UK prime minister Boris Johnson is hoping to ‘unleash the benefits of Brexit’ with a new plan designed to cut red tape for businesses.
The Brexit Freedoms Bill will look to end the specific status of EU law within the UK’s legal framework, ensuring that future laws can more easily be amended to replace carried-over EU regulations.
Numerous reviews of inherited EU laws have been undertaken to see where changes can be made to help businesses invest and create jobs.
Some key areas that could see change include:
- Changes to GDPR and data protection rules
- Updates to laws surrounding genetic modification, clinic trials, transportation and AI
- Slashing red tape for businesses
These changes would look to build on alterations already made by the government out of alignment with EU rules, including the simplification of alcohol duties, scrapping VAT on tampons and creating new subsidy schemes.
Help for businesses
Any reduction in the amount of paperwork and required regulations to follow will be a big help for UK businesses who, since the start of the year, have seen the realities of ‘Brexit for real’ take hold as the transition period came to an end.
Importing and exporting firms, in particular, have seen a massive amount of upheaval with new requirements around the HS code, customs declarations, rules of origin, pre-notification of imports, VAT and Incoterms (just to name a few!).
At Go Exporting, we’ve created a free guide on the key changes since Brexit for UK businesses to help guide you through the new trading relationship. You can download your copy right here.
Ports in the UK have started the New Year under new rules with thousands of additional staff being deployed to help mitigate potential delays.
As of the 1st January, traders now must meet full customs requirements including submitting declarations, paying VAT and exercise duty and also submitting new notifications surrounding animal products.
This next phase of the UK’s departure from the European Union and Single Market is a big step for ports and businesses alike and marks the end of the transitional period for most firms.
Chief executive of the British Ports Association, Richard Ballantyne, commented on the shift that: “This is another milestone for those involved in trade between Britain and Europe and we are hopeful importers will be ready to follow the new rules. There has been a huge amount of hard work from industry and government preparing new systems and processes, which have been developed at some pace. We are optimistic that these new arrangements will work although do expect there to be a small degree of teething difficulties.”
Read more: Rules of Origin guide & workbook
He continued: “That said, in terms of physical activities, much of the customs processes are relatively straightforward. Most UK ports with European trade are therefore more focused on the introduction of checks on animal and plant-based products at Border Control Posts, next July. This is where there will be significant changes to borders processes with the likelihood of interventions, delays and even extras costs for British importers.”
For more help and advice on what your business needs to be doing post-Brexit, download this free planning checklist.
Analysis commissioned by The Independent has discovered that the combined benefit of all the new trade deals signed in the wake of Brexit ‘barely scratch the surface’ compared to the economic damage caused by leaving the EU.
The boost from new deals, notably those with Australia and New Zealand, amounts to just 0.01-0.02 of GDP – or less than 50p per person.
However, data from the Office for Budget Responsibility shows that the damage caused by leaving the single market is worth more than £1,250 per person.
The Independent reports that the majority of new FTAs signed by the UK government, including those with Singapore and South Korea, are merely replacing treaties that the UK had already previously enjoyed as a member state.
However, a spokesperson from the Department for International Trade commented on the new report that: “Our Global Trade Outlook – published in September – shows the centre of gravity on global trade is moving away from Europe and towards fast-growing markets in Asia-Pacific.
“Our strategy is latching the UK economy to these markets of tomorrow, and seizing the huge economic opportunities as an agile, independent trading nation.”
Read more: UK exporters coping with new rules but wary of future changes
However, academics from the UK Trade Policy Observatory noted that any new trade deals the UK signs would never conceivably cover the economic losses of Brexit.
They noted that: “Non-EU partners account for about half of UK total trade and so, to counteract the OBR’s 4 per cent loss from Brexit, would require agreements with each and every one of them to induce trade changes that create a 4 per cent increment to UK GDP. That is nowhere in sight in the numbers in the table.
“The sad answer is that the government is happy to accept, on our behalf, the economic losses from Brexit in return for political benefits (sovereignty), and trade agreements with other countries are merely making the best of a bad job from an economic perspective.”
One of the biggest changes for UK firms trading with the EU since Brexit has been Rules of Origin.
In order for firms to claim zero duty, they must be able to prove that goods are predominantly of UK or EU origin. These are complex rules, and something that we created a detailed guide and workbook to help businesses understand what these rules are.
Earlier this month we joined Enterprise Nation for a Lunch + Learn event all about rules of origin and how new rules are about to bite as we head into 2022 and discussed in detail the requirements and how you can probe the origin of your products.
Watch the event in full on the Enterprise Nation website here.
A new poll has found that UK firms are starting to get to grips with new rules since Brexit, but are wary of potential additional changes to come.
Conducted by the Institute of Export & International Trade, the poll found that 70% of respondents are confident trading with the EU, albeit only 10% said they were ‘very confident’.
The proactivity of local firms has also been shown with almost two-thirds of businesses saying they’ve arranged additional training to adjust to the new post-Brexit rules and processes, with half of that support being from outside specialists such as a customs consultant, whilst two in 10 firms have also hired additional staff.
Whilst a brighter business outlook than some may have thought, there is nervousness about what trading with the EU will look like when new import measures come into effect starting on 1st January next year.
