London maintains status as Europe’s financial hub

A study released this month has found that London has maintained its status as Europe’s main financial hub – but global players are catching up. 

That’s according to Z/Yen’s Global Financial Centres Index (GFCI) which reported that, although London had maintained second place globally, it has lost 23 index points since September 2020 with Shanghai, Hong Kong and Singapore closing in. 

The news is significant as there had been real concern over the capital’s future status in both EU and global finance in the wake of Brexit, particularly with the lack of an equivalence deal maintaining its access to continental markets. 

Yet despite holding on to EU dominance, the Bank of England has suggested over 7,000 jobs have been lost to rival centres in the EU following the end of the transition period. But a jobs exodus from London has yet to be realised within finance, and a report from Business Money even shows a 10-fold rise in businesses looking to open satellite offices in the UK. 

There have been further reports this month that Chancellor Rishi Sunak is planning to set light to a range of EU rules in a bid to secure London’s position as a global financial centre. 

Read more: Quarter of all full-time UK jobs supported by export activity

Chairman at PwC UK, Keven Ellis, commented that: “Not only has the UK grown in appeal to some of our newer trade targets, but it remains an important market among our European neighbours, with 15% of Germany’s CEOs saying the UK is a top 3 growth target, compared with 13% in 2019.

“These are encouraging signs but there’s more to do to enhance the UK’s position and investment attractiveness in what remains a very uncertain world.”

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Trade between UK and EU nations falls

Export and import activity between the UK and France has dropped some 20% since the start of the year as businesses on both sides of The Channel continue to struggle against Brexit disruption.

According to the French customs office, exports from France into the UK fell 13% in January compared to the previous six-month average, whilst exports from the UK into France dropped 20%.

Whilst some pandemic-related ground has been recovered, especially as firms on both sides stockpiled critical components and goods, Brexit uncertainty and new friction-creating barriers has hampered that volume recovery. Meanwhile, French exports and imports with other nations increased. 

And despite the trade deal, higher shipping costs, health certificate requirements, complex customs requirements and transportation delays have all contributed to increased commercial costs and reduced activity. 

Activity isn’t only down between the UK and France either. A more marked 30% downturn can be seen in German exports to the UK – a continued decline that began after the Brexit referendum in 2016. The steepest declines have been in Italy, with a 38% fall in exports to the UK and a 70% drop in imports. 

Read more: Half of UK exporters struggling to adapt to Brexit changes

Gullies Moec, chief economist at Axa commented that: “I have a hard time deciding what is the impact of Brexit and what is simply down to the impact of coronavirus.

“There were so many stories about companies that had trouble exporting or importing after Brexit and a lot of hauliers were reluctant to deal with the customs issues, so there must have been an impact.”

If your business has been impacted, we can help

Go Exporting has already helped a number of companies both prepare for Brexit, and now workaround new restrictions, regulations and challenges. 

Our Brexit FastTrack service offers a detailed review of businesses post-Brexit to help resolve the issues they’re encountering – with a quick turnaround and at a fixed price. 

Some firms may also be able to reclaim the cost of this service via the SME Brexit Support Fund.  

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New Gov campaign to support UK producers export food and drink internationally

The Government has launched a new initiative aiming to boost exports of food and drink internationally for UK farmers. 

Called the ‘Open Doors’ campaign, the initiative will focus on growing middle-class markets including in Asia. 

The scheme will be welcome news for UK producers, many of whom have struggled since January 1st exporting food products into the EU. 

International trade secretary, Liz Truss, said of the launch of the scheme: “Our farmers need access to new markets around the world, but we need to get rid of the barriers holding them back. We will help you get out into the global market.

“Exporting supports higher wages, productivity, and high-quality jobs, but one in five of our food manufacturers export. We want to unleash the potential of many more businesses, which is why I am glad today to announce a new export campaign for British food and drink.”

She continued: “We are dubbing this our Open Doors campaign, reflecting the work we are doing to open new doors for farmers and food producers to unprecedented opportunities across the world. We need to look beyond our shores. By the end of this decade, 66% of the world’s middle-class consumers are expected to be found in Asia.

Read more: SMEs can now apply for grants to cover the cost of professional export consultancy

“They are hungry for top-quality food and drink, where they know – from farm to fork – that high standards have been at the heart.”

If your business is still working to adapt and change to the new trading relationship with the EU, we can help. Our Brexit FastTrack service can deliver a detailed review of your business post-Brexit to resolve the issues you are encountering. 

Learn more here.

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Webinar: Exporting goods & services to the EU at Emerging Tech Fest

This month we joined a fantastic line-up of speakers for Emerging Tech Fest 2021.

In this webinar, Go Exporting CEO Mike Wilson spome with Tony Hicks about exporting goods and services to the EU in the wake of Brexit. Key themes included what’s changed since 1st January, the trade agreement itself and its’ implications, how to identify challenges to your business and how to address the challenges whilst maintaining exports.

Watch the webinar in full below.

If you need support with your post-Brexit export strategy, we can help.

First, download this free Brexit Checklist to get you started.

