The real implications of Brexit on trading with Europe
In collaboration with Matt West at Metro Bank, hgkc hosted a roundtable looking at the true impact of leaving the EU on businesses in the UK. Marcus Broix from Trade with Europe spoke on the lasting effects of the trade deal and what is likely to happen in the future.
The UK and EU trade agreement has already caused a lot of disruption and it looks like the problems are here to stay for some considerable time. The full impact of the trade deal is likely to unravel throughout this year and the years to come, especially when it comes to the food industry. Sea food exports in particular have been significantly affected. UK to EU exports in January 2021, compared to January 2020, were down by 75.5%, that's a £750,000 fall in export value. Across all sectors, it is now very difficult - and more expensive - to export to the EU. And with the increased formalities, some businesses no longer consider exporting to the EU a viable option.
Businesses now need to apply for a VAT number and an EORI number for every EU country they wish to export into, otherwise they will have to use an EU country as a bridge head to export into other countries. There are options to use service providers such as Trade with Europe that will help, either by setting up a business within the EU or using an EU fiscal representation. However, if a business chooses to export without using any service provider there will be increased paperwork and a resulting negative impact on cashflow, either for the exporter or the recipient, as import taxes will need to be paid. On the import side, it appears that the current trade barriers may well impact inward supply chains, affecting the availability of components and spare parts.
Service sectors are also being heavily affected. Some professional qualifications might not be recognised by the EU, meaning that people trained for certain professions will need to possess a European qualification. When it comes to the impact on moving labour and moving people across borders, because of the new deal, work permits and work visas are required, and on top of EU legislations, there are 27 national legislations to navigate.
It is unlikely that the deal will be re-negotiated in favour of trade and it doesn’t look as though there is a general fix on the immediate horizon. The problems that businesses face now are likely to increase once the import grace period is over, and smaller business will suffer due to a lack of resources. The reality is that the UK and the EU have now become competitors.
The future outcome from Brexit is extremely uncertain and the effects on businesses seem to be worse than most realise. Looking forward, it is hard to see how the current trade situation will improve.