Brexit: Time is running out

Prime minister Theresa May is expected to visit Brussels tomorrow in yet another attempt to win further Brexit concessions from the European Union. It’s now just 38 days to Brexit and the prospect of the UK crashing out without a deal appears to be increasing.

Yesterday, the European Commission stepped up its no-deal customs preparedness. Pierre Moscovici, commissioner for economic and financial affairs, taxation and customs, said: “With the risk of a no-deal Brexit increasing as we get closer to March 29, the European Commission and national customs authorities are working hard to be ready to introduce checks and controls on goods flowing between the EU and the UK. This is key to protecting our consumers and our internal market.

“A lot depends on the ability of businesses trading with the UK to get up to speed with the customs rules that will apply on day one in case of no deal. There is no time to lose and we are here to help with the information campaign.”

Manufacturers particularly have been pressing the government to avoid no-deal. John Allan, the former DHL chief who is now president of the Confederation of British Industry, has highlighted the impact: “If the UK leaves the EU without a deal, we could cease overnight to enjoy the benefits of tariff-free trade with, and preferential access to, markets of fundamental importance for British products and services, from Japan to Turkey. Many British firms are unaware that it’s not just their relationships with EU customers at risk from a no deal Brexit, but relationships across the globe,” he said.

And manufacturers’ trade organisation Make UK (formerly the EEF) has just released a survey of members which found that 58 per cent of large companies believe that a no-deal Brexit will make the UK less attractive as a manufacturing location.

Just nine per cent of companies say they have won business previously sourced overseas since the referendum.

Of those who have adjusted supply chains a third (35 per cent) have offshored with the EU being the most common destination. A quarter (26 per cent) have reshored production back to the UK, the vast majority of which has come back from the EU.

The survey also shows that adjusting their supply chain has been a costly exercise for companies with over half (51 per cent) saying it has increased their costs with just ten per cent saying this has reduced their costs.

Dame Judith Hackitt, chair of Make UK said: “The clock has almost run down and it is now essential that the pantomime in Parliament ends and politicians of all persuasion come together to agree a deal that protects the future of manufacturing and people’s jobs right across the UK.”

Like the European Union, the UK government has been setting out plans for how trade will operate in the event of no-deal. In particularly, HMRC has produced a “Partnership Pack”, which is designed to help companies prepare for the changes at the UK border.

https://www.gov.uk/government/publications/partnership-pack-preparing-for-a-no-deal-eu-exit

However, there is plenty of anecdotal evidence that government systems will simply not be ready to cope with change on the 29th March – regardless of whether there is a deal or not.

And it is now being suggested that they only way that disruption will be avoided is simply to continue with existing import/export arrangements after Brexit until an orderly change can be made.

Nevertheless, it would be a foolish organisation that bet its business on such anecdotal evidence. Preparation is critical and time is running out.