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Brexit will see enhanced border checks at ports in Northern Ireland on certain exports

The UK government has confirmed plans to enhance border checks at ports in Northern Ireland and intends to release detail with the executive outlining ‘physical posts at ports of entry’ as soon as possible. 

Whilst the rest of the UK will stop following EU rules on agricultural and manufactured goods at the end of this year, Northern Ireland will continue to align itself with EU single market regulations. 

A cabinet office spokesman told the BBC that: “We want to work with NI businesses and the executive to ensure new admin procedures are streamlined and efficient.

“The protocol puts legal obligations on both sides. We are committed to complying with ours, just as we expect the EU to comply with theirs.”

He said that the government had made clear the checks requirement for live animals and agri-food – similar to what’s already in place at ports including Belfast and Larne – especially due to how strict the EU’s rules on the entry of animals and food products into the single market. 

So, whilst these border checks would always have been in the pipeline and a requirement of the Brexit outcome, this looks to be the first time the government has confirmed this will indeed happen. 

‘Deeply dishonest’?

Despite telling business leaders in November that there would be no buffers between GB and NI trade, and even saying that he would personally throw any suggested additional customs forms in the bin, the confirmation of enhanced border checks sits in contrast to Boris Johnson’s earlier Brexit rhetoric. 

Brexit spokesperson for the Liberal Democrats, Alistair Carmichael even commented that: “It now seems Johnson was deeply dishonest with businesses when he previously asserted there would be no checks and businesses could put paperwork ‘in the bin’.”

Read more: DIT outlines financial support available to UK exporters

However, minister Declan Kearney says that checks are required in order to ‘implement the protocol for 1st January’ and in a bid to avoid disruption to trade. 

“Delivery on that infrastructure needs to start as soon as possible, and the British government has indicated that it will provide advice on the requirements and the funding to put that in place.”

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Government confirms import controls on EU goods

The government has confirmed plans to implement import controls on goods entering the UK from the European Union once the transition period comes to an end on 31st December. 

After departing the EU’s customs union and single market, all UK exports and imports will be treated equally according to the Chancellor of the Duchy of Lancaster, Michael Gove, meaning that both EU and UK firms will need to submit customs declarations and be liable for goods checks. 

The government has given four key reasons as to why new customs checks will be required following the transition period, including security, treating all partners equally as new trade arrangements are agreed with other countries, collecting the correct customs, VAT and excise duties, and also simply matching what the EU says it will implement on UK goods entering the Eurozone. 

Read more: Two new digital tools available for UK exporters

Michael Gove said at a Border Delivery Group stakeholder event that: “The UK will be outside the single market and outside the customs union, so we will have to be ready for the customs procedures and regulatory checks that will inevitably follow.

“As a result of that we will be in a stronger position, not just to make sure that our economy succeeds outside the European Union but that we are in a position to take advantage of new trading relationships with the rest of the world.”

Businesses are urged to ensure they’ve applied for an Economic Operator Registration and Identification number (EORI) as soon as possible.

HMRC has also announced further funding and extended the deadline for businesses to apply for grants to help prepare for additional customs checks and paperwork following the transition period. Learn more about the grants and how to apply available here

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SMEs have bigger worries than Brexit

Whilst for large and enterprise organisations, Brexit has dominated the list of top headaches for over three years, for small businesses, other challenges are deemed far more pressing. 

That’s according to a new report from Clearwater International, titled Growth Europe, which surveyed some 2,100 small and medium-sized businesses across Western Europe. 

Of those firms questioned, from the UK, Ireland, France, Germany, Italy, Spain, Portugal and Denmark, Brexit only ranked as the fifth biggest challenge that their company currently faced, behind maintaining market position and recruiting skilled staff. 

The top 10 challenges included:

  • Recruiting skilled staff (33.3%)
  • Maintaining market position (31.7%)
  • Finding new customers (28.3%)
  • Access to foreign markets (24.4%)
  • Brexit (23.9%)
  • Political uncertainty (22.9%)
  • Dealing with regulation (19.9%)
  • Late payments (15.4%)
  • Getting external investment (15.3%)
  • Access to finance (14.5%)

Whilst the data in relation to concern over Brexit was somewhat skewed by the EU-wide SME survey, analysis of the 500 UK firms who took part in the study still only ranked the imminent departure from the EU as their third biggest challenge, with 45% saying they were still exploring markets within Europe and nearly 50% saying they are looking to expand further afield.

Meanwhile, in the Republic of Ireland, 62% of small firms report that they expect a positive impact as a result of Brexit. 

Nearly all of the countries who’s businesses took part said that recruiting was their primary challenge, followed by maintaining market share and finding customers. 

