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3232Only a quarter of UK businesses are ready for Brexit – with just 5 months to go
https://readyforbrexit.co.uk/only-a-quarter-of-uk-businesses-are-ready-for-brexit-with-just-5-months-to-go/
Tue, 21 Jul 2020 09:00:54 +0000https://readyforbrexit.co.uk/?p=27275Only a quarter of UK businesses are ready for Brexit
Ready for Brexit is independent and objective. It aims to help businesses and organisations manage the challenges and opportunities that Brexit brings. See member benefits 〉
It’s now just 5 months till the UK leaves the EU Single Market and Customs Union. Yet a new survey by the Institute of Directors confirms that most businesses have been far too busy coping with the Covid pandemic to even think about preparing for the change.
Only a quarter of businesses say that they are fully ready, as the IoD note:
“Nearly half of the 978 company directors polled in late June said they weren’t able to prepare right now, with one in seven distracted by coronavirus and almost a third saying they needed the details of any changes to be clear before adjusting. Those in the financial sector were most likely to be ready while manufacturers in particular had more to do. Directors in services felt especially unable to prepare at present, whether due to pressures of the pandemic or because they needed more clarity on changes.”
Most businesses are still hoping against hope that a deal will be reached with the EU, to enable business to continue more or less “as usual”. But the UK government doesn’t seem to share their concerns.
It has now published its new Border Operating Model – a detailed 206-page guide to what businesses need to do. It is also spending £705m on building a major new lorry park near Ashford in Kent, to serve lorries waiting to cross the Channel, and hoping to recruit 50,000 new Customs officers to deal with the extra 215 million Customs Declarations needed each year
Officials have also told industry leaders there will be a new “Smart Freight” app to enable lorry drivers to obtain a ‘Kent Electronic Access Permit’ – with fines for those who fail to do this. As the Financial Times notes:
“It seems quite late in the day to be launching these initiatives, however well intentioned. Building such an app is one thing — getting lorry drivers to download and use it effectively in the real world is quite another.”
Companies will no doubt continue to hope that a deal will be done at the last minute, to allow ‘business as usual’ to continue. But this is looking less and less likely as every day ticks by, as the CEO of Make UK warned last week:
“Should the UK fail to reach a comprehensive trade agreement with the EU, then those regions with a high concentration of manufacturing and a dependence on Europe as a major market will suffer a triple hit, given the impact of Covid-19. For some companies the combination may prove fatal.”
The risk of doing nothing is growing by the day. 5 months is really very little time to prepare for the scale of changes ahead if there is No Deal.
]]>Your A to Z Guide to the Brexit trade negotiations
https://readyforbrexit.co.uk/your-a-to-z-guide-to-the-brexit-trade-negotiations/
Thu, 30 Jan 2020 10:20:47 +0000https://readyforbrexit.co.uk/?p=26477 A. Article 50 of the Lisbon Treaty set out the rules for leaving the European Union. As with most negotiations, it assumed the leaving country would present its proposals for the post-withdrawal period – which would then be finalised with the other members. The UK government, however, has still not yet set out its post-Brexit trade objectives, […]
A. Article 50 of the Lisbon Treaty set out the rules for leaving the European Union. As with most negotiations, it assumed the leaving country would present its proposals for the post-withdrawal period – which would then be finalised with the other members. The UK government, however, has still not yet set out its post-Brexit trade objectives, and so the UK will leave the EU tomorrow without anyone knowing what might happen at the end of the year.
B. ‘Brexit means Brexit’, has been the UK’s core statement since Article 50 was tabled. But as we noted back in September 2016, Brexit can actually mean a variety of different outcomes – and they have very different implications as the chart above shows. At one extreme, the ‘Norway model’ is very similar to full EU membership, but with no say on EU decisions. Whereas the ‘Canada model’ is simply a free-trade agreement offering some access to the Single Market for goods, but less access for services (which are 80% of the UK economy). A ‘No Deal Brexit’ means working under WTO rules with arbitrary tariffs and regulations.
C. The European Commission manages the day-to-day business of the European Union on behalf of the European Council, and is effectively its civil service. Its president is Ursula von der Leyen and she re-appointed Michel Barnier to lead the post-Brexit negotiations. As with Brexit itself, the UK’s failure to agree its objectives has allowed Barnier to gain “first mover advantage”, and effectively control the scope of the negotiation, by finalising and publishing the EU’s own negotiating objectives.
D. The Default date for the UK to exit the Transition period is 31 December 2020. It has also been agreed that it can be extended for a further 2 years, if the UK requests this before the end of June – but the UK government has said it will refuse to do this. The UK stance gives the EU a very strong position, as it means they effectively control the timetable as well as the scope of the negotiations.
