British Businesses Slam Last-Minute Brexit as Talks Sputter
U.K. businesses fired a broadside at ministers for leaving them no time to adapt to post-Brexit rules, even if negotiators do strike a trade deal.
Executives and lobbyists from industries ranging from aerospace to law decried their situation in written statements to the Business, Energy and Industrial Strategy panel of lawmakers ahead of a Tuesday hearing on Brexit preparedness. U.K. and European Union negotiators have yet to decide the terms of the divorce once the transition period ends, and in some cases, the bloc’s rules will cease to apply but there is no replacement regime in sight.
“The uncertainty produced by the current negotiations and the lack of time with which to deal with the outcome before the end of the transition period on 31 December, 2020 is highly damaging to business confidence and their ability to prepare,” ADS, the aerospace and defense lobby, said in its submission. “A non-negotiated outcome would be the worst possible situation for businesses.”
U.K. Prime Minister Boris Johnson will head to Brussels within days for urgent talks with European Commission President Ursula von der Leyen. The two spoke on Monday evening and agreed to meet after they concluded a deal remained far off.
ADS called for the U.K. and EU to sign an agreement to ensure aircraft parts continue to be certified for safety whether they’re made in Britain or mainland Europe. Failure to do so could mean extra costs and complexity as manufacturers figure out an alternative system.
ADS also called for the European Aviation Safety Agency to have no-deal backstop measures in place, like recognizing safety certificates issued by the U.K.’s authority for at least nine months. As it stands, parts for production and maintenance would be approved but newly-designed parts would not.
Food and Drink
Arla Foods U.K., which represents as much as one-third of Britain’s dairy farmers, said in addition to concerns such as potential storage and labor shortages, “we also repeatedly uncover new issues that we have not been aware of before” despite preparing for Brexit since 2016.
The food and drink industry faces a “triple whammy of Covid-19, Christmas demand and Brexit,” and consumers aren’t ready, it said. In addition to potential tariffs in a no-deal scenario or extra red tape with trade even if a deal is reached, Britain could face shortages next month as the country imports 15% of the dairy it consumes, particularly yogurt, butter and cheese.
Despite preparation, law firms face “significant issues, additional costs and a reduced ability to service EU-based clients from January 2021 onwards,” the Law Society of England and Wales said. “Conditions they are planning for are likely to change with little warning,” it added.
Britain’s legal services industry accounts for 552,000 full-time employees and was worth almost 60 billion pounds ($80 billion) in 2018, the document added.
Without a free trade agreement the tobacco industry faces tariffs as high as 70%, which would lead to price shocks and risks a black market, said Japan Tobacco International Inc. “Our business planning is negatively impacted by the lack of clarity and timeliness in much of the information provided by the government as the deadline approaches,” it said.
Corner shops are worried about higher wholesale prices, availability of stock, and a lack of clarity over the trading program for the border between Great Britain and Northern Ireland, according to the Association of Convenience Stores, which represents 33,500 local shops. Most of its members are small and independent operators and therefore totally reliant on suppliers and wholesalers taking the right action, the ACS statement said.
Small- and medium-sized businesses are unlikely to be ready for post-Brexit accounting regimes, said financial software company Sage Group Plc. It called for a “soft landing” period with forgiveness on faulty filings as businesses adapt to new rules around sales tax and customs, and warned government that Covid-19 exacerbated the potential hit to its customers.
Travel agents’ and tour operators’ association ABTA said there’s potential for significant disruption in travel during the crucial year-end holiday period because of the risks to consumer confidence from a no-deal Brexit.
©2020 Bloomberg L.P.