WITH the Brexit trade-deal deadline looming, speculation surrounding a no-deal and its detrimental implications for British industry are reaching fever pitch.
The media is awash with reports of the perils facing our economy as a result of a no-deal Brexit. Speculation has ranged from reports of 10 per cent tariffs being imposed on British car exports, – plunging the industry into an apparent irreversible decline – to gallons of Scottish whisky being abandoned at the Dover dockside for lack of sufficient EU paperwork. The reality, however, is much more sanguine.
As it stands, only around 13 per cent of businesses actually trade directly with the EU. For the other 87 per cent (roughly equivalent to over five million companies), Britain’s future trading relationship with the EU will have little direct bearing.
To borrow our Prime Minister’s words, we should ignore ‘the doomsters’ and ‘the gloomsters’, including devoted disciples of the EU, such as the CBI, and their predictions that a no-deal will trigger severe complications for businesses. Typically, large businesses export and import goods multi-nationally far beyond the EU’s shores.
Many have extensive expertise of operating across multiple borders. Most large businesses often have dedicated departments that specifically deal with regulatory issues. This sees them well-placed to deal with any regulatory changes that will emerge post-Brexit with or without a deal.
This preparedness is echoed among smaller businesses, too.
For example, very few SME’s use their own means of transport to move traded goods.
Consequently, many of the complex issues surrounding documentation processing and customs clearing will be handled by freight forwarding companies with extensive knowledge and expertise in these areas.
There is also misplaced apprehension surrounding certificates and forms that will be required by businesses in the event of an EU trade deal.
As anyone who runs a business knows, there are daily challenges from dealing with premises, staff, suppliers, health and safety regulations.
Any supplementary paperwork as a result of a failure to strike a deal are unlikely to pose a significant additional administrative burden.
It’s also important to remember why Brexit was so important – it’s a unique opportunity for Britain to take back control of its own laws and borders.
As a member of the then EU-28, we had little influence over the regulations imposed upon our businesses by the EU. For example, the EU Structural Funds that were designed to aid SMEs were difficult to access and failed to offer any substantial benefit.
Post-Brexit, the Government has committed to establishing a UK Shared Prosperity Fund (UKSPF) for small businesses, which will tackle social inequality by raising productivity, particularly in more economically impoverished areas of the country.
By leaving the EU, cutting regulations and establishing our own tailor-made laws, small businesses can successfully access financial funding and see greater prosperity in the long-term.
The complexity of trading beyond the EU is considerably overstated. Countries outside the EU consistently trade with the region.
The US is currently the EU’s largest trading partner, with a total of €615 billion of traded goods and services from 2019.PROMOTED STORY
The complexity of trading beyond the EU is considerably overstated. Countries outside the EU consistently trade with the region, and their prosperity isn’t dependent on their membership to the single market. In 2019 the US secured a total of €615 billion of traded goods and services, €100 billion more in trade than the UK from that year.
In the City: Huge chunk of EU debt is underwritten by London and will continue to be so post Brexit (Image: Getty)
There is no reason why our trade should be significantly impacted once we adopt a new regulatory procedure.
The impact of a no deal on the City of London and our world-beating financial services sector has also attracted significant commentary. Speculation surrounding a no deal and the resultant demise of our financial services industry is just as misleading as it is for businesses in general.
At present 50 per cent of debt and equity, and 70 per cent of all sovereign debt issued by the existing EU-27 was raised or is underwritten in London. The Eurozone’s heavy reliance on the City of London will persist irrespective of the outcome of our trade talks.
The UK is by far Europe’s largest banking sector worth in excess of £10 trillion, significantly higher than Germany and France who take the second and third spot respectively.
There are a number of factors that will enable the City of London to retain its position as a global financial hub post-Brexit, for which it is well prepared, including its time zone, which offers trade convenience with Asia and the US; its multicurrency, liquid and open markets; its highly innovative achievements; and the opportunity to build on a more competitive, market sensitive regulatory culture without undermining risk.
Much like our other industries, Britain has established a robust financial services industry that will withstand Brexit and prosper beyond the EU’s claustrophobic clutches.
British businesses should not fear the post-Brexit future, with or without a deal. There is so much opportunity on the horizon. No deal, no fear.
Daniel Hodson and Lance Forman are vice-chairmen of the Independent Business Network which represents the needs of family owned and family run businesses across the United Kingdom.