The next government needs to deliver a better trading relationship with the EU as a matter of priority.
That’s the view of the British Chambers of Commerce, one of the most influential business networks, set out as part of its Future of the Economy Manifesto for 2024.
The manifesto focuses on five key areas of the UK economy, from green innovation and digital, to people, work, and global Britain.
The manifesto notes that: “There is a clear need to improve trading relationships with the EU, which remains our biggest trading partner.
“Retaining Britain’s place on the global stage also means keeping our most successful businesses who may be looking overseas for finance. British growth capital should be made more accessible.
“Finally, the government should only diverge from EU rules where it adds value to UK plc. We encourage close alignment on regulations that impact Britain’s global trade, such as standards on manufactured goods, while supporting divergence where there is a clear benefit, such as the Mansion House reforms that will help unlock additional investment for UK firms.”
The manifesto put forward three key recommendations for growing global trade;
- Implement trade deals which improve export potential for business
- Grow foreign direct investment into the UK
- Continue reforms to increase UK investment
A Swiss solution?
William Bain, BCC Head of Trade Policy, said that the UK should be looking towards a Swiss-style deal with the EU after a recent trip to the country.
He said that: “Switzerland is one of the UK’s strongest trading partners with a depth to its finance and services trade that mirrors our own. It is also at the heart of Europe’s life sciences and pharmaceutical industries.
“As a member of the European Free Trade Area, while sitting outside the European Economic Area, it can set its own course on many regulatory issues.
“But it retains close links with the EU Single Market, particularly in goods. These have been developed through bilateral agreements with Brussels over the past half a century, though Switzerland is also a full participant in the Schengen Zone, allowing friction-free movement through Swiss territory for qualifying citizens.”
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UK exporters are being urged to transition to the Customs Declaration Service (CDS) before the 4th of June deadline to ensure the continued smooth processing of their export declarations. With less than a month remaining, HMRC has intensified calls for businesses to make the switch from the current Customs Handling of Import and Export Freight (CHIEF) system to the new CDS.
Why the change?
The transition to the CDS is part of the government’s ongoing efforts to modernise and streamline customs processes. The new system promises enhanced capabilities, including improved data integration and greater flexibility in managing customs procedures. The CHIEF system, which has been in operation for decades, will be completely phased out, marking a significant shift in how export declarations are handled.
Sarah Hartley, HMRC’s Director of Border Change Delivery, said: ”There are just weeks left for businesses to migrate their export declarations to CDS – those who have yet to move need to do so now.
“Anyone who needs help migrating to CDS should work with a customs agent who is ready to use the system and can make declarations on their behalf.”
Support and resources available
To assist businesses in this transition, HMRC has provided a variety of resources, including a CDS toolkit and checklists. Exporters are encouraged to utilise these tools to ensure they are fully prepared for the switch.
Businesses that fail to adopt the CDS by the deadline may face significant disruptions to their export operations.
Steps to transition
Exporters should start by familiarising themselves with the CDS and its requirements. Key steps include:
- Registering for the CDS: Businesses need to sign up for the service through the Government Gateway.
- Understanding the new data requirements: The CDS requires more detailed information than CHIEF, so exporters should review the new data fields and ensure they have the necessary information ready.
- Updating software: If businesses use customs declaration software, they must ensure it is compatible with the CDS. HMRC provides a list of approved software providers.
- Training staff: Employees who handle customs declarations will need to be trained on the new system to ensure a smooth transition.
Exporters keen to understand the main differences between the two systems can do so with this gov article.
New post-Brexit border checks are expected to add billions of increased costs for UK firms doing business with the EU.
The new checks apply to medium-risk goods such as meat, dairy and plants. One flower company owner told the BBC that the extra costs related to checks on his imports from Europe will cost an extra £225,000 a year – costs that he will have to pass on to customers.
The checks kicked in from midnight and are designed to help secure the UK’s borders from biohazards and threats such as disease and pests. When inside the EU, these checks were already being conducted on the continent and meat, dairy and agricultural goods could pass into the UK unchecked.
Health certificates were already introduced in January this year for plants and food, though now physical checks must be carried out. Low-risk items such as canned goods can pass through unchecked though.
UK importers are also facing charges for consignments that arrive into the UK even if they’re not stopped for inspection.
The government has suggested that the increased beurocracy will cost businesses around £330, a year and add 0.2% to food inflation – figures which some specialists believe are optimistic.
The Cold Chain Federation told Sky News: “We think there’s going to be a billion pound’s worth of extra cost put onto food coming through Dover port alone, if you expand that to the rest of the country you’re looking at all sorts of money, so it won’t be 0.2%, it will be substantially more than that and the consumer will see that increase.