In essence, for small businesses anyway, the same challenges exist now as always have done – despite the huge upheaval that Brexit and recent political wranglings may have suggested. 

Clearwater International’s David Weavers commented on the report’s findings that: “A lot has been said about the supposed sluggish performance of European companies in comparison to their rivals in the US and China. But the results of our study show that there is a lot to be optimistic about in both the UK and continental Europe.

Read more: UK SMEs confident of achieving 2020 aims despite Brexit uncertainty

“The biggest challenges facing SMEs at the moment, such as difficulties in meeting expansionary recruitment targets, relate to things which may constrain growth but aren’t necessarily suggestive of excessive downward pressures.

“As such, the data seems to indicate that companies are looking to the future from a position of relative strength and a desire to maintain or enhance their current market position, rather than from a position of weakness.”

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UK business confidence on the rise

The confidence levels of UK businesses are slowly starting to rise after three years of political uncertainty – though investment caution remains. 

The resounding majority delivered to Boris Johnson in the general election caused a sharp increase in directors’ confidence in both their own firms and the economy at large. 

The Institue of Directors reported that confidence in the economy for December 2020 grew from negative 18% in November to positive 21%, whilst organisational confidence rose by over 20 percentage points to 46%.

Much of the new-found confidence is derived by the election promise from Johnson to take the UK out of the European Union by the end of January, bringing an end of over three years of uncertainty for businesses of all sizes – as well as costly preparations and planning. 

The service sector, in particular, saw an increase in activity at the end of 2019 with the IHS Markit/CIPS UK purchasing managers’ index for services rising 0.7 points to 50, indicating activity increases for the majority of companies. 

Read more: UK SMEs confident of achieving 2020 aims despite Brexit uncertainty

Economics associate director at IHS Markit, Tim Moore, commented to the Financial Times that: “The modest rebound in new work provides another signal that business conditions should begin to improve in the coming months, helped by a boost to business sentiment from greater Brexit clarity and a more predictable political landscape.”

With the UK’s departure from the EU just three weeks away, it’s now or never for businesses to ensure they’re prepared. If your company is yet to make concrete strategic plans to manage any disruption, including additional shipping paperwork or regulation changes, find out more about Go Exporting’s Brexit consultancy here.

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Increase in UK firms claiming Estonian e-Residency to retain EU market access

There have been numerous ways in which businesses have looked to prepare for Brexit. For some, setting up operational hubs on the continent has proved popular. Others have switched head office locations, whilst some are still resolute in their lethargy to make any operational or structural changes at all. 

But for some UK companies, a digital approach to avoiding the potential steepest of pitfalls has proved most popular – claiming an e-residency in Estonia. 

The Estonian government created e-Residency over fifteen years ago as a means for residents to communicate with the government, alongside 99% of other governmental services. And five years ago, this programme was opened up to foreigners who were already attached to Estonia to some degree – including companies who which to have a digital identity as being an EU firm. 

Managing director of the e-Residency programme, Ott Vatter, whilst speaking to readyforbrexit.co.uk, noted an increase in applications from UK businesses since the Brexit referendum result. 

Vatter said that: “We have seen a significant increase in applications for e-Residency since Brexit. e-Residency is useful for Brits because it means that they can still have a  company within the EU and still remain in the EU’s legal framework without actually physically leaving the UK space. 

“It is a virtual gateway to the EU, without being in the EU.”

For €100 you can register for e-Residency, and it costs €190 to establish a company alongside additional bookkeeping services if required. Yet whilst personal applications don’t result in becoming a physical resident or requiring to pay tax to Estonian authorities, businesses set-up using the programme it becomes a tax resident, yet tax will likely still need to be paid to UK authorities in this example if that’s where the customer base and main premises reside. 

Vatter explained that: “Before e-Residency, you could create a company in the EU by travelling to Germany or Estonia or France, for example, and pay quite an expensive fee to a lawyer and create an EU company. 

“So its conception, e-Residency is not anything new. What’s different is the fact that you can do it from the comfort of your home using your computer from anywhere in the world and when you become an e-Resident there are no obligations. It doesn’t mean that you become a tax resident or a resident of Estonia. There are no strings attached when you apply for e-Residency. It’s a personal status.

“Now, when you create a company using e-Residency then that company is automatically a tax resident of Estonia, but if your main customers are still in the UK and your permanent establishment is in the UK then you will probably have to pay your corporate tax in the UK.

“The general rule is where you create your value, there you pay your tax. It gets a bit more complicated with cross-border services and service-based industries. And, if you are travelling around a lot as a freelancer and you don’t have one permanent establishment, then we see that the benefit for them might be to pay your taxes to Estonia because you don’t have one permanent establishment.”