Barnier has suggested they have “3 goals for 2020: to maintain a capacity to cooperate closely at the global level; to forge a strong security partnership; and to negotiate a new economic agreement (which, most likely, will have to be expanded in the years to come).” Given the EU’s focus on its proposed EU Green Deal, and the need to ensure a positive outcome for the UN Climate Change Conference in Glasgow in November, there may not be much time left for trade talks, given that security is their second priority. This view is reinforced by Barnier’s suggestion that the new economic agreement will have to be expanded after December.
E. The European Union is a treaty-based organisation of 28 countries. As its website notes, it was ‘set up with the aim of ending the frequent and bloody wars between neighbours, which culminated in the Second World War.’ The UK joined the original six members (Belgium, France, Germany, Italy, Luxembourg and the Netherlands) in 1973, along with Ireland and Denmark. Further expansions took place, especially after the end of the Cold War between the West and Russia. At the suggestion of then UK Prime Minister Margaret Thatcher, it was agreed to establish a Single Market and Customs Union in 1993, based on four key freedoms – free movement of goods, services, people and money – and this transformed trading relationships across the continent.
F. The Financial Settlement or ‘divorce bill’ is part of the Withdrawal Agreement and covers the costs of the programmes that the UK agreed to support during the period of its EU membership. Like most organisations, the EU operates on a pay-as-you-go basis and only charges member countries as and when bills actually come due. The UK calculated this to be between £36 billion-£39 billion (€40 billion-€44 billion), depending on the assumptions used.
G. The UK held 2 General Elections whilst finalising the Withdrawal Agreement. The first, in 2017, forced premier Theresa May to rely on the Ulster Unionists in order to gain a working majority in Parliament. The second, in 2019, gave Boris Johnson a comfortable 80 seat majority on the basis that he would “Get Brexit Done”. In reality, however, the only bit of Brexit that has been “done” is the exit from the EU. The process of replacing all the arrangements built up over the past 47 years, since the UK joined the then European Economic Community, has yet to begin.
H. A Hostile No-Deal at the end of December would be the worst of all possible outcomes, as it would mean the UK had to trade on WTO terms. Unfortunately, this is a significant risk, given the range of areas that could cause friction – fisheries policy, financial services, immigration and EU citizen rights etc. The underlying issue is that the UK will become a 3rd country tomorrow night, and lose its veto rights in Brussels as well as the ability to help determine policy. Trade negotiations always cause Winners and Losers to emerge, as they are based on the negotiators conceding something of value to the other side in one area, in order to get back something of value for themselves. And potential Losers generally complain very loudly.
I. Ireland proved to be a key sticking-point in the negotiations, as nobody wanted to disturb the peace created by the Good Friday Agreement in 1998. The Withdrawal Agreement means that Northern Ireland will remain in the UK customs territory and, at the same time, benefit from access to the Single Market without tariffs, quotas, checks or controls. In turn, this means the end of frictionless trade as there will effectively be an EU – Great Britain border running down the Irish Sea, based on the EU’s need for sanitary and phyto-sanitary checks on food products and live animals entering from GB. The EU will also be able to assess risks on any product coming into its market and, if necessary, activate physical controls.
J. June 2016 was the date of the referendum that voted to take the UK out of the EU.
K. Keeping the UK aligned with EU standards is a key concern for many UK businesses. They rely on complex supply chains, and would face major expense if they have to operate to 2 different standards. However, the Chancellor of the exchequer, Sajid Javid, told the Financial Times earlier this month that “There will not be alignment, we will not be a ruletaker, we will not be in the single market and we will not be in the customs union — and we will do this by the end of the year.”
L. Legal issuesare, of course, a critical area in the negotiations as the UK currently operates under the jurisdiction of the European Court of Justice (ECJ), and now intends to ‘take back control’ to its own courts. Th ECJ role will continue during the Transition Agreement, but seems unlikely to continue after the transition period ends.
M. Tariffs on Materials and goods will be introduced between the UK and EU27 unless a comprehensive trade deal can be finalised by the end of the year. The EU’s terms for this depend on continued UK alignment with Europe’s societal and regulatory model. If the UK refuses to agree to this, then its trading terms will likely also change with countries outside the EU27. It currently operates under more than 750 free-trade and trade-related agreements negotiated by the EU – and it is unlikely that the UK will continue to benefit from all of them.
N. No Deal means that the UK would have to operate under WTO rules after 31 December 2020. This short Ready for Brexit video explains the complications this would create. The WTO has also warned that the number of Technical Barriers to Trade ‘has grown significantly‘ in recent years, and these can often severely restrict trading opportunities. Plus, EU laws would still have a role under WTO rules for all UK products sold into the EU27 under No Deal. The EU Preparedness Notices also suggest there could be a ban on UK banks providing financial services, as well as a whole host of other restrictions including on travel.
