Filenews 27 January 2021
Britain's departure from the European Union sparked the biggest change in trade since the country joined the European bloc 48 years ago, with companies now grappling with export documents, longer delivery times and the need to redesign supply chains.
Freight volumes moving between the UK and the European Union were down by 38% in the third week of January compared to the corresponding week last year, according to data from lorry traffic.
Here are just some of the changes in trade since Britain left the single market and customs union on 31 December:
GREATER DELIVERY TIMES
Fishermen were the first branch of workers to be hit in January when the introduction of health checks, certificates and customs declarations delayed the transport of stocks to such an extent that the goods were rejected by European buyers as they were considered to be no longer fresh.
Since then producers of a range of products from cheese to beef have stopped exporting to Europe for the time being, having been discouraged by expensive health certificates and huge bureaucracy.
Some companies are trying to find a solution. Some Scottish fishermen have taken their catch directly to Danish markets to avoid British bureaucracy. However, around a fifth of small and medium-sized enterprises exporting to the EU have temporarily suspended sales.
APPROVAL ALYSIDES
The new tension has led those companies that could afford to review their supply chains, particularly those British companies at risk of tariffs by selling products in the EU made from raw materials from Asia.
Online clothing retailer ASOS expects a tax charge of €15m (£15m). ($21 million) as, although almost all of its European sales are processed through its Berlin facilities, some continue to enter Britain first.
VAT AND COST
Companies and consumers received unexpected charges for consumption fees, VAT and higher transportation costs which makes some sales prohibitive.
Logistics groups said the cost of hiring European drivers to bring products to Britain has risen. The fact that drivers also need a negative COVID test to depart means that the island state is a much less attractive destination for them.
According to a CBI survey of British manufacturing companies, optimism about their competitiveness vis-à-vis European companies has deteriorated at the fastest rate on record. Nevertheless, orders from the EU have improved, suggesting that European companies continue to source products from the UK.
FINANCIAL SERVICES
The Brexit trade deal between Britain and the EU, which came into force on 1 January, does not cover financial services, leaving the financial centre of the City of London largely cut off from the European bloc.
In early January, daily transactions on shares worth EUR 6 billion were moved from the City of London to continental Europe. At the same time, a large chunk in swaps transactions. This has raised questions about the value of any future access to the EU, given that British banks and trading platforms have opened units in the European bloc.
Brussels has said it will not consider granting further equivalence access until there is a regulatory co-operation pact and Britain's planned departure from European rules has been considered.
London does not want to have a volume of regulation to maintain its position as the world's leading financial centre after Brexit, but is ready to act if the EU blocks access, the political leader of the city of London body told Reuters.
The Bank of England has said Britain should not bow to EU rules simply to ensure better access, warning that the price could be too high.
Ireland
The clearest impact from Brexit can be seen in ports where huge ships are now transporting goods directly between Ireland, an EU member state, and the rest of the European bloc in order to avoid the red tape and delays associated with the once-fastest route through Britain.
Supermarket shelves in Ireland and the British province of Northern Ireland have seen some shortages as retailers struggle to manage the paperwork, a situation that could worsen after the end of the three-month grace period for Northern Ireland's supermarkets.
E-commerce has also been hit hard by the number of Irish consumers shopping online from uk stores. Some British suppliers have stopped trading while logistics groups in Northern Ireland have warned that prices are rising as lorries return from Britain empty.
Source: ABA