Half of those quizzed said they are not confident that trade between the EU and UK will be trouble-free when customs declaration rules change, with just 5% saying they are highly confident that there won’t be any disruption.
Director general of the IOR&IT, Marco Forgione, commented on the poll findings that: “The past year has been a period of adaptation for UK businesses engaging in trade with the EU. Confidence in exporting to the EU has grown over the past 12 months, as companies have undertaken more training and education.”
Read more: UK becomes smaller international trader since Brexit
He continued: “The IOE&IT has been supporting businesses through this year, delivering technical support, guidance and most importantly training, to ensure British exporters can trade both confidently and compliantly.
“As the Brexit timeline moves on, the next crucial date is 1 January 2022. The Institute stands ready to support importers implement these new changes and help them navigate them effectively.”
The UK has seen its global international trade activity fall since Brexit, despite aims to become ‘global Britain’.
Data from the Bank of England shows how trade flows, imports plus exports, as a percentage of GDP has fallen for the UK, whilst they have continued to rise for EU main countries including Germany, France and Spain.
Despite the global Britain rhetoric, the UK has become a *smaller* international trader since Brexit.
— Ben Chu (@BenChu_) December 8, 2021
Chart shows trade flows as share of GDP – it's holding up for main EU countries, but has declined sharply for UK in recent years 👇https://t.co/51RGZOO2MQ pic.twitter.com/FpT1epRb0b
The data was released as part of the Bank of England’s recent speech by Michael Saunders reporting on the outlook for inflation and monetary policy.
In a wide-ranging speech, Saunders noted how the UK economy has become less globalised ‘with effects from the pandemic exacerbated by Brexit’.
Read more: Webinar exploring the export potential of Switzerland
For example, trade flows compared to 2019 have fallen by more than any other G7 country, whilst Q3 trade flows this year has a share of GDP were the lowest for 12 years.
The UK labour market has also become less global with the number of EU nationals working in the UK dropped markedly, contributing to worker shortages in haulage, farming and care industries to name a few.
Earlier this month we joined Deloitte on a panel discussion with Enterprise Nation.
Part of Enterprise Nation’s new international trade hub, the panel discussed what’s changed for businesses in the 10 months since the end of the Brexit transition period, what support SMEs need in particular and what’s to come in 2022.
Learn more about the international trade hub and listen in to the panel discussion here.
Britain’s export performance has slipped behind that of other developed nations as the recovery from the pandemic continues.
According to a report in the Financial Times, sluggish exports have become a ‘worrying trend’ as UK firms struggle to attract overseas markets.
By August this year, global goods trades rebounded well following the economic slowdown brought about by the pandemic. But whilst export volumes are well above pre-pandemic levels, the UK has struggled to get in on the action with export activity significantly lower than before Covid-19 hit.
In the three months to August, UK goods exports were down 13% whilst services dropped 14% too, whilst a longer six-year trend also shows UK bottom of a list of the world’s most advanced economies, including Canada, Spain, France and Greece.
Brexit hasn’t been the only factor either, with trade data showing sluggish activity with non-EU nations with a 20% drop in export activity compared to 2019.
“Supply disruption associated with both Covid and Brexit has weighed on UK competitiveness in general, not just on trade flows with the EU.”
Benjamin Nabarro, Citi Research
There are some nuggets of optimism though, with export activity showing strong growth with the Netherlands, Belgium and Ireland.
Small firms in the UK have received less than half of a £20m pot promised by the government which was designed to make up for any shortfall in EU business following Brexit.
Treasury figures show just £8.4m has been allocated so far, with just over 5,000 out of an eligible 113,000 SMEs benefiting from grants worth up to £2,000.
Businesses in Northern Ireland and Wales have claimed less than £670,000 combined.
Opposition politicians have called for the fund to be relaunched and the budget to be significantly increased to support the nation’s smallest businesses.
Liberal Democrat spokesperson Sarah Olney said that: “Smaller firms have borne the brunt of both the pandemic and the government’s botched Brexit deal.
“But instead of offering business owners support to help them get back on their feet, ministers are clobbering them with a manifesto-breaking tax hike.”
Get expert post-Brexit business support
If, like thousands of others, your business is still struggling to adapt to the new trading environment with the EU, then we can help.
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Trade barriers with the EU in the wake of Brexit have cost UK firms over £2bn in the first half of 2021.
£600m in costs alone have derived from issues surrounding Rules of Origin, where UK firms have to prove that products they’re exporting are over 50% derived from UK or EU components, or face tariffs.
As many businesses are starting to discover, free trade deals are not cost-free for UK firms.
The news comes as the Office for Budget Responsibility reported that leaving the EU would reduce the UK’s potential GDP by 4% long-term – twice the negative effect that the pandemic is likely to have.
Richard Hughes of the OBR commented to the BBC that: “In the long term it is the case that Brexit has a bigger impact than the pandemic.
“We think that the effect of the pandemic will reduce that (GDP) output by a further 2%.”
Read more: Complex Rules of Origin add £600m to duty costs
The OBR also suggested that shifting trading regimes following Brexit have been partly to blame for supply chain issues, which in turn is supporting above-average inflation.