O. The Operation of the Transition Agreement will be in the hands of a new UK-EU Joint Committee. This will replace all the formal and informal interactions that the UK used to have with other member states and EU officials. It may well also become the body though which the UK and EU manage new treaties on global co-operation and security, as well as any future trade agreement.
P. Preparing for Brexit. The Ready for Brexit team has over 250 years’ combined experience of importing and exporting, and we wanted to share this knowledge. Ready for Brexit is a subscription-based ‘one-stop shop.’ It provides a curated Directory to the key areas associated with Brexit – Customs and Tariffs, Finance, Legal, Services and Employment, and Supply Chain. It includes Brexit Checklists; a BrexSure self-audit tool to highlight key risks; a Brexit Negotiation Update section linking to all the key official UK and EU websites; a Brexplainer video on WTO Rules; plus news and interviews with companies about their preparations for Brexit.
R. Regulations can often be a much greater barrier to trade than tariffs, as they set out the rules that apply when products and services are sold in an individual country. The EU never aimed to harmonise regulations across its member countries, as that would be an impossible task. Instead, it has focused on creating a Single Market via mutual recognition of each other’s standards, along with harmonised rules on cross-border areas, such as safety, health, and the environment. Regulations are particularly important in the financial services industry, and many businesses have already relocated relevant parts of their operations into the EU27 so that they can remain authorised to trade.
S. The Single Marketseeks to guarantee the free movement of goods, services, people and money across the EU without any internal borders or other regulatory obstacles. It includes a Customs Union, as this short BBC video explains, which seeks to ensure that there are no Customs checks or charges when goods move across individual country borders. With a No-Deal Brexit, however, the UK will become a Third Country and no longer benefit from these arrangements.
T. The Transition Agreement begins after the UK leaves on 31 January 2020. It allows the UK to operate as if it were still in the EU until 31 December 2020 (or possibly December 2022 if the UK government requests an extension by the end of June 2020). The aim is to give negotiators more time to agree how future EU-UK trade in goods and services will operate, and provide guidance for businesses on how the new deal(s) will operate. But trade deals are very hard to do and generally take at least 5-7 years.
U. Unblocked, or frictionless trade, is a key aim of the negotiators. Nobody really wants to go back to the pre-1993 world, before the Single Market arrived, when vast numbers of forms had to be filled in and lorries/ships sometimes stopped for hours for border checks. As Honda explained in June 2018 (see chart) it could easily take between 2-9 days to move goods between the EU27 and UK without a Customs Union, compared to between 5-24 hours today. The cost in terms of time and money would be enormous given that, as Eurotunnel told the Commons Treasury Committee in the month, ‘Over the past 20 years, warehouses have become trucks rolling on the road’.
V. Ursula von der Leyen has taken over from Jean-Claude Juncker as EU Commission President. Her priorities are naturally different from his, with her key focus being to deliver the EU Green Deal. On Brexit, she noted earlier this month in London that “The truth is that our partnership cannot and will not be the same as before. And it cannot and will not be as close as before – because with every choice comes a consequence. With every decision comes a trade-off. Without the free movement of people, you cannot have the free movement of capital, goods and services. Without a level playing field on environment, labour, taxation and state aid, you cannot have the highest quality access to the world’s largest single market. The more divergence there is, the more distant the partnership has to be.“
W. WTO Terms are not actually “terms of trade” at all, but simply a reference to the basic rules set out by the World Trade Organisation. As our Brexplainer video explains, they mean that a tax, called “Tariffs”, would be reintroduced for trade in goods between the UK and the EU27. Services, including financial services, could also be impacted by restrictions on market access. Border controls and customs checks could add time to shipments and impact supply chains. This could be particularly important for highly regulated sectors such as chemicals. Documentation and paperwork will increase, as businesses will need to be able to prove the nature and origin of their goods, especially if they use parts or components from several different countries. As a result, no country currently trades on WTO terms, as this briefing from the independent academic group, The UK in a Changing Europe, explains.
Z. Zig-zag perhaps best describes the process that has led us to this point. It began long ago when Margaret Thatcher resigned in 1990, as the catalyst was partly her hostility to European Monetary Union. Fast forward through many zigs and zags by both main political parties, and we finally reached June 2016 and the Brexit referendum – and then, in turn, tomorrow’s UK’s exit from the EU.