“Restaurants, delicatessens, fish and chip shops could well be affected by what’s currently happening today and the consumer, in the very near future will start to see some of those food products going up in price.”
Read more: Brexit has made the UK harder to invest in, and less productive too
A cabinet office minister said that: “It is essential that we introduce these global, risk-based checks to improve the UK’s biosecurity. We cannot continue with temporary measures which leave the UK open to threats from diseases and could do considerable damage to our livelihoods, our economy and our farming industry.”
The economic landscape of the UK has shifted massively since both Brexit and the pandemic. A nation that once used to build and manufacture its GDP now relies heavily on a financial services heart as trade with our closest major market becomes increasingly difficult post-EU departure.
And this has led to difficulties around productivity, and a slowdown in inwards investment too.
The productivity puzzle
The introduction of customs checks and the need for additional paperwork have slowed down the process of international trade, impacting industries that rely on just-in-time supply chains in particular. Furthermore, the uncertainty surrounding the UK’s future relationship with the EU has made it difficult for businesses to plan for the long term, stifling investment in productivity-enhancing measures.
Brexit has also had a tangible impact on the workforce too. The end of free movement has led to labour shortages in key sectors such as agriculture, healthcare, and hospitality. These shortages not only hinder operational capacity but also place upward pressure on wages, further squeezing businesses’ ability to invest in productivity-enhancing technologies and training.
Investment challenges
The sentiment around investing in the UK has notably shifted post-Brexit, as highlighted by Jeffrey Sprecher, the founder and chief executive of Intercontinental Exchange. Once a proponent of the UK’s decision to leave the EU, Sprecher has observed a decrease in the UK’s value as a trading centre since its exit from the single market. The ambiguity surrounding post-Brexit regulations has made it increasingly difficult for international companies to commit to investments in the UK.
Sprecher’s comments reflect a broader trend among international investors, who now view the UK with caution due to the compounded uncertainties of Brexit. The perception of the UK as a gateway to Europe has diminished, making investments in the US and other regions appear more straightforward and less risky.
Moreover, the UK’s historical reputation as a global trading centre has been complicated by Brexit. The shift in regulatory frameworks and the potential for divergence from EU standards pose additional hurdles for businesses looking to operate across borders.
This complexity not only deters investment but also challenges the UK’s ability to maintain its position on the international stage.
A post-Brexit reality
Brexit has undeniably transformed the UK’s economic landscape, making it a more challenging environment for productivity and investment. The combined effects of trade disruptions, labour shortages, and regulatory uncertainties have contributed to a decline in the UK’s economic performance.
As the UK continues to navigate its post-Brexit reality, the need for clarity and stability becomes ever more critical to regain the confidence of investors and businesses alike. The path forward will require a balanced approach, one that addresses the immediate challenges while setting the foundations for long-term growth and productivity.
And there are, of course, opportunities to be grabbed too – especially in emerging international markets, for businesses who are brave enough to shift their focus away from the EU and to the global marketplace instead.
For more help on doing just that, click here.
Research commissioned by the British Beauty Council has found that Brexit has severely impacted the UK beauty sector, with SMEs especially affected.
The research, conducted by Oxford Economics, found that customs delays, increased costs associated with cross-border trade and a reduction in skilled EU workers entering the UK economy have shrunk the value of the UK beauty industry’s exports into the continent by £850m.
The research looked at sales trends before and after the UK’s departure from the European Union and found that, whilst sales increased in 2010 and 2016, exports have been in decline ever since the Brexit vote.
Interestingly, export values from UK beauty firms into the global marketplace have remained steady – its EU sales which have declined.
Head of trade policy at the BCC, William Bain, noted that: “The reality is if UK business is to thrive, then we must export more, it’s as simple as that. If we want to remain one of the world’s largest economies, then we need more firms selling goods and services internationally.
“The pandemic, supply chain disruption, Brexit, non-tariff trade barriers and global headwinds have all made this more difficult over the past few years.”
Read more: Growing crisis for UK’s exporting industry
This report, although damaging for the impact Brexit has had on trade with the EU, highlights the advantages of setting corporate sights further afield.
By targeting a global audience rather than just within the Eurozone, UK firms have an opportunity to find new customers – potentially in territories where competition is lower, or there is huge demand for their products and services.
To find out how export-ready your business is, take a quick and free quiz right here and get an instant assessment report on areas you need to work on to start taking advantage of the global opportunities that are out there.
A straw poll as part of UK exporters has unearthed how unprepared most are for upcoming changes to the British border and how they will affect them.
Taken on an Institute of Export & International Trade webinar, just 6% of attendees said they were ‘completely clear’ about upcoming changes, whilst 16% said they were ‘clear’.
The question relates to the government’s Border Target Operating Model which sets out how the UK will approach checks on some goods entering from the EU – including several sanitary and phytosanitary (SPS) requirements.
