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Northern Powerhouse

Brexit weekly digest 26 August

The UK Prime Minister has suggested that he will be able to secure a Brexit solution with an amendment to the Northern Ireland backstop and a prediction that of a deal being done in the ‘final furlong’ citing the findings of the Alterative Arrangements Commission as evidence of ample scope for a deal.  Boris Johnson, this week, is at European Summit meetings, looking to meet and negotiate with other European Leaders.

The government announces custom passes   (EUOR) will be issued in the next few weeks to 88,000 exporters to ease flow of goods. The Chamber of Commerce has recommended automatic issue of passes to exporters that currently fall below the EORI/VAT threshold and for the government to launch an official database to offer information about tariffs and quotas in preparation of a no deal Brexit. At present there are 250,000 businesses in the UK that export to EU countries

New statistics from The Office of National Statistics (ONS) reported numbers of EU citizens moving to the UK has heavily reduced since the Brexit announcement in 2016 with the steepest drop in arrivals being from EU8 countries.

The German budget food retailer,Lidl, announced that they expect suppliers to absorb the additional costs of a no deal Brexit with terms ‘delivery duty paid ready’ reiterated in line with their current contracts that already stipulate DDP (Delivered Duty Paid) terms.

As suppliers start to understand the implications of a no deal Brexit unsurprisingly an increasing number of industries that trade internationally are looking to introduce Brexit break clauses  as part of their supply chain management to cover the risk of currency fluctuations, change in law and economic impact designed to allow the supplier to recover additional costs from clients.

Bloomberg report that fears  that a no deal Brexit will further hinder the renaissance of the nuclear power industry who are already reliant on EU for workers particularly skilled welders. At present 13% of welders in the UK nuclear industry are from EU countries and training of new recruits in the UK takes three years. The risk to the industry is that any increase in costs caused by the skills shortage will further hinder the build and operation of atomic plants which are vital if the government hopes to achieve its target to produce net zero carbon emissions by 2050. In the case of a no deal Brexit EU citizens could currently continue to work in the UK on restrictive three-year permit.

Commenting on the public sector finances for July 2019, published by the Office for National Statistics (ONS), Sumita Shah, ICAEW Regulatory Policy Manager, said:  “Last month’s contraction in the economy and net borrowing up by £6bn brought about fears that we could be heading for a recession for the first time in 10 years. Forthcoming key decisions by the government need to consider the long-term development of the country, and the need to bring back positive growth. As we lead up to the 31 October Brexit deadline, it’s important that the government gets to grips with the bigger, long-term picture, which is maintaining the sustainability of our public finances. The government has a responsibility to instil confidence back into the UK economy, which is essential if the economy is going to be in the best shape to face the challenges and opportunities of life outside the European Union.”

The CBI report that retailers expect the sharpest deterioration in business conditions since February 2009 in the coming months, according to the latest quarterly Distributive Trades Survey.  Anna Leach, CBI Deputy Chief Economist, said:  “It is unsurprising that business confidence has deteriorated sharply, with a potential no-deal Brexit on the horizon. But retailers are also buckling under the cumulative burden of costs, including an outdated business rates system and the apprenticeship levy. Businesses will be looking for government action in the budget in the coming months to alleviate some of these pressures.”

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