]]>How UK firms are using Estonia’s e-Residency scheme to operate as EU firms post-Brexit
https://readyforbrexit.co.uk/how-uk-firms-can-use-estonias-e-residency-after-brexit/
Tue, 17 Dec 2019 09:29:20 +0000https://readyforbrexit.co.uk/?p=26249Ott Vatter, managing director of the Republic of Estonia's e-Residency programme, which enables business people to establish and manage an EU-based company paperlessly from anywhere in the world, explains how UK businesses can benefit from the service after Brexit
Ready for Brexit is independent and objective. It aims to help businesses and organisations manage the challenges and opportunities that Brexit brings. See member benefits 〉
Ott Vatter, managing director, e-Residency
Ott Vatter, managing director of the Republic of Estonia’s e-Residency programme, which enables business people to establish and manage an EU-based company paperlessly from anywhere in the world, explains how UK businesses can benefit from the service after Brexit
Can you explain how e-Residency works?
e-Residency is an Estonian Government programme. It’s a transnational identity that is issued by the Estonian police and border guard. Estonia has had a digital identity programme for fifteen or sixteen years and we can’t imagine our lives without it, so 99% of our Government services are online. We communicate with the Government using this identity all the time. And in 2014 we thought why not make it available for foreigners who are already attached to Estonia to a certain extent. And, to our surprise, it came out that there were many more people who could benefit from a digital identity and who wanted to have companies in the EU, without actually physically being in the EU.
Has Brexit boosted the scheme’s popularity?
Yes, 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.
How has Estonia managed to lead the way in creating virtual EU residencies for UK companies?
When we became independent from the Soviet Union [in 1991] we had few resources to begin with and Estonians in general were reluctant to communicate with public officers, so we made the communication with the Government non-physical and we have been using digital identities for more than fifteen years. We didn’t have to invent anything new, we replicated the same infrastructure and system that we have for our citizens for non-citizens and we called it e-Residency, although the name e-Residency can be a little confusing, because it’s not actually residency. You can’t move to Estonia, you can’t travel with an e-Residency card, but it’s your virtual identification.
Will UK residents have to pay tax in Estonia if they set up an e-Residency for their businesses there?
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.
Does your programme offer additional support to businesses looking to set up e-Residency?
Absolutely. There is an entire industry built upon servicing e-Residents. You need a virtual address registered in Estonia and there are a lot of private companies that will help to establish a company and business consultation services, for example, if you need legal or bookkeeping advice. Every inch of the administrative part can be dealt with, so that you can focus on your core business.
How much does it cost to create an e-Residency?
The state fee for e-Residency is €100 and the state fee for establishing a company is €190 and many companies also pay a fee for services, such as bookkeeping, and that is roughly around €35 to €50 per month, depending on how many transactions you have per month. It’s very cost effective way in terms of establishing and running a company inside the European Union.
How many UK residents have taken up this offer?
We have around 3,200 e-Residents and about 450 companies who are based in the UK.
Do you have a base in the UK where people can come and find out more about your service, or is it all online?
Our base in the UK is the Estonian Embassy. When you apply for e-Residency you go through a background check and not everyone is accepted, but those that are have to then make an appointment with the Estonian Embassy. You go to the Embassy and they will issue you with the physical card there and you have to have one face-to-face meeting there with the representatives of the Government, because it is a national document, it requires the highest level of security in the EU according to the eIDAS [Electronic Identification, Authentication and Trust Services] act, so we want to see you and verify that you are as you claim to be and then we give you the key to enter our virtual systems.
How long does it take to set up?
It takes roughly two months, sometimes a little quicker and the company registration will take you thirty minutes. Once you have an EU company through e-Residency you have the right to offer goods and services across the EU and in accordance with the EU’s legal framework, even if you are based in the UK after a No-Deal Brexit.
]]>metals4U founder Paul McFadyen says business urgently needs clarity on Brexit
https://readyforbrexit.co.uk/metals4u-founder-says-business-needs-clarity-on-brexit/
Thu, 05 Dec 2019 10:35:45 +0000https://readyforbrexit.co.uk/?p=26036Paul McFadyen, founder of West Yorkshire-based online supplier of metals, plastics and engineering products metals4U, talks stockpiling, EU staffing and how he craves some certainty on how Brexit will playout
Ready for Brexit is independent and objective. It aims to help businesses and organisations manage the challenges and opportunities that Brexit brings. See member benefits 〉
Paul McFadyen, founder metals4U
Paul McFadyen, founder of West Yorkshire-based online supplier of metals, plastics and engineering products metals4U, talks stockpiling, EU staffing and how he craves some certainty on how Brexit will playout
What preparations has metals4U made for Brexit?
We are an online supplier of metals, plastics, and engineering consumables, mainly to the UK market and we are the market leader in the UK. We’ve made several changes to our business in preparation for Brexit.
