Dangers of no-deal Brexit are clear, say small firms
Ben Francis, FSB Wales Policy chairman, responds to the release of the first tranche of no-deal Brexit technical notices
THE dangers of a sudden and unplanned no-deal Brexit have today been laid bare. A pro-business Brexit is one with a transition period – a vital lifeline that won’t be there in a no-deal scenario. The smallest firms will be the least able to cope with a cliffedge moment.
It’s right to prepare for a no-deal outcome. That means following-up these notices with guidance that every small business owner can understand. ‘Technical’ is certainly the word – anyone without real expertise won’t be able to make head nor tail of these documents.
Suddenly having EU tariffs applied to UK exports from 11pm on 29 March will cause huge disruption to small UK firms that trade internationally.
Two in five smaller businesses that trade exclusively with the EU say they would be put off continuing to do so by a tariff of any size.
“Small UK exporters will also have to negotiate the paperwork that comes with third country access to EU markets. It’s all very well for UK Government to suggest that small businesses ensure they have the software, freight forwarders and brokers needed to make customs declarations in the event of a chaotic no deal. What UK ministers need to understand is that these are not big corporations, they don’t have thousands of pounds to throw at consultants and new tech.
The majority of smaller businesses exporting goods to the Customs Union say sales would be impacted by the introduction of new customs declarations. Checks at borders, additional paperwork and the need to prove that EU exports have left the UK will mean mounting costs for small firms.
There’s also the many Free Trade Agreements with countries beyond Europe that we’re party to by virtue of EU membership to consider. Keeping trade easy with these countries is an absolute must. Continuity arrangements must be in place in the event of a no-deal Brexit.
Allowing businesses to manage cashflow through postponed VAT accounting on imports from any country in the event of a no-deal outcome would ease the pain up to a point. However, there will be small UK firms feeling disappointed that no-deal will mean the end of easy access to the VATMOSS scheme for digital services sold to the EU.
It’s disappointing that we haven’t received a technical notice on what a no-deal outcome would mean for those applying for settled status. One in five small firms that employ staff have an EU citizen on their books. These workers – the vast majority of which are mid or highskilled – are absolutely critical to the success of our economy beyond March 2019. We need a definitive unilateral commitment to the rights of EU citizens to stay in the UK after Brexit.
Welsh smaller firms need to see Welsh Government and UK Government working together to deliver a pro-business Brexit that supports the ambitions of our Welsh businesses.