Overview
In recent months Brexit has been completely overshadowed by coronavirus and while focus has started increasing again, it’s been difficult to know what’s happened/is happening and what’s speculation; there’s been increasing noise in the media and on social media, but we’ve not seen much formally from the Government. There’s rumour from some media outlets that coronavirus has been used as a mask to progress our exit from the EU behind closed doors.
The Government came under increasing pressure to help the economy by extending the transition period, but on 12 June they formally confirmed they’d neither accept or seek an extension – (GOV.UK).
Trade
There’s one more round of talks scheduled this month before a planned high-level “stock take” between Boris Johnson and President of the European Commission Ursula von der Leyen, where both sides will consider the progress made so far – Independent. As we’ve formally ruled out an extension of the transition period, this now leaves a small window to complete the trade talks before the end of the year when we’ll stop trading under EU terms and potentially move to World Trade Organisation (WTO) rules.
On 12 June the Government announced it would introduce new border controls in three stages up to July 2021 and shared details of a £50 million support package to boost the capacity of customs brokers, freight forwarders and express parcel operators – GOV.UK.
Trade talks with Japan begun on 9 June, the UK’s 11th largest trading partner, and the fourth largest outside the EU – Independent.
Regarding the Northern Ireland Protocol, an action plan published at the start of June says businesses will need to complete export declarations for goods moving from Great Britain to Northern Ireland and there’ll need to be extra border infrastructure in Northern Ireland ports for checks on food and live animals. While this raised some noise in the media as Boris Johnson had originally said there wouldn’t be a hard border, Michael Gove told the Commons that declarations were needed to “ensure UK trade qualifies for tariff free status” and there would need to be “some expansion of existing infrastructure to provide for some additional new processes for the agriculture and food sector” which, while these are checks, are technically not customs checks – (Independent). The Irish Times reported that Northern Ireland business groups were calling for a six month delay to implementing the checks as the late admission leaves them little time to prepare for this. The Government’s approach to the Northern Ireland Protocol is laid out here GOV.UK.
The Government outlined the intention to create up to 10 freeports in the UK and invited responses to the Freeports Consultation. This was originally due to close 20 April but has been extended to 13 July to allow key sectors with an interest, including ports, businesses and local government, the time to submit views following disruption due to coronavirus.
The UK Global Tariff, Published 21 May, will replace the EU’s Common External Tariff from 1 January 2021. The intention of this is to “lower costs for businesses, ensuring they can compete on fair terms with the rest of the world, as well as keeping prices down and increasing choice for consumers.” Businesses can now familiarise themselves with the changes here and tariffs being maintained in order to back UK industry, including agriculture and cars. Consumers will benefit from more choice and lower costs on some items, including household appliances and tools, due to the removal of tariffs.
Trade/Sentiments
There’s been lots of noise in the media in the last couple of weeks regarding the trade deal with America and food standards/animal welfare. In initial talks our Government said it would under no circumstance lower the high standards we enjoy in the UK; however, much has been reported in the media and on social media about the potential that we’re moving towards a trade deal that would open the gates for lower food standards and animal welfare, such as chlorinated chicken, animals treated with high levels of antibiotics/hormone fed and high levels of pesticides in crops. While there’s been lots of mention of this in the media, including a petition to Government spear-headed by Jamie Oliver (Riverford), there’s been very little mention of this by Government. The Agriculture Bill reached the House of Lords 10 June after MPs voted against an amendment last month that would have meant the high standards of current UK food and farming must be applied to future deals on international trade. Sky.
Supply Chains
Andrew Opie, director of food sustainability at the British Retail Consortium stated that “if we get a disorderly Brexit we potentially face a bigger challenge to the food supply chain than was faced with Covid.” Independent
Sticking Points
Initially there was a deadline of 1 July for the fisheries agreement but this is now looking unlikely as it appears we’ve reached a deadlock. A number of rounds of talks were held recently but with no progress towards a deal, which Europe state may get pushed back towards October (Guardian). The UK’s position is that trade and fisheries should not be linked while the EU’s position is that it should (House of Commons Library).
Finance
Andrew Bailey, Governor of the Bank of England, has advised banks to “step up their plans for a no-deal Brexit” and a senior EU official echoed this stating “Britain’s financial services sector should be ready for a no deal Brexit.” Our desire to retain passporting rights is driving us to ensure we secure a “binding commitment from the EU on financial market access” Independent. Some banks have prepared for this by moving operations to the EU, for example in Dublin.
Dorset Chamber will be sharing regular updates on the UKs exit from the EU. We also offer a Brexit support service, delivered by the Dorset Local Enterprise Partnership (LEP) in partnership with Dorset Chamber, with free of charge advice for all Dorset businesses. Please contact gateway@dcci.co.uk or phone 01202 714800.