We dramatically increased our stocks in the run-up to the March and October deadlines and we are maintaining those stock levels so that, as we get close to a possible date, we can make sure that we have sufficient stock to satisfy our customers’ demands.
We’ve increased our stock by over 50%. We’re keeping it at maximum capacity, we literally can’t squeeze anything else into the warehouse. And we are just about to finish an extension to give us even more space, so that in the new year we can hold even more stock. It’s not hit our cash flow, but it obviously has taken up a lot of cash.
Do you source any of your products from the EU?
The majority of goods that we sell are produced outside of the EU, but quite a lot of that comes through the EU. It’s really really difficult to plan for something when you don’t know what it is you’re planning for. We’ve got several scenarios depending on what sort of deal we come out with. If it’s a hard Brexit then we will then be sourcing those products direct from the manufacturing countries, China, India and the Far East and go with World Trade Organisation tariffs. If it’s a soft Brexit then it will probably be beneficial for us to continue to buy these goods through the EU.
Have your suppliers outside the EU been supportive of your need to possibly find new routes?
They have as little information as we have as to what the outcome is going to be. But, in a lot of cases, the EU is their largest export market and the UK’s usage of their products is relatively small compared to the EU as a whole, so the UK takes second fiddle to the EU, with the EU being the bigger customer. Obviously, they do want to continue supplying to us and for us to buy their products, but the UK is not the priority, the EU is.
Do you have any EU staff who have been impacted by Brexit?
Yes, when the referendum took place over 10% of our workforce was from the EU. Now we have no one from the EU, the last person left to go back home two months ago. We tried as best we could to retain them, but there are two reasons why they ended up leaving: firstly there’s the uncertainty as to what’s going to happen with regards to Brexit, and secondly the value of the pound plays a big role. When you send your money home, you don’t get quite as much for it. It’s made the disparity between UK and Eastern European wages a lot closer.
Do you see any opportunities coming your way from Brexit?
Yes, because a lot of what we purchase is manufactured outside of the EU, if the UK can do a good trade deal with the countries that our manufacturers are based in, then we could see a fall in our cost prices, which we could pass on to our customers.
It’s very difficult for UK businesses, small and large to plan for eventualities when we don’t know what we’re planning for. Regardless of what the outcome is, it’s almost getting to a point now where we need to know one way or the other. The outcome of the deal becomes less and less relevant as time goes on. What becomes more relevant is that we have something to work towards and we have something that we can plan around because a lot of UK businesses are very strong. There are a lot of great entrepreneurs in the UK. We can find a way of coming out of this in a good place, but we need to know soon what we’re up against.
]]>It’s vital that firms prepare for Brexit now says Forbes Burton’s Rick Smith
https://readyforbrexit.co.uk/forbes-burton-md-assesses-the-brexit-risk-to-uk-businesses/
Wed, 04 Dec 2019 14:17:31 +0000https://readyforbrexit.co.uk/?p=26012With another Brexit deadline looming, Rick Smith, managing director of business rescue and recovery consultants Forbes Burton, dives into how the break from the EU is likely to affect British businesses
Ready for Brexit is independent and objective. It aims to help businesses and organisations manage the challenges and opportunities that Brexit brings. See member benefits 〉
Rick Smith, managing director of Forbes Burton
With another Brexit deadline looming, Rick Smith, managing director of business rescue and recovery consultants Forbes Burton, dives into how the break from the EU is likely to affect both British businesses and his own operation
This article is the view of the author and not necessarily of Ready for Brexit
Brexit has the potential to have a massive impact on almost every industry – we’ve already seen some businesses failing because of Brexit uncertainty, and until Brexit is done and dusted or scrapped altogether, British businesses are going to continue to suffer.
Even after the UK has formally exited the EU, the effect of Brexit could have a big impact on many businesses because of the trade deals that have been struck. Some changes will have a drastic impact on the way British firms work with those inside the European Union, such as import and export tariffs, changes to immigration and workers rights.
There is also the likelihood of increased staffing costs, as access to cheaper EU labour is restricted, this will reduce the margins of already pretty close to line companies even more – it could be the straw that breaks the camel’s back.
A lot depends on whether planning for exit has been done and what safeguards are in place for workers and businesses.
A lot of Forbes Burton’s clients come from the construction, manufacturing, retail and leisure sectors and all of these have seen increases in numbers in financial distress creeping ever upwards since the EU referendum. One thing in common with these is they use EU nationals as a large part of their workforces and these sectors could definitely feel the effect of Brexit.
In more niche areas, the UK is well placed when it comes to tech innovation and medical science, key areas where the rest of the world is still catching up. By concentrating on niche areas of growth, UK businesses should be more than prepared for the lean period we may be entering.
