Brexit - the final approach
14 Dec 2020.
As we get closer to Christmas and another Brexit deadline becomes exactly the opposite, it is worth a review of where we are, what we know and what we have yet to see. At the end of the transition period, on 31st December, we know that there will be new customs procedures in place irrespective of whether a trade deal is agreed or not.

We know, as far as imports to the UK are concerned, that the UK is introducing a graduated approach, starting on 1st January with step ups on 1st April and 1st July. The intention is that this gradual introduction of new procedures will ease the transitionary burden and allow new procedures to bed-in more smoothly. The ability to defer the payment of duty in those first few months will also aid cashflow but it is critically important that EU suppliers are aware of what new import requirements they will have to meet and ensure they have these in place.

 

Movement of coffee into the EU from UK will see full customs requirement in place from 1st January with the production of commercial and Export Accompanying Documents generating additional processes such as registration on the Goods Vehicle Movement Service for road haulage, particularly through the Channel Ports where congestion is expected to be at its peak. Travel through the South East of England, particularly Kent, will see additional procedures in place for good vehicles and it is vital that hauliers have all the necessary paperwork in place to avoid delays or even being returned to base. Business will also need to be aware that when hauliers are transporting multiple goods, problems with any part of that load will halt the progress of the entire consignment.


One of the biggest prizes for trade in the ongoing political negotiations relates of course to tariffs. Essentially agreement means a tariff-free arrangement and avoids the introduction of, what can be, fairly punitive tariff levels. Tariffs on coffee is a particularly puzzling one given neither side is a producer. Whilst the generally ‘rolling-over’ of EU tariffs to create the UK Global Tariff Schedule made sense in many areas, coffee was not one of them and, should a deal not be agreed, we face the perverse situation of tariffs delivering the opposite result to that intended, ie. damage to, rather than protection of, UK businesses.

Another area of considerable concern at present is how the improving hospitality economy in 2021 will be serviced from a labour perspective through the post-Brexit labour migration policy. With a reduction in overall immigration and focus on highly skilled workers this will mean that there are less migrants coming in to work and fill many types of ‘low skilled’ roles which are common across the food service industry and retail settings. Potentially this could open up job prospects for UK workers in both the short and medium term but it should be borne in mind that prior to Covid-19 the UK had experienced its highest ever level of employment with 76.6% of people aged 16-64 in work. A rapid recovery in the economy in the second half of 2021 may therefore expose real labour shortages in some areas.


As we write this, less than 3 week before the only real deadline of the year end, the pendulum has moved back slightly to favour a deal. In a discussion which should be about business and the economy but which is, inevitably, all about politics, only the very brave or the very foolish will forecast the outcome.

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