For a professional service to assess your Brexit positioning, learn more about our Brexit consulting here.

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Brexit headaches cause 68% drop in exports to EU

The volume of exports heading into the EU from British ports has fallen almost 70% as the immediate realities of Brexit take hold. 

The data, compiled by the Road Haulage Association, compared exports data via ferry and rail onto the continent in January this year compared to 2020. A letter from the association to Michael Gove stated that recent warnings before the end of the transition period, especially around the lack of customs officials, had been largely ignored, despite a new mountain of paperwork. 

It said that the shortfall in exports was largely due to EU vehicles returning empty as UK companies had either temporarily or permanently halted exports to the EU.

RHA chief executive Richard Burnett said of Gove that: “Michael Gove is the master of extracting information from you and giving nothing back. He responds on WhatsApp and says he got the letter but no written response comes. 

“Pretty much every time we have written over the last six months he has not responded in writing. He tends to get officials to start working on things. But the responses are a complete waste of time because they don’t listen to what the issues were that we raised in the first place.”

Whilst a combination of Brexit and the pandemic will have led to some reduction in exporting activity, trade experts fear that worse could be over the horizon. 

Chief executive of the Cold Chain Federation, Shane Brennan, noted that: “As we look to April through to July what really worries me is we face a perfect storm.

“We will have an economy looking to come out of lockdown at the same time as the UK is imposing a range of import controls on EU business that may be no more prepared than UK businesses have been – and possibly less so – and a supply chain that is incredibly reluctant to service the UK. The full Brexit crisis that we were predicting could well come into effect at that point.”

Read more: Survey shows majority of UK SMEs aren’t expecting EU trade slowdown following Brexit

The news of the sudden drop in exports to the EU comes as hundreds of companies make moves to switch operations to countries inside the EU. 

Reported by The Observer, data from the Netherlands Foreign Investment Agency reported that by January 1st this year, over 500 businesses with UK connection had already made inroads into setting up branches, depots or warehouses in the Netherlands alone. The majority cited ‘Brexit-related reasons’. 

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Survey shows majority of UK SMEs aren’t expecting EU trade slowdown following Brexit

A new survey has shown the positive mindset of UK SMEs in the wake of Brexit, with the majority of small firms saying they don’t expect trade with the EU to shrink in the coming years. 

Conducted by Politico, the survey found that 62% of small and medium business directs don’t expect their trade with the EU to slow down, though manufacturers say it’s too early to tell whether leaving the bloc will be good or bad for their prospects. 

Whilst combined figures show a positive mindset, there are more SMEs who expect trade to shrink rather than grow. Thirty-eight per cent said they expected some fall in orders compared to 23% who expect growth. 

This sentiment is mirrored by The Engineer’s poll of British firms, with 41% saying it’s too early to tell, 31% saying Brexit will cause a drop and 27% saying they’re optimistic for growth.

‘Brexit for real’ has already caused some major headaches for businesses on both side of the Channel. Freight rates have spiked whilst re-exported products are causing tariff and Rules of Origin headaches for retailers. 

Added bureaucracy, new rules on business travel and ongoing uncertainty surrounding personal data and services are challenges that will likely continue long into the future as well. 

Read more: 5 issues UK businesses face despite the UK/EU trade deal

If your business is still working to adapt and change to the new trading relationship with the EU, we can help. Our Brexit FastTrack service can deliver a detailed review of your business post-Brexit to resolve the issues you are encountering. 

Learn more here.

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Cross-channel freight rates spike, likely to remain high

The price of shipping freight across the Channel has surged following the end of the transition period as the realities of ‘Brexit for real’ kick in. 

The price of moving truckloads from France into the UK rose almost 40% in the first week of January – according to a report by Transporeon. 

Despite relatively quiet flows of commercial traffic at the start of the year, particularly following the stockpiling and Covid delays seen around Christmas, new Brexit-related paperwork and the events towards the end of 2020 have seen many shippers – who typically work on tight margins – increase costs. 

And those heightened prices are likely to remain to help cover the added administrative costs, with Transporean CEO commenting that: “There is a likelihood that we will be seeing higher rates for lanes into and out of the UK into the EU as a result of Brexit.

“Carriers, which normally operate on very tight margins, are reacting to market dynamics.”

Read more: Re-exported products causing tariff and Rules of Origin issues for retailers

Chief executive of the Road Haulage Association, Richard Burnett, said that there appears to be a lack of customs brokers able to manage the paperwork for traders and hauliers. 

Elsewhere, policy directory of Logistics UK, Elizabeth de Jong, noted that whilst the number of vehicles being refused passage was low, the next few weeks will be telling as to whether planning, understanding and systems currently in place are sufficient. 

Growing into the future

At Go Exporting, we help business just like yours plan for the future, research new markets and helping you to plan and implement your export strategy for profitable growth.

Learn more about our international trade consultancy here.

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UK continues investment into five EU research programmes

The UK will continue to participate in and help fund five key EU research programmes, including the €95.5 billion Horizon Europe project.