Businesses need to avoid risks, cut controllable costs and keep an eye on the competition. Brexit isn’t going away in a hurry and it will have an impact on business. To bury your head in the sand just as things look to be changing in such sweeping ways could be disastrous. Planning is key!
Brexit is unlikely to have an impact on how Forbes Burton trades, we deal with UK companies and have little to no dealing with international businesses at the moment. If the businesses and industries we work in find themselves in trouble, however, we’ll always be there.
In any event, we can all agree that Brexit has brought some misery on the UK’s economy and high street especially. Regardless of if we eventually leave the EU, the damage is done and we are likely to still be feeling it in years to come. The best thing for British businesses to do now is to prepare for a difficult few years by slimming down and ensuring that all processes are as efficient as they can be.
On a more positive note, there could be more inward investment into our own workforce and we may well see more apprenticeships or similar schemes launched to build the skills needed to replace the loss of EU workers. There will also be the freedom to renegotiate new trade deals, which could be beneficial moving forward. It’s all up in the air, and not entirely in the UK’s control. It all really depends on whether you’re an optimist or a pessimist!
Unfortunately, even though there has been time for planning, many businesses have been unable or unwilling to do it. This will have a large knock-on effect, even affecting those businesses that have planned and put the necessary work in because problems in the supply chain can affect everyone in it. It’s an unfortunate reality, but if Brexit causes even half of the problems that it could, without proper preparation by UK businesses, and indeed the UK economy, they could be in big trouble.
]]>New SRSF EU food, plant and timber trade rules should apply deal or no deal
https://readyforbrexit.co.uk/new-srsf-trade-rules-for-animal-imports-should-continue-to-apply-deal-or-no-deal/
Tue, 03 Dec 2019 11:20:32 +0000https://readyforbrexit.co.uk/?p=25979New animal import rules and rules regarding the trade of plant, seed, and timber come into force next week. These new SRSF regulations should continue to apply even if the UK leaves the EU without a deal, says Defra. Anna Tobin reports
Ready for Brexit is independent and objective. It aims to help businesses and organisations manage the challenges and opportunities that Brexit brings. See member benefits 〉
(Shutterstock)
New animal import rules and rules regarding the trade of plant, seed and timber come into force next week. These new SRSF regulations should continue to apply even if the UK leaves the EU without a deal says Defra. Anna Tobin reports
The UK will begin implementing new EU Smarter Rules for Safer Food (SRSF) biosecurity regulations from 11pm on Friday 13 December 2019, the Department for Environment Food and Rural Affairs (Defra) has announced. The SRSF rules are designed to modernise protections against animal diseases and plant pests and improve food safety.
All affected businesses should have already received direct communications from Defra detailing what action they need to take to ensure that they can continue to trade these products with the EU.
Changes include:
Animal import and animal byproduct import businesses will need to use an improved IT system TRACES (NT) to log imports from beyond the EU and new look import forms.
Plant, seed and timber businesses will see an increase in the number of plant passports required and will have to deal with changes to the content and format of plant passport application forms.
Brexit and SRSF
Defra states that these new regulations will apply to the UK in all Brexit scenarios. Should the UK leave the EU without a deal, the regulations will be retained by the Withdrawal Act and will continue to apply subject to any amendments Parliament may agree.
]]>Industry stands still as the uncertainty grinds on finds MakeUK/BDO
https://readyforbrexit.co.uk/industry-stands-still-as-the-uncertainty-grinds-on-finds-makeuk-bdo/
Mon, 02 Dec 2019 09:55:43 +0000https://readyforbrexit.co.uk/?p=25941The quarter-four MakeUK/BDO Manufacturing Outlook finds Britain’s manufacturers are ending the year at a standstill, a result of the political uncertainty and downturn in major global markets. Anna Tobin reports
Ready for Brexit is independent and objective. It aims to help businesses and organisations manage the challenges and opportunities that Brexit brings. See member benefits 〉
(Stuart Boulton / Shutterstock.com)
The quarter-four MakeUK/BDO Manufacturing Outlook finds Britain’s manufacturers are ending the year at a standstill, a result of the political uncertainty and downturn in major global markets. Anna Tobin reports
The MakeUK/BDO quarter-four Manufacturing Outlook surveyed 339 companies between 30 October and 20 November 2019. It found that the total order balance, whilst still hovering in positive territory, fell to just 1%. This continues a downward trend seen throughout 2019. It has fallen respectively from 16% to 8% and 2% in the three previous quarters. In comparison, the total order balance in 2017 was 37%.