It takes around two months to apply to become an e-resident, whilst company registration takes around 30 minutes. 

Read more: UK SMEs confident of achieving 2020 aims despite Brexit uncertainty

But critically for UK firms, once the EU company has been established via e-Residency, that business has the right to offer goods and services across the EU and in accordance with the EU’s legal framework – even if that company is actually based in the UK and EVEN after a potential no-deal Brexit. 

So far, 3,200 UK residents have signed up for the programme – including 450 companies. 

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UK SMEs confident of achieving 2020 aims despite Brexit uncertainty

The vast majority of small business owners say they’re confident of achieving their company goals in 2020 according to a new study. 

The research, carried out by Vistaprint, quizzed 500 SME bosses on their primary goals for next year and their optimism for being able to achieve them. 

And despite the ongoing Brexit uncertainty, the General Election and rising costs, 86% of respondents said they were confident of achieving their 2020 business goals. 

The study found that UK business owners are more likely than not to feel ‘confident’, ‘prepared’ and ‘optimistic’ about the future, with just one in five saying they felt apprehensive. 

Of the primary goals for SMEs in 2020, the most popular were:

  1. Substantially increasing revenue and growth
  2. Reaching a new customer base
  3. Surviving the year
  4. Generating return customers
  5. Breaking even
  6. Introducing new products/services
  7. Increasing social media presence
  8. Building or updating website
  9. Expanding marketing/advertising efforts
  10. Selling the business

However, despite the optimism, a quarter of firms expect a struggle in the year ahead, with half saying they’re concerned on how political changes will affect their business and 38% saying they may struggle due to bills and expenses rising. 

Customer strategy and insights director at Vistaprint, Simon Baier, commented on the findings that: “While political changes and economic barriers are very real challenges facing Britain’s small businesses, our research shows that these factors haven’t dampened the UK’s entrepreneurial spirit.”

Read more: Exporting SMEs grow twice as fast as non-exporters

“It’s encouraging to see small business owners’ confidence and optimism going into 2020.

“The better they do, the more chance they have of generating jobs for local people, giving an economic boost to their community and continuing to provide significant value to customers.”

Perhaps the most pleasing statistic of the study, however, is that 90% of SME owners said they were pleased they took the initiative to start their own firm. 

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Drop in sales for British exporters as Brexit uncertainty goes on

UK manufacturers are feeling the effects of a prolonged Brexit process as sales and orders drop into the negative, despite growth in the number of individual firms selling overseas.

The British Chamber’s Quarterly International Trade Survey for Q3 2019 found that the percentage balance of manufacturers exporting internationally reporting order increases dropped from 9% to -1%, indicating a decline in foreign trade. 

Confidence is also hitting local demand with domestic orders falling from 8% to -4% in the balance analysis. 

The state of cash flow for UK manufacturers also feel from 6% in Q2 to -5% – and down from 13% at the same time last year. 

The export of services is still seeing growth, albeit slower, at 8% compared to 12% with export orders levelling out. 

Adam Marshall, director-general at the British Chamber commented that: “A strong and balanced economy needs healthy exporters at its core. But while there are some companies bucking the trend, future sales and orders are now well into negative territory, after a steady downward trend in export performance this year.

“On top of Brexit uncertainty and global trade tensions, election turbulence won’t be helping. The next administration will need to most fast to restore confidence, with action to upgrade infrastructure, boost skills and cut business costs. 

Read more: Number of exporting manufacturers on the rise

“Without urgent clarity around our future trading relationship with the EU, firms across the UK will increasingly struggle to fill order books, and jobs and prosperity in many of our communities could be at risk.”

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Business Secretary gives 5 Brexit benefits for UK companies

The December election campaign is well underway in the UK with the two main parties set to pitch their financial agendas for the country today. 

Triggered and still dominated by Brexit, the campaigns will also focus on some of the big areas that have had little discussion time in the last three and a half years, namely the environment, education, healthcare and public services. 

However, talks of new hospitals, infrastructure programmes and wi-fi for all won’t matter all that much for UK businesses if the departure from the European Union isn’t sorted – quickly, efficiently and, critical for most, with as little disruption within the transition period as possible. 

Business secretary Andrea Leadsom spoke to Management Today this week about the incumbent government’s Brexit positioning and noted five areas in which she thought British businesses would be better off after leaving the EU. Here’s a quick look:

1 – Ability to attract international talent

Leadsom notes that Brexit will afford local businesses the opportunity to shop for the best industry talent within a global pool of candidates, supported by initiatives such as the new fast-track visa route for scientists and an extended post-study work visa for overseas university students to stay within the UK and apply their learnings within the marketplace. 