Under the terms of the trade and co-operation agreement between the UK and EU, the UK will continue to play an active roll in the programmes which includes the Euratom nuclear research scheme, as well as the UE satellite and surveillance services. 

The UK’s annual financial contribution to EU programmes is calculated on the country’s gross domestic product as a share of EU GDP – known as the ‘operational contribution’. There will also be an additional participation fee, calculator at 4% of the country’s operational sum. 

The two further projects the UK will continue to contribute towards are the ITER project to build the world’s first functioning nuclear fusion system, and the earth monitoring project called Copernicus. 

The UK has been a major benefactor of the various EU research programmes so far, securing €7 billion in funding between 2007 and 2013, as well as €5.9 billion in funding from Horizon 2020.

Read more: 5 issues UK businesses face despite the UK/EU trade deal

UK institutions had suffered as a result of the Brexit referendum in 2015 with EU-backed funding dropping by almost a third. However, the deal agreed on Christmas Eve ends uncertainty surrounding the UK’s eligibility for EU competitions. 

Read more detail on the various frameworks here

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Re-exported products causing tariff and Rules of Origin issues for retailers

Retailers in the UK have warned the government that supply chains and trade flows are being affected by new post-transition customs and trade requirements. 

M&S was one of the first retailers to take action by temporarily suspending sales of hundreds of items in Northern Ireland stores as it fears food would be blocked due to new rules. Many other firms have spoken out about delays fuelled by increased paperwork at ports too. 

The trade agreement between the EU and UK was designed to preserve zero-tariff and zero-quota access, but retailers which use the UK as a distribution hub for EU business operations are facing the possibility of tariffs when re-exporting goods back into the European Union. 

The most prominent example so far has been M&S’s popular Percy Pigs which is manufactured in Germany, shipped into the UK and then exported once more into Northern Ireland – something which chief executive Steve Rowe suggests should, under the new trade agreement, incur tax. 

“Tariff-free does not feel like tariff-free when you read the fine print,” he told Reuters.

“For big businesses, there will be time-consuming workarounds but for a lot of others this means paying tariffs or rebasing into the EU.”

Read more: 5 issues UK businesses face despite the UK/EU trade deal

Elsewhere, John Lewis has said it will scrap overseas deliveries into the EU due to confusion surrounding post-Brexit trading rules. Debenhams, Fortnum & Masons and ASOS are just three further examples of UK retailers suspending deliveries onto the continent. 

Growing into the future

At Go Exporting, we help business just like yours plan for the future, research new markets and helping you to plan and implement your export strategy for profitable growth.

Learn more about our international trade consultancy here.

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Trade agreement done… now the hard work begins!

At almost the last minute, the trade deal between the EU and UK has been agreed by the negotiators. It just now needs ratifying by the respective parliaments, which may be a challenge. EU ambassadors have given their OK and the UK parliament will discuss this week. 

As in any discussion, not everyone will have gained everything they wanted, but broadly the deal seems to be positive for trade between the parties. The avoidance of duties and quotas on goods can only be applauded and a collective sigh of relief for all exporters and importers. 

In previous articles, we have written about the hidden threat of Rules of Origin. This also seems largely to have been resolved with an agreement on full bilateral cumulation which allows EU inputs and processing to be counted as UK inputs in UK products exported to the EU, and vice versa. This is an extremely important simplification which will avoid countless headaches and supply chain issues.

So, all relatively positive, but considerable changes to the way the EU and UK trade with each other will nevertheless come into effect from 1st January 2021. If you are one of those companies who were hoping it would all go away with a trade deal or were waiting for certainty before finalising your planning for Brexit, well now is the time to get ready. There are still significant changes coming for your business which cannot be avoided. 

Some of the important procedures and requirements you need to be ready for are:

  • EORI Numbers including the XI number for Northern Ireland
  • Customs Declarations on all imports and exports
  • Changes to licence and certificate requirements, such as sanitary and phytosanitary rules
  • Rules of Origin – there may be an agreement on bilateral cumulation, but you still need to understand the requirements to prove and indicate the origin of your product. 
  • VAT Changes – do you need a local Vat number and fiscal representative, changes to MOSS 
  • Incoterms – have you agreed with your customers and suppliers the exact terms of future trade? Don’t get caught out with charges you were not expecting.
  • Approvals and UKCA/CE Marking – are you aware of the changes and requirements for your products?
  • Who is going to be the Importer of Record and are they prepared for the implications and responsibilities? Would you benefit from an Authorised Representative?
  • Do you sell via eCommerce across borders? Are you aware of the implications for VAT, for data handling etc

We could go on, but you get the picture. There is a lot of change coming and you need to be ready for it. 

Go Exporting can help you prepare for Brexit with our FastTrack Review. We look specifically at the implications for your business and provide you with a detailed action plan to follow. If you are not ready, you will need to act fast to avoid disruption to your business. 

Call us today on 0800 689 1423 for fast turnaround support to prepare your business. Then let’s start looking forward to taking advantage of the new world of opportunities that are about to emerge. 

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