Less than Lush Brexit outlook for cosmetics giant

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.

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Germany increasingly concerned by lack of SME Brexit readiness

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.”

uk business 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.

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Fishing industry urged to avoid no-deal exports catch

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.

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71% of UK manufacturers have an export-based growth strategy

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!’”

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Three quarters UK manufacturers report Brexit is damaging business planning and prospects

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 in the report, Director at Cumbric Ltd said that: “Small businesses like mine who rely on an EU supply chain can’t afford the added bureaucracy that is currently threatening to crash down on us.

“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 as smooth and consistent an ongoing trading relationship with export suppliers and buyers as possible.

If your business is yet to conduct a Brexit audit and format a post-EU membership strtategy, or if you want to ensure the plan you have in place covers all the bases, you can talk to Go Exporting today about ensuring your business is Brexit Ready.

Find out more about our Brexit consultancy here.

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Could it take 7 years to re-establish frictionless trade following a no-deal Brexit? How to prepare your import / export business for No Deal

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 an operation as currently exists.

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.

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UK firms trading with EU urged to apply for EORI number in preparation for No Deal

UK businesses exporting or importing with the EU have been urged by HMRC to apply for an Economic Operator Registration and Identification number so they can continue trading in the event of a No Deal Brexit.

With Theresa May’s deal set to be voted on by Parliament tomorrow and the rhetoric having advanced to a ‘my deal or no deal’ stage, many large exporting firms have already started enacting their own no deal preparations in advance of the Brexit outcome.

This latest advice, published early December, aims to help ensure businesses are ready to continue operating across borders should the UK exit the EU without a deal.

In such a scenario, it’s more than likely that the same processes that apply to international trade will then apply to any and all trade with the EU as well. However, the requirement for an EORI isn’t required for exporting goods to and from Ireland or across the Northen Ireland – Ireland land border.

Learn more about and find out how to apply for an EORI number here.

British businesses will also require an EORI number in order to apply for customs simplifications and to submit import and export declarations.

Whilst large, global exporting firms will already have an EORI number as a requirement for trading in territories outside the EU, smaller or more specified operations that have only ever traded within the EU block will likely need to apply.

Businesses urging last-minute deal agreement

businesses urge Brexit agreement

It will have been nearly three years since the EU referendum that the UK leaves the EU on 29th March, with or without a deal. And for businesses, in particular, as the deadline loomed ever closer, it’s been an uncertain time with millions being spent in Brexit readiness.

And as Theresa May’s deal finally goes to the vote in Parliament tomorrow, bosses at some of the UK’s biggest manufacturers and employers have voiced once again their desire to see a deal agreed in the interest of business certainty and limiting disruption.

Read more: Do businesses really back the current Brexit agreement? 

Today, Toyota Europe’s Dr Johan van Zyl reiterated his support for the Prime Minister’s deal, just days after Jaguar Land Rover and Ford announced thousands of redundancies across UK sites.

He said that: “We’ve said since the start of the Brexit discussions that we would like to see trade without any duties or tariffs, and of course we would like to see a regime where the regulatory framework is the same between the EU and the UK.

“That for us is what is really required to make sure that our operations can continue as they are at the moment.

“The big thing about [the] deal that is on the table is that it really allows us to keep our competitiveness. But if we put any friction or tariffs into the system, that will impact our costs and that will affect our competitiveness.”

Is your business Brexit-ready? If not, there is no time to lose to ensure your firm is prepared for any and all eventualities.

Find out more about Go Exporting’s Brexit Consultancy.

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Government’s Export Strategy to be analysed by International Trade Committee

The Department for International Trade’s Export Strategy is to be reviewed by the International Trade Committee as part of an inquiry into the department’s support for exports.

Chair of the Committee, Angus Brendan MacNeil, said the inquiry will look to review the strategy and ascertain whether or not it offers ‘sufficient levels of support to UK businesses wishing to export’.

A number of questions have been submitted to the DiT, including whether or not the Government is effectively identifying and resolving market access barriers faced by UK exporters and how effective the GREAT campaign has been at promoting UK products and services overseas.

There are also requests for written submissions regarding the DiT’s view on the effectiveness of UK Export Finance to support companies looking to export and also whether the DiT’s export service in its entirety is fit for purpose and sufficiently resourced.

Of the inquiry, Mr MacNeil said that: “Exports are the lifeblood of the UK economy, and in August, the Department published its new export strategy. Regardless of whether the UK has the ability to strike new trade deals around the world after Brexit, promoting and supporting UK exports remains a core task.

“In this inquiry, my Committee will examine whether the plans that have been set out in the Government’s strategy provide for sufficient levels of support to UK businesses wishing to export.

“We will also be looking at the effectiveness of the ‘Exporting is GREAT’ campaign, and whether the Government has set itself realistic targets, especially given the uncertainty around how the economy will fare after Brexit.”

