It might have been delayed, but Brexit is still a very real issue for everyone in business. Our Brexit Director Peter Wilding – a leading expert on the UK’s relationship with the EU – gives his tips on how to survive until the new deadline of October 31 without losing business
So, how do you like your local florist? Flowers always beautiful, fresh and reasonably priced? These are the most local of local businesses, 15,000 in all – almost one in every town in the country, 90% of which are run by no more than two people.
One in four florists have no employees, and 66 per cent employ between one and nine. Just 10 per cent of the £2.25bn spent by the British public on flowers is produced here in the UK today. All this and the added burden of dealing with a product that essentially loses its quality within a few days.
Well, I wonder if the long reach of Brexit has found its way into their thinking. Because it should have done. In the event that the UK leaves the EU without a deal on Halloween this year then seven immediate hits on day one are:
• A 12% hike in price: WTO tariffs would be added to flower and plant costs via the wholesaler
• More red tape 1: each shop would have to register as an importer using the “Procedure for Electronic Application for Certificates” (PEACH) for fulfilling a number of important requirements when importing plants or fruits and vegetables into England and Wales
• More red tape 2: each shop would need to provide pre-arrival notification using PEACH
• More red tape 3: each shop would need to make sure a controlled consignment enters the UK with a phytosanitary certificate issued in the country of export (or re-export)
• More red tape 4: each shop would need to upload scanned copies of the phytosanitary certificate and other relevant documents (for example bill of lading, cargo movement request, or delivery company invoice to the PEACH
• More red tape 5: each shop would need to supply the original copy of the phytosanitary certificate within 3 days of the consignment reaching the UK via post
• Red tape 6: each shop would need to plan for 3 day notice periods for imports
But, of course, it’s not just the florists. As against 0% tariffs today, importing or exporting dairy products will cost 35% more, sugars & confectionery 21%, animal products 15.5%, fish products 11.8%, cars 10% and fruit, veg and our flowers and plants 12%.
So prices will rise. But so will other costs. Such as compliance. A report by the Institute for Government estimates that 180,000 British companies will need to make customs declarations for the first time after Brexit. The additional administration required to cope with this task is expected to cost UK traders around £4 billion a year. The number of annual entry customs declarations is expected to increase by 1.5 million and the number of exit declarations by 5 million once the UK leaves the EU Customs Union
Add onto this other barriers to trade, like sanitary and phytosanitary issues or just jobsworth protectionism and soon we’re talking a serious and unavoidable amount of friction, resulting in additional red tape and consequent price rises.
All these cases offer a very clear contrast between the relatively straightforward procedures enjoyed by British and European businesses today, and the risk of much more cumbersome and costly customs and compliance procedures that could become a reality after Brexit.
What can you do?
1. Information - You need to have procedures in place to ensure you are well-informed about the Brexit process. Relying on press reports won’t be enough. Understanding and forecasting the likely impacts are fundamental to your Brexit strategy to gaining early competitive advantage.
2. Preparation - Prepare for Brexit with and without a deal. To do so, businesses should carry out a Brexit legal impact assessment followed by a Brexit commercial impact assessment. These will form the baseline of any contingency measures. To be Brexitproof, FBC Manby Bowdler’s online survey can help you legally and commercially.
3. Action - Based on this survey, you should decide what contingency plans you need and when they should be activated. You might be marginally or massively impacted. Contingency measures could include setting up alternative supply chains, identifying new customer markets, or re-skilling employees.
One approach for minimising the burden of increased customs declarations for European and British companies is based on two pillars – self-assessment and simplified procedures. These benefits should at the very least be extended to Authorised Economic Operators (AEO), whose status is obtained on the basis of a detailed analysis of the products, procedures, and partners in order to ensure that imports, exports and customs procedures will be handled in line with customs regulations. Consequently, customs should adopt a process-oriented approach to these procedures as opposed to transaction-based approach. This approach should be applicable for as many companies as possible.
4. Influencing - The best way to avoid a Brexit that damages your business is to influence the outcome yourself. Brexit provides an opportunity to do that, which businesses should exploit more.
So with 190 days to go and any number of political outcomes possible, it’s time to get ready. It is entirely possible that within the next few weeks Theresa May might resign, forcing a Conservative leadership election which leads to Boris Johnson as Prime Minister, declaring that a no deal Brexit is his aim and moreover the will of the 100,000 Conservative members who put him into No10.
FBC Manby Bowdler will give you a tailored service which monitors progress, analyses published documents, and identifies the impacts for your business the moment they become clear. If you’re a florist or a car manufacturer, this is the way to become Brexitproof.
If you would like to contact Peter or the rest of the Brexit advisory team to discuss any of the above please call 01694 724440, 07901 008220 or email email@example.com