The Chief Executive of Hertfordshire Chamber of Commerce, Yolanda Rugg, reports on UK’s Brexit business options and imperatives.
“Following the EU Referendum, June 2016, British Chambers of Commerce conducted a number of country-wide surveys eliciting 20,000 responses and discussions with over 75,000 businesses employing five million people on Brexit’s potential opportunities and challenges.”
The report sets out key priorities to ensure that UK business can continue to trade, invest, flourish and grow with regard to trade, customers, taxation, regulation, the labour market and EU funding.
“Over 35 per cent of businesses plan on putting even more resource into the European market over the next five years and another third have no plans to change their approach to selling into Europe,” she said.
“It will be the ability of businesses to seize new opportunities that will shape our future relationship, not only with Europe, but with the rest of the world — it is businesses, not governments, that trade,” said Yolanda Rugg.
Businesses are concerned about potential new trade barriers that could frustrate trade with the EU. They want an EU trade deal on the best terms possible. These include adoption of existing rules to apply to the new situation (for the time being), Free Trade Agreements (FTAs) with key markets (USA, others) and focus on additional high growth markets.
Businesses planning increased export resources over the next five years are: 36 per cent to Europe, 25 per cent to North America, 20 per cent to Asia (excl China, India), 18 per cent to China, 17 per cent to Australasia, 16 per cent to India, 15 per cent to South America and 13 per cent to Africa (Chambers’ International Trade Survey: Dec 2016).
Market liberalisation has a significant effect for SMEs; FTAs having a limited impact. Businesses want good trading deals and removal of non-tariff barriers in key markets through diplomacy, engagement and support.
Businesses say: keep tariffs with the EU to a minimum, alleviate non-tariff barriers (EU and rest of the world), ensure the continuance of existing FTAs, consult with business when negotiating future trade deals, revitalise the trade mission, trade fairs and trade support, and avoid sudden disruption to trading relations with the EU after 2019.
Businesses are concerned about HMRC and Border Force’s ability to deal with any changes to customs arrangements. They also want certainty regarding any future procedure to enable them to prepare for any changes; UK must be a distribution hub into the EU.
Adjustment costs are likely to arise for some exporters currently trading exclusively with the EU with insufficient awareness of trade and customs processes.
The UK tax system is mainly affected by EU law through rules — when to levy indirect taxes, assigning tax liability in cross-border transactions and information disclosure and reporting of income, personal and corporate. There is uncertainty over what tax regime changes might arise and whether HMRC can deal with major changes.
Businesses want a clear transition period for the complex indirect tax issues facing business and trading partners, greater clarity on future tax systems and arbitration processes and future jurisdiction for interstate tax disputes.
Businesses found some EU regulations and standards bureaucratic and challenging: high volume of regulations, sometimes poorly drafted rules, and subject to regular changes, all incurring compliance costs.
They know it will be necessary to adhere to EU regulations, standards and EU directives to continue trading with Europe; but want to know how procurement procedures will change. Maintaining short-term stability of the regulatory framework and standards equivalence to enable two-way trade is vital but businesses want framework flexibility that reduces the size and complexity.
The future status of EU workers in the UK is critical: low-skilled EU workers for sectors such as hospitality and agriculture are as necessary as high and medium-skilled EU workers — their immediate residency rights are vital. We need a policy with minimal bureaucracy, cost or barriers supported by an improved skills system and favourable labour market policy.
Regarding EU funding
Businesses want a new economic funding system with maximum local autonomy, a strong voice for business priorities and effective support for economic growth. Equally important is continued access to the European Investment Bank whose loans are critical for major infrastructure and utilities programmes essential to business productivity in the UK.
Strong negotiation, clear thinking and putting UK business first is essential during the next two years, says Yolanda Rugg.
“Hertfordshire businesses also have other issues — internet and transportation, skills shortages, the growing burden of costs. However, we must be ready to take grasp the opportunities that Brexit presents.”