What is the Export Strategy?

The Government’s Export Strategy was launched in August last year and set to lay the ambitious, visions and way forward to further improve the UK’s export prowess around the world.

In the Strategy, it noted that the UK is punching above its’ weight but below potential and the ambition to raise exports as a percentage of GDP from 30% to 35%.

Read more: ‘Brand Britain’ helping boost international trade as 46% UK SMEs say Brexit uncertainly not dampening exporting appetite

On Brexit, the Strategy noted that: “Leaving the European Union means we can pursue an independent trade policy for the first time in four decades, which we will use to maximise our trade opportunities across the world and deliver benefits for business, workers and consumers around the whole of the UK.”

However, the level of Brexit advice in the exporting strategy is also set to be analysed, with one of the quests from the International Trade Committee quizzing whether the strategy is sufficiently tailored to markets with particular potential in the post-Brexit trading environment and if it’s fit and ready to resolve the challenges that exporters will likely face due to the new relationship with the EU.

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‘Brand Britain’ helping boost international trade as 46% UK SMEs say Brexit uncertainly not dampening exporting appetite

A new survey has found that UK SMEs are still hungry for international trade success in the face Brexit uncertainty.

The research, called the UK SME Confidence Survey, commissioned by OFX and conducted by OnePoll, quizzed 500 UK SMEs owners and senior managers with employee counts ranging from 10 to 249.

It found that 46% of those asked said Brexit had had no effect on their hunger for international trade.

Interestingly, there was a switch in primary market focus too. In 2017, the USA was cited as the most attractive market for exports at 62%, but this year’s confidence survey saw the USA stand at just 36%.

Europe, conversely, fell back into favour with 45% of those quizzed this year suggesting Western Europe was their favoured growth market, compared to just 20% last year.

The OFX report summarised that: ”Again, it seems that Brexit-related uncertainty is no longer holding small businesses back from their EU trade ambitions.

“Despite the uncertainty surrounding the terms of Brexit, small British businesses are increasingly optimistic about international trade.

“In fact, the majority expect to increase overseas sales in the next year. And it’s not all talk. Since 2017, 47% increased overseas sales, growing international revenues by an average of £50,000.

“It’s good to know that political uncertainty hasn’t dampened the spirits of UK businesses.”

Perhaps not surprisingly, business owners in regions favoured leaving the European Union during the referendum in 2016 were most confident and optimistic about international sales now. This manifested itself in the survey results where England-based responders, where the Leave vote was highest in the United Kingdom, were the most confident, with 72% saying they were optimistic about future international trade compared to just 40% of responders from Scotland-based firms, for where the referendum result was firmly in favour with Remain.

Read more: 10% of UK SMEs now exporting

Despite the divisions in future export and international trade confidence though, one thing that united all four nations’ small businesses was the confidence in the ‘made in Britain’ brand. Over half (53%) of those asked said that the ‘Britishness’ of their brand and products was an invaluable asset when selling services and goods internationally.

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Eight out of 10 UK industry groups experienced export growth since 2015

Eight of the UK’s 10 industry groups saw export growth between 2015 and 2017 according to the latest data released by HMRC.

The data, compiled from the Overseas Trade Statistics and Office for National Statistics, found that 151,000 UK firms exported goods and employing some 9.7m staff.

Of the 10 industry groups, just two saw negative growth in export value; electronic and electrical equipment and chemicals.

The largest growth between 2016 and 2017 was seen in the pharmaceuticals sector, followed by mining, petroleum products & waste and aerospace. The chemical industry also saw a healthy increase between 2016 and 2017, offset by a larger 28% decline between 2015/16.

Industries seeing the largest import growth included pharmaceuticals and mining, as well as electronic goods.

export data

(Source: UK trade goods in statistics by business characteristics 2017)

Each and every industry group saw more short-term growth between 2016 / 17.

Business strength in the face of Brexit

This latest data set from HMRC makes for an interesting read, and a positive one too.

Firstly, whilst some sectors including most notably chemicals and electronics saw marked declines between 2015/16, every sector experienced growth thereafter. That’s despite the EU referendum result in late June of 2016 and ongoing uncertainty and negotiations the year after.

Stalwarts of UK industry including aerospace, pharmaceuticals and vehicles continued to see growth – a positive sign before the UK officially leaves the EU in March next year.

Overall, the total value of exports saw an extremely healthy 13.7% growth, highlighting both the ambition, confidence and success of exporting UK firms throughout the Brexit process.

And despite one in 10 UK SMEs now exporting around the world, 72% of the total value of exported goods is generated by a smaller percentage of more experienced firms over 20-years-old.

Read more: 10% of UK SMEs now exporting

This data, combined with other further data released recently as part of the Annual Business Survey, shed a positive light on the UK’s international trade and the increasingly international outlook for SMEs and start-ups too.

(Image by Pkuczynski)

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