The new border controls are designed to protect the UK against security and biosecurity threats and to ensure a smooth flow of goods, delivered as part of the 2025 Border Strategy.
Kevin Shakespeare of the IOE&IT noted: “There’s a lot going on in the trade and customs space in the UK. It can be a challenge to keep up, but there are also opportunities for businesses operating compliantly, that take the time to analyse and stay up-to-date on the changes.”
The 200-page document explains how the UK will adopt a digitised and risk-based approach to border checks with agencies conducting different levels of checks depending on the risk category of the product.
The same approach will then also be applied to non-EU goods entering GB.
IOE&IT customs specialist Anna Doherty further explained: “The impact of the model will vary depending on what you trade.
“For example, for exporters of SPS goods, the EU has been implementing controls right from the end of the transition period. To bring these checks into the UK will even out the playing field for these businesses.
“The model is also bringing in a range of simplifications. If you’re bringing in SPS goods from the rest of the world, then the modernisation in this regime will allow you to align your processes.”
Read more: Planned post-Brexit checks on EU food imports delayed again
UK importers and exporters have more to contend with too over the next 18 months, including the migration to CDS for exporters, a new NCTS5 system for transit, and the Windsor Framework.
Three key milestones that exporters need to know as part of the British Border Operating Model include:
- 31 January 2024 – The introduction of health certification on imports of medium-risk animal products, plants, plant products and high-risk food (and feed) of non-animal origin from the EU
- 30 April 2024 – The introduction of documentary and risk-based identity and physical checks on medium-risk animal products, plants, plant products and high-risk food (and feed) of non-animal origin from the EU. At this point, Imports of Sanitary and Phytosanitary goods from the rest of the world will begin to benefit from the new risk-based model
31 October 2024 – Safety and Security declarations for EU imports will come into force from 31 October 2024. Alongside this, we will introduce a reduced dataset for imports
If your business is yet to fully understand what upcoming changes mean for continued operations, Go Exporting can help you uncover the practical steps you need to make to remain compliant, continue seamless trade, and even spot an opportunity for growth.
Find out more about our customs and compliance reports, or get in touch directly here.
In a recent piece for The New Statement whilst discussing Peter Forster’s book ‘What went wrong with Brexit and what we can do about it’, Andrew Marr has highlighted how UK SMEs are struggling to export to the EU and are increasingly deciding not to.
He says there is an ongoing contraction happening as firms decide it is too difficult to trade with the EU, and new ‘sectoral deals’ may be required by future governments to create closer alignment.
In short, back into the Single Market, but without saying so. Watch Marr’s points below:
Still opportunities for international trade
Whilst doing business with the EU market has undoubtedly become more complex since Brexit, there are still fantastic opportunities for new and established UK businesses to expand their horizons and drive increased revenue through international sales.
For many, it’s just about knowing how to start.
Go Exporting helps companies like this to understand their readiness to export with a three-stage audit and additional strategy, including export viability and corporate goals, legal, customs and market research – as well as market entry strategies.
Learn more about our export readiness audits here.
The government has delayed plans to introduce checks on imported food products once again.
The post-Brexit checks on fresh farm produce and plants from the EU into the UK were meant to begin in October, however, concerns over supply chain readiness, delays and potential inflationary cost increases have seen the roll-out pushed back once more.
Industry bodies have welcomed the move, with the Cold Chain Federation noting; “UK food retailers, hospitality businesses and consumers were in line for major disruption because many EU food-producing businesses supplying into the UK are not ready for the new requirements.”
But some businesses have said that delaying the checks will give an unfair advantage to continental rivals as UK produce arriving in the EU are subject to checks.
When will checks begin?
There’s no date as to when the changes will be introduced, with some industry insiders telling the BBC that they don’t expect any additional checks to come into play before the next general election, in January 2024, for which it is unlikely any new government would immediately mandate checks begin either.
This leaves a prolonged period of limbo for supply chains and the businesses which rely on them. When should they invest in the updated processes and procedures necessary, and if they do, could that be money down the drain?
At a time when inflation is still stubbornly embedded in the UK economy, it is unlikely any policy will be forced through onto businesses that will undoubtedly cause an increase in consumer prices.
But the period of limbo is harming UK producers, with the director of trade at the National Farmers Union, Nick von Westenholz, saying UK farmers were facing issues with exporting but continental competitors could export into the UK at will.
He said: “We appreciate the need to protect consumers from rising food prices, but it is vital that we introduce proportionate, light-touch checks on all our food imports that keep costs for importers to a minimum while properly managing biosecurity risks.”
Get support with the new post-Brexit trading environment
It’s been a tumultuous time for UK businesses adapting to the post-Brexit trading environment with new processes, delays and costs to mitigate.
