In this episode of Chain Reaction attention is on the post-Brexit supply chain evaluating the impact of leaving the EU for firms in three industry sectors in the United Kingdom, services, food and fisheries. We know that promises made by government ministers about taking back control, doing great trade deals with the rest of the world and life outside of the EU being less bureaucratic have not yet materialised.
The UK officially exited the European Union on 31st December 2020. UK Government statistics show trade with the EU approaching 52 per cent for exports and 48 per cent for imports. Both in volume and value the EU is the UK’s principal trading partner. Having left the customs union means that tariffs and quotas are possible on either side when trade is conducted.
In the twelve month period leading to the UK exit from the EU Customs Union concerns were raised by many hauliers that the previous roll-on roll-off ferries could be disrupted at UK ports if trucks had to que to access ships while export documentation was checked. There were press reports about the M25 becoming a lorry park. The government’s commitment to build additional lorry parks approaching ports has reduced the impact but whether or not this is a long-term solution to the problem when trade increases remains a question-mark.
Summary of immediate impacts:
Services:There were few, if any arrangements for services as part of the Prime Minister’s deal concluded at the eleventh hour. In any commercial setting critics might be asking serious questions if they left the negotiations with a major trading partner to the last minute, It emerged in press reports in February that Amsterdam has become the major financial services centre in the EU taking over from the City of London. This was widely trailered during the period between the Brexit vote and leaving but little was done to remedy the threat posed after the UK left the EU. Financial services alone are worth £126,000 million to the UK Economy (ONS, 2019).
Food:The UK food and drink supply chain is worth £120 billion with £23 billion of that exported to 220 countries all over the world. It is the biggest manufacturing employer in the UK larger than automotive and aerospace together (FDF, 2020). During 2020 many food retailers had raised concerns about cross-channel trade and highlighted that delays would cause shortages and empty shelves in supermarkets. Retailers moved swiftly to stress test their food supply chains in an attempt to make them resilient in the face of this threat. Nevertheless, Ian Wright CEO of the Food and Drinks Federation has said that food exports to the EU fell by 60 per cent in January 2021. The Road Haulage Association estimated that exports through UK ports was down by around 68 per cent in January 2021.
Fisheries:During the November 2020 in the run up to the December 31st Brexit deadline Fisheries became a sticking point of the deal. Fish represent a very small percentage of the total trade between the two parties (UK-EU i.e. 0.2%). Regaining control of fishing rights was a key part of the rhetoric in the ‘Leave Campaign’ The time would have been better spent thrashing out the Services part of the economy. Time added to a supply chain through delay is always problematic for a supplier but for perishable goods it is disastrous. One exporter of lobster, crab and prawns said his consignment of £50,000 worth of goods was delayed over 30 hours at the port. The Fishing Industry is valued at £437 million (ONS,2019).