It’s been a great couple of months not having to speak about BREXIT but the harsh reality of a ‘No Deal’ exit looks more likely given the current political climate and that Britain will exit the EU on the 31st October 2019. I’m certainly no expert on what might or might not happen in the short, medium or longer term but there continues to remain (no pun intended) uncertainty and it is clear that preparation will be key to minimise the impact on all of us.
It was ever thus it would seem. In popular recollection, the 1970’s have gone down as the dark ages, Britain’s gloomiest period since the Second World War, set between Harold Wilson’s Swinging Sixties and Margaret Thatcher’s divisive 1980’s. In the 1970’s Britain was often more pitied than envied or admired, its economy characterised by little or no growth, high inflation and rising unemployment. Weary of being outpaced by its continental competitors, the UK belatedly joined the European Economic Community in 1973. In 1976, the plummeting value of the pound forced Jim Callaghan’s Labour government to accept a £2.3 billion bailout from the IMF, the largest fund in its three decade history. Britain had become known as the ‘sick man of Europe’
Times have clearly changed for the better. But we have received a stark warning this week from the governor of The Bank of England who suggested that with a ‘No Deal’ Brexit, food shortages, job losses and business closures are likely. More importantly for Bishopsgate and our clients he adds, “An abrupt Brexit would create a “logistics” headache. While he noted that the government had been hiring extra customs officers and increasing capacity at ports to deal with a possible sudden switch away from tariff-free trade with the EU, Mr Carney refused to be drawn on whether the government will manage to complete the preparations by the 31 October Brexit deadline, but hinted at consequences of failing to do so.
“A no-deal Brexit would also deliver an immediate blow to a “potentially substantial number” of companies, Mr Carney said. “The economics of no deal are that the rules of the game of exporting to Europe or importing from Europe fundamentally change and there are some very big industries in this country where that which is highly profitable becomes not profitable, becomes uneconomic and very difficult decisions will need to be taken. That has knock-on effects on the economy in the short term.” Mr Carney added that the automotive, food, chemicals and transport sectors would be most affected.
But even those businesses that survived would not emerge unscathed, he suggested, citing a survey of 10,000 firms by the central bank. “They think that output will go down, they’ll have to let people go … That is the view of those firms,” Mr Carney said, reiterating a warning he issued last month. And no one will be able to escape the higher inflation that will result from a weaker pound if Britain leaves the EU without an agreement.
“In the event of no deal, the exchange rate would go down for a period of time, and the area of the economy where that instantly translates into prices is in the forecourt of the petrol station and in food and veg,” Mr Carney said.
His comments follow the release of gloomier economic forecasts by the Bank of England on Thursday. They showed that, even if there is an orderly Brexit, the economy will grow at the weakest rate in a decade in 2019 and 2020 and there is now a one-in-three chance of recession. A no-deal Brexit would mean even slower growth, the bank said.
And for Bishopsgate? We do know that it is going to change the European trading landscape and particularly for our clients who ask us to perform ‘final mile’ collections and deliveries in mainland Europe…that includes Southern Ireland. Naturally we want to support our clients through this process and eliminate any problems that may occur through the supply chain. We recognise that there may be a need for easily accessible, reliable customs information per country enabling swift responses to customer queries. Please find below the advice that we gave last time…Brexit 1…which hasn’t changed although I sense that a ‘No Deal’ hard Brexit is more likely now given the current political climate.
The one real change that we are seeing now are requests for more ‘short term’ warehouse space. Many companies have therefore asked us to store their fast moving goods in The UK ready and in anticipation of any delays.
We have created space in our facilities in London, Swindon and Warrington to meet your short and medium term needs so if you need to discuss this further, don’t leave this too late. Please speak to your local contact now.
The worst case scenario would be with a “hard Brexit” and an export declaration may be required for 100% of all European road freight movements. The basic requirements which are essential for completing an export declaration, are highlighted below. Those of you who currently operate in Switzerland, Norway or even Jersey will feel this pain already. If you haven’t yet thought about this internally, I suggest you do this now. This will help eliminate delays on route or your goods being short shipped due to the lack of information.
Required documentation includes
- Exporters name, address & VAT/EORI number https://www.gov.uk/eori
- Valid documentation; invoice declaration, EUR1 if issued
- Consignees name & address
- Ultimate country of destination
- Packages, weight, goods value & clear description of goods
- Commodity code
- CPC code (Customs Procedure Code). Current examples; 1000001 (Non Preference goods in Free Circulation) & 1000018 (Preference Goods, EUR1), 3151000 goods ex IPR goods etc.
- Are the goods subject to any Export Licence control or other requirement
We will provide you with more detailed guidance once we know more from Customs on the requirements.