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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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Action on new Covid strain compounds pre-Brexit stockpiling at ports

Queues at UK ports, especially Dover, Felixstow and Southampton, have been increasing as pre-Brexit stockpiling efforts from businesses on both sides of The Channel were compounded by a new strain of Covid-19. 

Some tailbacks have been longer than 10 miles last week as companies had been buying and selling additional components and goods in a bid to avoid increased levels of bureaucracy at the end of the transition period – now just 10 days away. 

What started as queues relating to business activity has been compounded by health and political action, with France closing its border with the UK for 48 hours to assess the new strain of Covid found in Southern England. The move means no lorries or ferry passengers are allowed to sail from the port of Dover. Operation Stack, the post-Brexit plan to create a lorry car part in Kent, has been put into operation early as a result. 

Unaccompanied freight in the form of containers can still be transported, but there are fears in the UK that French drivers won’t make the journey if they could get stuck, whilst exported goods and empty lorries returning to the continent face lengthy delays. 

Read more: Business groups urge Brexit negotiators to find compromise and agreement

Elsewhere, the Confederation of British Industry has called on the EU to delay introducing new customs checks immediately after Brexit as firms are still unprepared due to the pandemic. 

In a report published on Friday, the CBI stated that: “With time so short, both sides need to take steps to minimise disruption no matter the outcome. 

“Without them, much of the progress made recovering from the pandemic will be lost.”

If your organisation is one of the thousands who have been unable to fully prepare for Brexit, then our Brexit FastTrack service could help you #BeBrexitReady, and fast. Find out more here.

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UK food and drink exports fall 13% in 2020

Food and drink exports from the UK have fallen by 12.9% so far in 2020 as manufacturers struggle to deal with the Coronavirus pandemic and uncertainty surrounding Brexit. 

The data, released by the Food and Drink Federation, showed that exports to key markets including Spain were significantly down (almost 34% into the Spanish market), whilst sales of the otherwise export success story of whisky dropped the most – down 19% to just over £900 million. 

Q3 2020 saw an 11.6% exports decline compared to the same period last year, with both exports to the EU and non-EU markets falling. 

Head of international trade at the Food and Drink Federation, Dominic Goudie, commented on the findings that ensuring a quick return to growth will be essential to the industry as the UK looks to continue its economic recovery from the pandemic. 

The UK’s food and drink sector is also struggling to find enough vets, an issue which could cost up to 75% of trade volume into the EU from next year.

Export health certificates must be signed by an official veterinarian to confirm that certain food or animal products meet import requirements, but a lack of qualified and available official vets in the UK could see delays. 

In September this year, the British Meat Processors Association warned that Britain simply doesn’t have enough vets to deal with export inspections post-Brexit,  with chief executive Nick Allen commenting that: “We have been pressing the Government for three years now to lay out the details of exactly how these barriers to trade will be dealt with. They have known since the beginning that we will need an army of extra qualified vets to cope with the 500% increase in workload.”

Read more: Brexit offers ‘best chance’ of banning live animal exports

“All the guidance in the world is useless if we are not able to complete required export paperwork because of a chronic shortage of vets. If this is not addressed, £175 million per month of meat exports will be at risk.

“The bottom line is that British companies cannot prepare effectively for Brexit because the UK Government is not keeping to its side of the bargain by putting in place the right measures and resources and failing to give us the answers we desperately need.”

If your organisation is one of the thousands who have been unable to fully prepare for Brexit, then our Brexit FastTrack service could help you #BeBrexitReady, and fast. Find out more here.

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Business groups urge Brexit negotiators to find compromise and agreement

Company bosses from some of the UK’s leading firms have warned UK Brexit negotiators against brinkmanship as talks look set to resume following a stand-still earlier this week. 

As Boris Johnson and Ursula von der Leyen were called in to bridge a gap both negotiation parties were struggling to close, business leaders have warned that firms are already overwhelmed by dealing with the ongoing pandemic and that clarity on trading arrangements with the EU are urgently needed with just weeks to go.

Deputy director of the CBI, Josh Hardie, commented on the latest talks: “We always knew the political leaders would have to step in. It is essential they do that. The political brinkmanship and delay is paid for by communities.” 

Less than a month ago, leading UK business groups from across industry sectors urged Brexit negotiators to find compromises and find agreement in a bid to avoid a no-deal exit on January 1st. 

Over 70 groups, representing millions of workers from across automotive, aviation, chemical pharma, tech and FinTech sectors have been alarmed by the stop-start nature of talks, and have warned that securing an agreement with just days until Brexit for real ‘matters greatly for jobs and livelihoods’. 

A poll last month by the Institute of Directors showed nearly one in four companies would not be ready for the end of the transition period, whilst only half said they were fully prepared. Preparations have without a doubt been hampered by the ongoing pandemic, with smaller firms, in particular, struggling to juggle both the immediate threat of Covid and the upcoming impact of Brexit. 

Read more: Over 40% of importing & exporting SMEs have made no preparations for Brexit

Richard Torbett, CEO of the Association of the British Pharmaceutical Industry, commented then that: “With each day that passes, business resilience is chipped away.”

“It is absolutely clear that it’s in nobody’s interest — and certainly not patients — to face the future with uncertainty around how medicines will be regulated, tested and moved throughout Europe and the UK.

If your organisation is one of the thousands who have been unable to fully prepare for Brexit, then our Brexit FastTrack service could help you #BeBrexitReady, and fast. Find out more here.

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Over 40% of importing & exporting SMEs have made no preparations for Brexit

At the time of writing, there are just 33 days until the end of the transition period. And whilst 2020 has been incredibly difficult for businesses across sectors, Brexit will wait for no company. 

Research recently released from Aldermore found that 47% of SMEs who import goods and services from the EU have made no Brexit preparations, whilst 43% of small firms who export into the EU have yet to act either. 

Group managing director of business finance at Aldermore, Tim Boag, commented on the findings that: “2020 has been an extremely difficult year for SMEs, as many have been profoundly impacted by the Covid-19 pandemic. 

“With the Brexit transition period coming to an end on 31 December, businesses who trade with the EU now face a new set challenges, particularly if there is no-deal. Tariffs could be introduced on many imports and exports, which will have an impact on costs for businesses, and even if a trade deal is agreed there’s still likely to be significant changes to prepare for, such as additional checks and documentation on goods as required by both the UK and the EU.”

The average SME derives around 30% of their revenues from business and customers in the EU, and one in four small business owners say the think Brexit will worsen the economic trauma already faced in mitigating the pandemic. However, only 15% think there will be supply chain issues, despite some UK ports already struggling this winter to deal with Christmas demand. 

Read more: Visit our free Brexit Knowledge Bank for free Brexit downloads, webinars and advice

“Our research reveals that many SMEs are generally unprepared for Brexit or are delaying plans to address the impact until after the end of the transition period. Whilst the delay in preparing for Brexit is understandable given the ongoing impact of the pandemic, the potential wide-ranging effects of Brexit on many businesses means it’s crucial that SMEs begin to take steps to prepare,” Boag continued.

“Businesses should consult the Government’s guidance for SMEs post-Brexit and work out how VAT, tax and duty, and other regulatory changes will impact them and their supply chain.  Aldermore has created a Brexit hub with key information for businesses to help SMEs best prepare for the transition and the challenges and opportunities that lie ahead.”

If your business is one of the many who has yet to properly prepare for Brexit, now really is the time to act. At Go Exporting, we’ve developed a Brexit FastTrack service which will deliver a comprehensive Brexit impact review and transition plan for your business. Prices start from just £950 – find out more here.

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