2 – Lead on clean energy

The government has set ambitious targets to generate £170bn a year from green economy exports by 2030, the date by which the UK has also targeted a net-zero climate change contribution. 

“As the first major economy to legislate to end our contribution to global climate change, we are perfectly positioned to seize the opportunities of the global shift to cleaner technology.”

3 – New trade agreements

Freedom from legislative alignment and EU rules would allow more flexibility to reform regulation of emerging technologies and the pursuit of free trade agreements with North America and Asia-Pacific marketplaces, particularly in the development of renewable energy, clean growth and electric vehicles – also stimulating additional foreign direct investment. 

“This will give British companies the freedom to explore new markets and secure investment from every corner of the globe.”

4 – Investment

EU funding programmes, which have supported many British enterprises, will be replaced with domestic initiatives more aligned and focused on UK priorities, ‘ensuring Britain’s businesses and regions have the support they need to thrive and expand productivity after Brexit’. 

5 – Fair and flexible labour market

Deregulation on worker’s rights has been cited as a real cause for concern in Boris Johnson’s current Brexit agreement with the European Union, but Leadsom says the highest standards are to be developed, including as part of the Good Work Plan. 

“This will increase fairness and flexibility in the labour market by strengthening workers’ ability to get redress for poor treatment and increase transparency and clarity for staff and employers, taking account of modern working relationships and routines.”

Election outcome to dictate period of Brexit uncertainty

Whatever the potential benefits (and pitfalls) of Brexit, what has harmed British businesses most is the length of the period of uncertainty that’s followed the EU referendum some three and a half years ago.

The outcome of the election will likely dictate for how much longer that uncertainty continues. A majority Conservatives win would see Boris Johnson’s agreement the primary way ahead. A Labour win would see a further six months of talks with a new agreement forged and a referendum put back to the British people (with remain on the ballot paper). A Liberal Democrat win would see Brexit cancelled altogether. 

Read more: Brexit delayed as EU grants extension: the positives and negatives for businesses

Whichever the outcome, what’s paramount is UK organisations are ready. Find out more about our Brexit consultancy services and how we can help your businesses prepare for whatever the outcome. 

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Brexit delayed as EU grants extension: the positives and negatives for businesses

“Brexit has had more dates in the last year than I have” has been a popular quip on Twitter today following the EU’s announcement that member states have agreed to a new extension period.

The UK now has a deadline of 31st January to agree to a deal in Parliament. Just to add further intrigue, the deal is flexible and allows for Brexit to happen before that date should an agreement be reached. Entering a new term into the Brexit dictionary – ‘flextension’.

It’s a blow for Boris Johnson who’s primary message during his leadership battle focused on ‘getting Brexit done’ by the 31st October – no ifs or buts. And whilst his amendments to Theresa May’s deal, predominantly on arrangements on the Irish border, did garner enough support in Parliament to grant a second reading, the rejection of MPs to assess the new text in just three days has lead the UK to another position of uncertainty and, the word of the day – delay.

But is today’s news good or bad for British businesses?

The good news

The good news for UK firms is that a no-deal Brexit by the end of this week won’t be happening. Huge employers, particularly in the manufacturing sector, have been unified in their belief that a no-deal or ‘crash out’ exit from the European Union would be disastrous, cut jobs and result in further operational relocation onto the continent.

The delay also affords a further opportunity for SMEs who are still unprepared for an EU departure, whether on good grounds or not, to put some plans in place to deal with whichever eventuality comes from what will be by next year a near-four-year process.

It’s also worth noting that for many companies, Christmas is a critical trading period for which any disruption, including an agreed exit, would have proved extremely poor timing.

The bad news

What many business leaders have publically commented in the last few years is that it is uncertainty and not Brexit itself which is really harming UK business.

And for those businesses who have seen investment dried up or the firms who have growth plans stuck on pause, the wait for a clear and verified path forwards goes on.

Read more: No-deal red tape bill could cost £15bn

Ongoing delay also proves another blow to organisations who have invested millions in stockpiling goods and critical components who will now need to decide whether to continue paying to store them, start using them and buy further stocks next year or, indeed, try to get rid of what may now have gone out of date where perishables are concerned.

But for now, it’s as you were for UK businesses, and trade goes on.

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Brexit uncertainty blamed for slowest hiring rate in three years

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. 

Read more: CBI releases 200 actions firms and government should take in preparation for no-deal Brexit, warning ‘no one is ready’

“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.

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