The Make UK/BDO survey did find that manufacturers’ confidence in the economy has risen slightly, but Make UK puts this down to the Halloween No Deal exit from the EU being avoided. Output also increased slightly from 4% to 11%, but again this was due to stockpiling in preparation for an expected October No Deal Brexit.
Sector breakdown
Looking at specific sectors, basic metals saw a large contraction due to the ongoing situation affecting the local and global steel sector; and, rubber and plastics were impacted by the downturn in the automotive sector and the move towards more environmentally friendly products. The electronics sector, however, continues to buck the trend as the automation drive continues, although it too saw a decline this quarter.
Export orders also picked up slightly from 6% to 10%, but domestic orders remain weak and in negative territory at -5%, up from -6% in quarter three. And, although still historically weak, investment intentions returned to positive territory reaching 3% from -1% last quarter.
As a consequence of these overall disappointing results, Make UK is now forecasting manufacturing growth of just 0.1% in 2019 and downgraded it to 0.3% in 2020, down from 0.6%. GDP is forecast at 1.3% in 2019 and 1.4% in 2020. A quarter of companies now view increasing investment allowances as the main priority for the new Government, with a fifth believing cuts in corporation tax should be the priority.
“Uncertainties about the outcome of Brexit and the impending general election continue to weigh on the UK manufacturing sector but the build up to Christmas has brought a much needed boost,” said Stephen Phipson, chief executive of Make UK. “Firms are reporting weaker business activity overall, especially from the domestic UK market but export orders have increased slightly this quarter, indicating greater confidence from foreign customers about purchasing UK goods as concerns about an end of year No Deal Brexit fade.
“Christmas, and the end of the year, are a time when people reflect on the past and try to begin afresh. Manufacturers will hope that the next twelve months will see an end to the political charade in Westminster and a return to focus on critical issues such as delivering a long term vision for the economy.”
]]>Exporta’s Don Marshall says trade patterns are disrupted by Brexit uncertainty
https://readyforbrexit.co.uk/exportas-don-marshall-says-brexit-makes-trading-hard-to-predict/
Tue, 26 Nov 2019 13:56:50 +0000https://readyforbrexit.co.uk/?p=25826Don Marshall, head of e-commerce and marketing at Kinross-based packaging solution provider Exporta, says Brexit has made trading trends harder to predict
Ready for Brexit is independent and objective. It aims to help businesses and organisations manage the challenges and opportunities that Brexit brings. See member benefits 〉
Don Marshall, head of e-commerce and marketing, Exporta
Don Marshall, head of e-commerce and marketing at Kinross-based packaging solution provider Exporta, says Brexit has made trading trends harder to predict
How has Exporta been impacted by Brexit?
Brexit has made things slightly harder to predict from a sales and business perspective. When it came up to the first deadline last March, we saw an uplift in sales from some of our existing customers who were stockpiling to a degree, but then when Brexit didn’t happen we saw the opposite effect, because they’d placed their orders earlier April was slower.
If we were to average the two months, they were probably the same as they would have been, but we saw an uplift in March and a slight downturn in April. It made things a little harder to predict based on standard annual patterns and we saw the same thing happen around the October deadline.
The biggest impact on us of Brexit overall though is that a lot of companies seem to be putting off their larger purchases. I would say that more larger projects this year than last year are being deferred, potentially because of the Brexit uncertainty. We’ve heard from some of our customers that the uncertainty surrounding Brexit has caused them to cut back and look at what they’re spending. So there has been a decline in those larger orders.
Generally though we have been marketing hard and working hard to retain our core customer base and we’ve been able to keep things on a growth trajectory, but not what we had expected for the year, although we are still moving forward.
Has the volatile exchange rate been problematic?
The volatility in the exchange rate for when we have been buying has meant that at times we have seen an increase in cost price because of the weaker pound. That’s been one of the other knock-on effects on us of Brexit.
Are all your customers UK-based?
We do have some oversea’s customers, but our customers are mainly UK-based. We don’t have a strategy at the moment for going overseas, it’s not something we’re trying to attract. The UK is our focus market.
A lot of our customers do export though, so depending on what happens with Brexit, if a No-Deal Brexit ends up in play that could mean that a lot of our customers who export have to comply with ISPM15 which means that they would have to have certified treated wooden pallets, or they could use plastic. That could be a good thing for us because plastic containers are exempt from ISPM15 and we predominantly sell plastic pallets and plastic storage containers, that’s our core business.
]]>Get your Brexit questions answered
https://readyforbrexit.co.uk/get-your-brexit-questions-answered/
Wed, 20 Nov 2019 16:13:43 +0000https://readyforbrexit.co.uk/?p=25719Brexit is up in the air. But it hasn't gone away. Pretty soon, if Boris Johnson wins the election, the UK will have left the EU, and suddenly things will start moving very quickly indeed.
