With a Brexit agreement done at the eleventh hour, is the deal the UK has struck a basis for a new trade and prosperity era or a red tape nightmare? Dave Howell reports.
With an agreement running to over 1200 pages, the Brexit deal is now complete. You can read a summary of the agreement here.
In the aftermath of the deal, will the UK be able to leverage its new-found freedom, or suffer the consequences of leaving the country’s largest single trading partner?
Geraldine Bolton, Chief Executive Officer of the Confederation of British Metalforming says: “It's a hard Brexit, but definitely better than a no deal. Time will tell how good it is for those that export and import, there could be additional costs through paperwork or tariffs if they can't meet the Rules of Origin Regulations.
“Small businesses need to be more agile and flexible and, most importantly, improve their productivity so they can remain competitive. Only then will they achieve the margins required to trade profitably with the EU. UK companies are the best in the world when it comes to innovation and doing thing differently. Commercialising this talent has always been the biggest challenge, but we have a major opportunity with electrification on the horizon.”
In their reaction to the deal, the FSB (Federation of Small Business) commented: “After such a torrid year, and during such a disrupted festive trading season, it's a huge relief to see negotiators finally strike a deal. The work of looking through the detail of the agreement to map out exactly what it means for the small firms that make up 99% of our business community now begins.
“As well as going through the terms of access to each other’s markets, we are keen to see the Small Business Chapter that we have championed and encouraged both sides to include. What we need from here is tangible, targeted support, including £3,000 transition vouchers that small firms can spend on the training and advice required to navigate a new trading relationship with our biggest export market.”
No two businesses will be impacted the same, which is one of the major issues that small firms, in particular, are struggling to comprehend in a post-Brexit trading landscape. The Government has produced a Brexit Checker tool which can give an immediate indication of the areas a business may have to pay close attention to and what potential significant impact Brexit could have on their business.
The major headline, of course, was that tariffs would not be imposed on “qualifying” goods. Which goods are included can be checked here to verify their rules of origin.
For small businesses, the Government's explainer states that the agreement includes specific commitments to provide SMEs with clear and accessible online information about the deal, helping them trade and do business in each party's jurisdiction. This covers customs procedures, intellectual property rights and public procurement. The agreement commits each party to provide a searchable online database on customs duties, taxes and rules of origin. The agreement also establishes a framework that will allow the parties to work together to increase opportunities for SMEs and to report on their activities.
The general consensus amongst business leaders is that while the deal the UK isn't as soft as many would have liked, at least a deal has been struck. No one wanted to contemplate a trading landscape within a no-deal scenario.
View from business
Croner-i Business-inform spoke with Nick Devine, Director at software consultancy JS3 Global.
As a small business themselves, JS3 Global delivers enterprise resource planning software consultancy to clients operating in industries such as oil and gas, maritime, logistics, automotive, aerospace and manufacturing; helping hundreds of organisations globally achieve their business application project goals. Brexit has far-reaching implications for how the business operates and deploys its consultant services and how they work with their end customers.
Nick has over 20 years’ experience leading high-performance teams — particularly in the business development and technology space.
Is the Brexit deal the UK now has suitable for small businesses?
“This depends on the small business in question. While many will face an indirect impact, others face significant uncertainty — particularly when it comes to imports and exports and employing workers from the EU.
“While small businesses which liaise directly with the EU will have felt relief at news of a deal, uncertainty remains about the finer points of the agreement. It’s hoped that ongoing calls for SMEs to receive £3000 in transition vouchers could help ease the process and make preparations easier.”
Do small businesses in the UK now feel empowered to look outside the EU for new commercial relationships? Or is the feeling they are now out in the cold?
“As the dust settles and firms adapt to the realities of a post-Brexit age, we’re cautiously optimistic that SMEs will take steps towards forging partnerships with non-EU businesses.
“Driven by technological advancements, accessing markets and networking with overseas suppliers and partners has never been simpler. What’s more, enterprising SMEs should look to take advantage of trade booms in the wake of COVID-19, as firms across the globe look to rebuild and take stock in the wake of the pandemic.”
What are the challenges small businesses now face as they move into 2021 with a new relationship with Europe?
“Changes to imports and exports are the principal concern for SMEs, with new rules on trading relationships with the Bloc. It's important businesses which trade with the EU sure-up their supply chain to account for potential disruption and delays.
“Elsewhere, it’s important for SMEs to remember that the rules on employing workers from the EU have changed. Businesses should review the new visa requirements and be prepared to seek alternatives should their sector not allow for frictionless personnel sourcing from the EU.”
How will small businesses have to change to trade with the EU profitably?
“Adhering to the sweeping import and export changes which came into effect on 1st January could prove challenging for some SMEs. However, with the right approach, there are opportunities to manage trade logistics while ensuring profitability and budget planning.
“First, businesses should apply for postponed VAT accounting; this allows firms to defer when they pay VAT on goods imported from the EU. Another tip that can simplify logistics and make budgeting easier is to apply for a Duty Deferment Account. This enables qualifying firms to set up a line of credit for duty with HMRC, up to a value of £10,000 per month — something which could help with financial planning.”
There are no tariffs as part of the Brexit deal, but what other “costs” do businesses who trade with the EU face?
“It's absolutely essential that SMEs complete the correct customs declarations as accurately as possible before importing and exporting goods to the EU. Failing to do so could lead to significant additional costs and long goods clearance delays that could have a knock-on effect across the supply chain.
“Completing customs declarations can be complicated for small businesses not versed in such logistics. That’s why it’s highly recommended that businesses enlist the help of a trusted customs broker when recommencing trade with the EU.”
What is your essential advice to small businesses to ensure they make the most of the post-Brexit opportunities?
“Brexit and COVID-19 have made for a highly volatile and uncertain commercial landscape — but it won't last forever. SMEs should use this 'downtime' to shore-up their supply chains, investigate new partnerships and opportunities, and develop new marketing strategies to hit the ground running when the world rights itself.
“And leaning on technology will be key to this. With emerging software offering solutions to the most complex logistical challenges, investing in the appropriate tools and platforms will be critical to driving recovery and growth in the new post-Brexit era.”
From supply chains to exports and staffing, the Brexit deal the UK now has will impact all small businesses to some degree either directly, or indirectly. It is very early to assess the success of the agreement. The devil will be in the detail. For now, a focus on understanding the elements of the deal that will impact your business, and mitigating any negative aspects is the best and most prudent course of action to take.