analyse together where the pinch points may arise and work through a solution. Re-assure them that you are prepared and that they can rely on your company to deliver.”
Still concerned?
Well, you’re not alone. Even those businesses that have invested millions into pre-Brexit planning and contingencies are concerned. But what’s critical is to ensure you have a plan in place to cover all the potential outcomes.
Creating action-plans that can be implemented from the 29th March as the picture becomes clearer is the best way to help safeguard your import-export business in the days running up to Brexit.
If your firm needs support and expert guidance on preparing for Brexit, you can read more about our Brexit consultancy services.
The UK has looked to sure-up its trading relationship with Chile after the signing of a new trade continuity agreement.
Signed by Jamie Bowden, Ambassador to Chile an the Chilean Foreign Minister Roberto Ampuero on 30th January, the deal will see companies and consumers cotinue to benefit from preferental trading arrangements after Brexit.
Trade in goods and services between the two nations has been steadily growing for over a decade, with near 9% annual average growth since the initial agrement was agreed back in 2003.
This continuity agreement will ensure that the relationship continues to prosper with UK expots to Chile having grown some 351%.
The news will be particularly sweet for anyone who bougfht one of the 105 million bottles of Chilean wine sold in the UK last year, with the deal meanning no new tarrifs being itnrduced after the UK leaves the EU.
As well as confirming future trading relations, the deal also allows both British and Chilean companies to bid for certain public sector contracts across the Atlantic.
Read more: Nearly half of UK firms not prepared for chaotic Brexit
International Trade Secretary, Liam Fox said of the deal that: “Today we have signed an important trade continuity agreement as we prepare to leave the European Union. This will ensure there is no disruption to British business exporting to Chile after we leave the EU and will mean consumers continue to benefit from low prices and more choice on supermarket shelves.
“Our trading relationship with Chile continues to go from strength to strength, with exports rising over 20% to almost £1 billion last year. This free trade agreement will allow trade to continue as freely as it does currently and will help to strendgthen our trading relationship even further.”
Almost half of UK companies feel they are unprepared for a chaotic exit from the EU according to the Bank of England’s quarterly inflation report.
The report, which quizzed 200 businesses about their Brexit preparations and readiness, found that half had begun planning for no deal and no transition, but half said they felt unprepared for a cliff-edge scenario.
That’s despite three in four saying they did have some semblance of a Brexit plan in place.
Those we said they were ready still expected disruption over the next 12 months, including a reduction in output and employment.
Worryingly for exporters, just one in five firms said they were taking measures to ensure they had the required documentation in place to continue trading with the EU once Brexit happens.
Read more: UK firms trading with EU urged to apply for EORI number in preparation for No Deal
In what would have been denoted as ‘project fear’ by some, the reality and realisation of what leaving the EU without a deal would look like on the ground for manufacturers and consumer services companies, in particular, has started to hit home, with two-thirds stating they’d begun building up stock and taking out extra warehousing space.
Further research from IHS Markit/CIPS found that UK businesses are stockpiling goods at the fastest pace for nearly three decades, also reporting that export orders had levelled out despite three years of record export growth across UK industries.
Director at IHS Markit, Rob Dobson noted that: “The start of 2019 saw UK manufacturers continue their preparations for Brexit.
“Stocks of inputs increased at the sharpest pace in the 27-year history, as buying activity was stepped up to mitigate against potential supply-chain disruptions in coming months.
“There were also signs that inventories of finished goods were being bolstered to ensure warehouses are well stocked to meet ongoing contractual obligations.”
If your business is one of the many that still feels unprepared for Brexit, find out how Go Exporting can help support your company’s export interests with our Brexit consultancy.