Ready for Brexit is independent and objective. It aims to help businesses and organisations manage the challenges and opportunities that Brexit brings. See member benefits 〉
(Shutterstock)
Brexit is up in the air. But it hasn’t gone away. Pretty soon, if Boris Johnson wins the election with a majority, the UK will have left the EU, and suddenly things will start moving very quickly indeed.
After all, the Government is aiming to negotiate a new trade deal in a few months, when it would normally take several years.
The team behind Ready for Brexit are all experienced in international trade, customs, imports, exports, tax, regulations and business development. Some have been at the head of global businesses, others have grown their own start-ups into significant success stories.
They know the frustrations and limitations that Brexit is putting on SMEs. As our recent interviewee Kate Pietrasik, founder of Tootsa MacGinty said, many SMEs just don’t have the resources to navigate Brexit in the way the Government is advising. But there are a lot of people visiting the Ready for Brexit site each week, and some of them may well be able to help you get your Brexit questions answered.
Get your Brexit questions answered
So post your Brexit questions in our Brexit forums. And make use of the resources in the Ready for Brexit community.
]]>Brexit uncertainty means big brands not betting on little brands surmises Tootsa MacGinty founder
https://readyforbrexit.co.uk/brexit-uncertainty-means-big-brands-not-betting-on-little-brands-surmises-tootsa-macginty-founder/
Wed, 20 Nov 2019 07:35:49 +0000https://readyforbrexit.co.uk/?p=25709Kate Pietrasik, founder of childrenswear clothing brand Tootsa MacGinty, explains why she gets the feeling that the larger stores will cut back on stocking independent brands in the Brexit climate
Ready for Brexit is independent and objective. It aims to help businesses and organisations manage the challenges and opportunities that Brexit brings. See member benefits 〉
Tootsa MacGinty
Kate Pietrasik, founder of London-based childrenswear clothing brand Tootsa MacGinty, explains why she gets the feeling that the larger stores will cut back on stocking independent brands in the Brexit climate
What impact has Brexit had on Tootsa MacGinty to date?
Tootsa is a very small business, an SME, and Brexit has already been a huge challenge for us. I first noticed the impact of Brexit immediately after the referendum at our summer trade shows. Buyers were hesitant to place orders citing uncertainty about the future. We manufacture a sample and then take pre-orders for that sample at the shows and base our production run on the pre-orders received. We’ve never mass-produced huge runs, but we averaged 250 pieces per colour, depending on who was buying. And we used to be very busy, with buyers for both large and small boutiques placing their orders six or seven months in advance.
Over time we’ve been stocked in John Lewis & Partners, Selfridges, Harvey Nichols and Fenwick, large on-line stores like Zalando and Alex & Alexa and we have always been present in plenty of small independent boutiques. We also have our own busy webshop. However without wholesale pre-orders we cannot manufacture.
We exhibit in New York, London and Paris and the Parisian trade show was always our busiest, yet over the last couple of years each trade show has got quieter and quieter, to the point where at our last, in July 19, we didn’t see one UK buyer when we would usually receive at least 40 or 50 onto our stand. It was shocking to see the decline in the attendance of British buyers.
Why is it do you think that international tradeshows are attracting fewer UK buyers?
Many have said to me that they weren’t coming to pre-order for their boutiques because they were uncertain about their future. And as our products are mostly manufactured in the EU they were also reticent about the future of imports from Europe; that they’d rather wait and see what trade deals were negotiated before placing any orders.
As well as the independent shops the larger retailers also seem to have cut back on any small brands like Tootsa. Perhaps choosing to stick to the most popular sure-selling brands that offer them the biggest profit margins. This is just speculation as everyone plays their cards close to their chest.
Have your international sales benefited from the poor exchange rate?
No, with the bulk of our customers being UK based and as we buy our stock in euros we have lost a lot of margin. I suspect this is also a reason why many of the British buyers did not attend the European trade shows.
Have you looked at expanding your international sales?
We do have stockists throughout the world, but we are now having to cut back on trade show costs and sales agents and won’t be able to expand until we experience an up-turn. It does seem ironic to see Government advertising about ‘Getting Ready For Brexit’ when they don’t, in reality, know what it will entail.
Moving a warehouse out of the UK or altering your supply chain could be a solution if you’ve got some spare money to splash around on that sort of thing, however, like many independent brands, we just don’t have the funds.
It’s a very strange world that we are in at the moment and there is a lot of waiting and seeing, but Brexit uncertainty has and will sadly certainly be the demise of a lot of small brands and retailers.
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