Yorkshire businesses face a 'wave of issues' caused by post-Brexit trade rules with Europe

Businesses in Yorkshire are being hit with a "wave of issues" from price rises to border delays and paperwork issues in the first month since the UK formally separated from the European Union, according to one of the region's most senior business figures.

James Muir, who chairs the Sheffield City Region Local Enterprise Partnership, said Brexit was having an "undeniable impact" on businesses in South Yorkshire, with companies across the region "reporting confusion, frustration, and a costly transition".

He is among the business leaders across the region to warn of the impact the new trading arrangements with Europe are having on firms who last year endured a "rollercoaster of uncertainty" due to the pandemic and fears of a 'no deal' Brexit.

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James Muir, the chair of the Sheffield City Region LEP. 13th February 2019. Picture Jonathan Gawthorpe

They were forced to wait until December 24, just days before the end of the Brexit transition period, for a Trade and Co-operation Agreement to be reached between the UK and the EU.

The long-awaited agreement establishes arrangements for future cooperation across a range of areas including trade, aviation, road haulage, fisheries, police and security, health insurance and continued UK participation in some EU programmes.

The UK got the ‘Canada-style’ free trade agreement that Boris Johnson’s government said it wanted. Speaking after the deal was agreed on Christmas Eve, Mr Johnson said the £668bn-a-year agreement would "enable UK goods to be sold without tariffs, without quotas in the EU market".

But Mark Goldstone, Head of Business Representation & Policy at the West & North Yorkshire Chamber, said the biggest issue for local businesses was dealing with 'rules of origin' requirements which allow their goods to be exported to the European Union without incurring taxes.

Goods qualify as being made in the UK or EU based on where the products or materials used in their production originate from and if firms can prove that significant ‘value’ has been added through the manufacturing process.

He said: "Ensuring goods meet Rules of Origin can be burdensome and bureaucratic but the cost of not getting this right can be disastrous both for reputation and financially."

There are other problems such as getting the correct transit documents which allow goods to travel through EU member states whilst duties and taxes are suspended until arrival at

their final destination.

And the chamber has heard of demands from European businesses that UK traders have to deal with duty and VAT to be paid within the EU. In practical terms this means that traders may need to ‘establish’ a company in the same country as the import and find an agent to handle the import customs clearance. It is feared the cost burden may dampen their appetite and they decide to stop trading in the EU.

Mr Goldstone said: "Whilst guidance exists on government websites, this is not the same as advice. The nature of the enquiries the Chamber is receiving often require a detailed, technical and bespoke response providing answers for their specific product, customer type or market."

According to overseas trade specialist Chamber International, aftershocks in international trade remain after the end of the post-Brexit transition period but are being addressed.

These include many border issues, especially in Eastern Europe where details of new post-Brexit trading arrangements have not filtered down to customs staff. And several European logistics companies have joined fast parcel carriers in reducing or suspending deliveries to the UK as a result of new customs processes.

Typical export difficulties that Chamber International is helping to address include a technology shipment from West Yorkshire held up due to specialist documentation drawn up in Italy rather than the UK and a North Yorkshire computer business facing increased costs.

Meanwhile, a West Yorkshire technology company has sought advice on new rules covering call outs for its engineers to Northern Ireland and The Republic and a West Yorkshire

manufacturing company has had deliveries held up in France due to an incorrect commodity code.

Tim Bailey, director of Chamber International, said: “One of the most common concerns is being raised by businesses with an EU warehouse and distribution model in the UK when they realise that customs duties have to be paid again in the EU.

“One way to address this is to import goods under customs control [which allows HMRC to determine whether customs law has been complied with in relation to the movement of goods between the UK and other countries].

He said: "We are currently applying for HMRC customs warehouse approval for a large, multi-million pound West Yorkshire clothing company which can manage the additional costs but smaller companies don’t have the budget after months of struggling with Covid-19 and cashflow issues created by the pandemic lockdowns.”

James Muir, a former President and CEO of Mazda Europe who now leads the Local Enterprise Partnership aiming to boost the economy of South Yorkshire, said the area "has a history as an industrial heartland and a rapidly growing reputation for advanced manufacturing and engineering, health, and technology",

But he said: "Our businesses are being hit with a wave of issues, from raw materials and freight price rises to border delays and paperwork issues.

"Some businesses do not feel they are seeing the full impact of the Brexit transition yet, with many having stocked up on materials pre-Christmas and yet to experience the price rises reported elsewhere.

“With this in mind, and the added impact of COVID on business continuity, there is an understandable concern and wariness for the year ahead. Whilst we’ve seen a downturn in business activity in recent months, we have begun to see manufacturing activity begin to increase which we’re hopeful sets a positive precedent for the future.

“The past year has been a roller coaster of uncertainty for our business community, with the impact of COVID and little clarity on the Brexit deal taking its toll, but we are optimistic for the future and supporting businesses is integral to our work with the Sheffield City Region Business Growth Hub, the region’s local authorities and the chambers of commerce.

"Our businesses will be vital to South Yorkshire’s recovery and growth in the years to come and we are committed to supporting them through these tough times and helping them seize the opportunities of the future.”

The Hull and Humber Chamber of Commerce has set up its own help desk, drawing on its own knowledge and expertise, for businesses that don't have a direct line to government.

The biggest concern is for businesses anxious to get the documentation right and who don't want to get held up at customs, though the amount of extra paperwork depends on the sector.

International Trade Director Pauline Wade said: "We would normally expect it to get better as they become more accustomed to the rules and the declarations and what paper trail is required.

"But it is adding cost to everything they do because every customs declaration that has to have this supporting documentation behind it costs money.

"So they're clearly going to pass it on to somebody, the end user I guess, so the consumer. And that has an impact on competitiveness in the market because we have to add another layer of cost onto it."