Written by Kunal Sawhney, Kalkine Media
The aftermath of Brexit has been quite uncertain for many businesses even after the continuous support from the government, constant advisory on the prospective changes in commercial arrangements from respective departments and the transition window of nearly a year.
The ever-evolving repercussions of Covid-19 pandemic has also taken a toll on the UK based enterprises involved in international trade in 2021 as the government had to announce a third national lockdown, soon after the new agreement of zero tariff and zero quota became effective from the new calendar year. The situation worsened after the government and bordering nations had to implement stern checks following the widespread emergence of mutated strains of virus.
All the businesses have been thoroughly advised to upgrade the process according to the newly-agreed arrangement in order to continue operating seamlessly. Many corporations judiciously reviewed and modified the commercial operations in accordance with the new arrangement, but a large section of small-to-medium scale enterprises struggled to manage the double whammy of Covid distress, as well as Brexit-related changes.
Subsequent to the United Kingdom’s exit from the bloc, the regional businesses were required to procure relevant operating licences and mutual recognition of qualifications including the licences for banking, auditing and insurance. Packaging and labellings, product safety features, eco-compliances, copyright and trademarks, alongside the environmental industrial standards, including emissions were some of the major changes that have been incorporated by the businesses.
Transports and logistics systems were highly guided by the revised tax structures. The corporations responsible for import and export of goods to and from the partner EU countries were required to revise the VAT payments, including the VAT refund claims. Some goods were materially affected by the effectuation of Brexit as the authorities mutually decided to keep several items outside the free trade agreement, thereby making the calculations different for the computation of custom and excise duties.
The services industry has to implement a plethora of changes with regard to transfer of personal data between the UK and the EU engulfed by the General Data Protection Regulation (GDPR).
Cumulatively, the businesses and the international trade industry have faced a series of unforeseen challenges that were not anticipated by either the government of the UK and the corporations themselves. As a result of repeated disruptions between the cross-border trade due to Brexit-induced changes and pandemic melancholy, the UK exports to the countries under the umbrella of EU have significantly reduced over the time.
According to the latest trade data unveiled by the Office for National Statistics (ONS), the total exports of goods in July of 2021 dropped by 1% as against the quantum of exports recognised in June 2021. During the corresponding period, the exports to the EU slipped 6.5%.
With the continuous efforts by the government to reduce the trade dependency on the EU countries, the exports to the non-EU countries soared by 5% in the reporting month, effectively offsetting the de-growth in exports to the EU region. Notably, the total trade deficit in the three months to July of 2021 has broadened to £4.9 billion, witnessing a rise of £1.5 billion as against the trade deficit recorded for the three months to April 2021.