The continued delay on UK checks on EU produce is a great example of businesses having to exist in a state of perpetual uneasiness – huge changes on the horizon with major consequences, but no clear idea as to when those changes will come into play… and when they should start preparing for them!
At Go Exporitng, we help import and export businesses of all sizes to adapt to the ever-changing tides of international trade, and we can do the same for you.
Learn more about our Brexit consultancy services and how we can help you overcome the obstacles and actually benefit from the changes here.
Rishi Sunak’s new Windsor Framework was designed to do a few things. First and foremost was to fix the backstop issue in the original Brexit deal and remove the border down the Irish sea. And second, it was supposed to unlock talks with the Biden administration over a new, lucrative ‘Brexit dividend’-worthy trade deal with the US.
And the latter looks to have worked… to a degree. The White House suggested to the UK government this week that it would now be open to starting talks over a trade deal again – but not until 2025.
That timeline is only likely to accelerate should Biden lose in the 2024 US elections, if he decides to run for another term. If Biden is reelected, then 2025 could be pushed back further as he battles with those on the left of his own party who are concerned at the number of US jobs being lost overseas.
Conservative MP David Jones told The Telegraph that: “The US can remain on the back-burner until we have a more sympathetic US President.
“Indeed, it was rumoured that Biden himself was keen [for the US] to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership [CPTPP]. If that happens, we will not need a bilateral deal.”
Read more: UK to join £11 trillion CPTPP trading bloc
“In the meantime, we can focus on more enthusiastic trading partners, who are accounting for an increasing share of the global economy.”
Anyone trading with or from Northern Ireland since Brexit will be aware of the increased difficulties and effective border down the Irish Sea. It’s an issue which has been a constant bone of contention, especially with Northern Ireland politicians, leading to the collapse of the Stormont Assembly after the DUP withdrew.
Rishi Sunak, the UK Prime Minister and Ursula von der Leyen, President of the European Commission announced the so-called Windsor Framework on 27th February, hailed as the solution to the issues and a victory for common sense. But what does it mean for international trade? Will it actually improve the situation for UK-NI traders without closing the border between NI and the EU?
One of the key wins is the Green Lane/Red Lane idea where goods from the rest of the UK destined for Northern Ireland will follow a Green Lane, with a separate Red Lane for goods destined for or at risk of ending up in the EU. It has been publicised as if the Green Lane will have virtually no paperwork and movement of goods to NI will be like before Brexit.
As ever the devil is in the detail. There will in fact still be paperwork requirements for traders, albeit at a significantly reduced level. There will still be around 25 datapoints required. This is not being called a Customs Declaration, but some would argue in effect that is what it will be. Goods in the Green Lane will not be subject to systematic checks, though the facility for spot checks is there.
Parcels will not be subject to full customs declarations but from 2024 the parcel operators will be required to share data with the EU to manage smuggling risks.
Current bans on certain products like chilled sausages entering Northern Ireland as a result of EU law will be lifted, meaning anything available in UK supermarkets will once again be available in Northern Ireland. New labelling arrangements will come into force for some goods. UK VAT and Excise Duties will once again apply in Northern Ireland for alcoholic drinks for immediate consumption.
Northern Ireland retailers will have to qualify as trusted traders to benefit from the reduced paperwork, however. Rishi Sunak explains:
“It means food retailers like supermarkets, restaurants and wholesalers will no longer need hundreds of certificates for every lorry,” Sunak said. “If food is available on supermarket shelves in Great Britain, then it will be available on supermarket shelves in Northern Ireland.”
Personal, online shopping and business-to-business parcels sent from Britain into Northern Ireland “will have to complete no customs paperwork”, he said.
Download now: Checklist for exporting from the EU to the UK post-Brexit
Bans on seed potatoes and 11 types of native UK trees will also be lifted. Medicines approved in the UK will automatically be available in Northern Ireland. This is a major boost for pharmaceutical companies in the UK and the NHS.
Goods moving from NI to the rest of the UK will not require paperwork.
On the face of it, this is a good agreement for Northern Ireland, keeping its foot in both the UK and EU with it seems the minimum of bureaucracy. Yet could all be about to implode?
A key element of the framework is the so-called Stormont Break, designed to give the Northern Ireland Assembly a say on how EU laws are applied in Northern Ireland. It can effectively put a brake on new laws being implemented.
Read more: New Northern Ireland framework could unlock US trade deal
The DUP has indicated that it will oppose this element of the framework in a House of Commons vote on 22nd March 2023. If they do, then the future of the overall agreement could be in doubt. The bill will still pass on Wednesday as it has Labour support, but ultimately the DUP must be convinced in order to restart the power-sharing executive in Northern Ireland which has failed to sit for over a year.
Watch this space!
