Unchartered waters for our firms after deal
THE East Midlands is likely to be disproportionately affected by Brexit - both positively and negatively - due to the large part of the economy being made up by manufacturing, a leading business expert has said.
In some areas – such as transport equipment – the East Midlands produces more by volume than any other area of the UK, and more generally the region’s economy is more dependent on manufacturing than elsewhere in the country.
The Brexit deal, announced on Christmas Eve, means there will be no new taxes on goods leaving to or arriving from the EU.
However new paperwork will be required and there will be checks on goods, producing additional red tape for businesses.
Chris Hobson is the director of policy and external affairs at East Midlands Chamber, which represents firms throughout the region.
He said checks on goods and new paperwork requirements were likely to create new “stickiness” at the borders, and that while there would be winners and losers as a result of the deal, he expected this new border friction to last several months.
He said: “Businesses are glad we’ve got it [the deal]. It is certainly preferable to having no deal in place.
“I think a lot of businesses still won’t fully understand – until things start happening from this year – what the full implications will be.
“One of the things we have been asking for is that where new measures do come into place, that they are phased in.
“My understanding is that for goods moving from the UK to the EU that isn’t going to take place.
“They will come into immediate effect from January 1 so that is going to slow things down.”
With businesses having only a short period of time to adapt to new rules, he said he was unable to say to what extent he expected the delays to be.
He said: “Right now I genuinely – and I think most people – genuinely don’t know what those delays are going to be and how much more sticky it is going to get at the borders.
“It’s just going to be very messy I think for long periods of time and for lots of businesses they will need to work out how to get around that.
“From January 1, it’s not like it’s suddenly over and everyone can sit back and move on.
“It’s going to be a period of at least a few months, probably longer, of learning as we go.
“Things will look different to how they currently look and there will be some winners and losers in there and it won’t be for a good few months if not longer until things really settle down and we get a sense of what it means.
“The first quarter, definitely, of next year and probably longer businesses will be finding their pattern and the implications.
Asked about what the mood was like among business in the region he was speaking to, he said: “Leading up to the deal that was just incredible frustration because we’ve had four and a half years. I think the fact we have had to wait so late in the day wasn’t easy and at the same time there was a big government campaign saying ‘Get ready for Brexit’ and businesses thought that was a bit patronising if anything. “Now that we’ve got a deal there is an element of relief because no deal was a very poor option.
“I came across very, very few businesses that were saying that they wanted a no-deal, and I speak to lots of businesses. “
Asked about which areas of the economy were likely to be most impacted by the deal, he said: “For us in the East Midlands we export more manufactured goods than other parts of the country so we are more exposed to that.
“What the challenge will be is how those levels of competitiveness move - will those additional delays and additional work that needs to be done make you less competitive if you’re a UKbased business.
“In terms of opportunities I’ve spoken to businesses that are saying they are looking to localise their supply chain and source their products from closer to home. “It might be slightly more expensive potentially but you’ve got more flexibility and a bit more certainty of delivery.
“Between us and the West Midlands in manufacturing we are much bigger players than the rest of the UK so we employ more people as a proportion of the overall workforce in manufacturing than anywhere else in the country. “So as a result we are probably more exposed in that regard. But on some of the other big issues like financial services, obviously we are not as exposed as London would be.
“So our eggs are a bit more spread across different baskets than London. “The key thing is that this isn’t ‘job done’. It’s not like a switch is going to be flicked on January 1 and everything is going to settle. There’s going to be a lot of learning g along g the way and there will b be some fall out both negative neg and positive.
“L “Live learning will be very important an and having contin tinuous conversa sation with our m members, and th the government an and authorities to un understand the issu issues as they arise, and w where we can be support supported because it’s certainly n not over.”
From January 1, it’s going to be a period of at least a few months, probably longer, of learning as we go. Chris Hobson