Tom Lees: Clearing up the myths around a ‘no-deal’ Brexit

Many business leaders are worried about the consequences of a no deal Brexit  Photo:  Stefan Rousseau/PA Wire
Many business leaders are worried about the consequences of a no deal Brexit Photo: Stefan Rousseau/PA Wire
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It’s a brand new year, but despite the mince pies and mulled wine, the same old issues rumble on.

Theresa May is still in office, managing to delay the arduous ‘meaningful vote’ on her deal she faces until the middle of this month. It remains a significant challenge to get through the Commons and the probability of a no-deal Brexit is rising along with UK and EU preparations for such an outcome.

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Energy

With so much spin and counter-spin, it’s hard to know what your business should do or what the impacts might be. So what do Yorkshire businesses really need to think about?

Let’s take a level-headed practical look at the most common areas of concern.

Business travel

2,500 flights take place between the UK and the rest of the EU every day, with just under a third of trips being for business, according to the Office for National Statistics.

Hull docks container vessel.  . Source: Associated British Ports

Hull docks container vessel. . Source: Associated British Ports

The claims that flights would be grounded in the event of a vote to Leave the EU or a no-deal Brexit have proven to be false.

The European Commission has said that in the event of no-deal it will unilaterally allow point-to-point flights between the UK and European Union countries for a year. This will give the time needed for a permanent agreement to be put in place.

UK visitors will be not be required to get a visa and will be allowed to stay in the EU for 90 days as long as you have three months left on your passport from the day you intend to come back to the UK. The rules which prevent mobile phone roaming charges would no longer apply, these are EU rules, but our Government has said it will legislate to replicate the rules in the event of a no-deal.

Exports and imports

According to HMRC, around 5 per cent of UK businesses export to the EU. Looking specifically at Yorkshire and the Humber this translates to around 9,000 out of 183,000 businesses. Just under half of our exports are with the EU and we have a trade deficit which means that we import more from the EU than we export.

If you’re one of the 5 per cent of businesses, a no-deal Brexit means that we will trade with the EU under World Trade Organisation terms, as we already do with a number of other countries. According to Capital Economics this would see tariffs averaging 5 per cent applied to the things we export to the EU (paid by EU customers), which could be annoying but not the major issue.

What is commonly misunderstood by TV pundits and commentators is the real issue, the checks and four types of export declarations which take time and money. These are called non-tariff barriers. The exporter is responsible for getting the Export Customs Declaration, the haulage company the Safety and Security Declarations and the importer getting an Import Declaration.

Dover to Calais is the route of particular risk to disruption, so if you use this route you may want to look at alternative continental facing ports like Immingham or Tees.

Yorkshire doesn’t have many just-in-time import dependent businesses, but it does have a sizeable number of farmers.

Agriculture exports from British farms are particularly dependent on trade with the EU. In the event of a no-deal, the EU Commission has immediately said that the UK would be listed as a third country, so trade will continue. The issue is that Export Health Certificates would be needed, and these need to be signed off by a vet for each consignment and they would need to be inspected on the EU’s side which could cause delays due to a shortage of qualified people.

It is unlikely that the EU would want to make these checks especially onerous as they would impact on the supply of goods to supermarkets and consumers on the continent. A delay of 45 minutes per lorry for these checks has been suggested by the Road Haulage Association.

EU workers

Nearly three million EU nationals live in the UK, with the majority coming from Poland and Ireland. Under both a no-deal or a deal, EU citizens in the UK will have to apply for settled status to continue living here after June 30, 2021. Irish citizens should be able to stay without applying.

The UK Government has now published its Immigration White paper which ends the Free Movement of People from the EU and introduces a ‘skills based immigration system’ which would start in a couple of years’ time. They also suggest that low-skilled migrants will be able to come to the UK from ‘low-risk countries’ on a 12-month visa as a temporary measure until British business trains more local people.

In the event of a no-deal, the most likely outcome is that the UK would continue to replicate the current situation until the systems and technology were in place to implement our own immigration approach. What businesses need to know is whether we have a deal or not, bringing in people from the EU is going to become harder.

Confidence

The most important thing of course for any business is confidence. Economies rise and fall on confidence. Whether that’s from investors, consumers or other businesses.

In the event of no-deal I am sure that the government of the day would quickly unveil an emergency budget that cut taxes on business and consumers, along with more spending on infrastructure to try and reassure people. The Bank of England of course would also do what it could to reassure markets and business.

Hopefully this has given you some clarity about the things you need to be thinking about and demonstrates that although there certainly would be some short term disruption and worry, the sky is certainly not going to fall in.