On the day that the UK leaves the EU, what will Brexit mean for retailers selling from and to the UK?
Today marks the last day that the UK will be a member of the European Union, and yet it’s still not clear what Brexit will mean for retailers long-term. But here’s what we do know.
The transition period following the UK’s departure from the EU starts at 11pm tonight. In practice, the regulations that cover trade for retailers selling cross-border into the EU will stay the same as they are today since the UK will remain a member of the single market and customs union until the end of December 2020.
In emails sent out this week to retailers who have registered for information, HMRC advises retailers to use this period to get an EORI number and to look into whether they might employ a customs specialist to file their customs declarations for them following the end of the transition period.
International delivery specialist ParcelHero says there is very little information for exporters, importers and people planning to send a parcel to the EU after today – despite the £100m advertising campaign launched to advise retailers around a possible no-deal Brexit at the end of October. That was averted when agreement was reached.
THE NEW RELATIONSHIP
There is little clarity on what the new trading relationship with the EU will mean for the industry. Negotiations on that are currently timetabled to begin in March. UK chancellor Sajid Javid told the Financial Times earlier this month that the UK would be leaving the single market and the customs union [paywall]. He mentioned that there will not be alignment, they will not be a rule taker, they will not be in the single market and they will not be in the customs union – and they will do this by the end of the year. Companies must adjust to the new reality. We’re taking about companies that have known since 2016 that we are leaving the EU. Admittedly, they didn’t know the exact terms.
It has been mentioned that the government would only change rules if it “was in the interests of British business.
Everyone wants trade to be as frictionless as possible but the EU is clear that you can only have fully frictionless trade if you accept all their rules, you accept all their laws, you are subordinate to their judges, you are subordinate to their political structures.
What happens after [the transition period] will depend on the numerous trade negotiations that the UK will now be engaging in, and everyone now looks forward to the opportunities that new trade deals may have for consumers around the world.
SO HOW CAN RETAILERS RESPOND?
While retailers still don’t know what Brexit will mean, it seems to have different and sometimes contradictory effects on their businesses so far. A drop in the value of sterling immediately following the referendum in 2016 made prices cheaper for those buying from overseas, giving a short-term boost to many retailers. However since then, uncertainty has dominated, especially during the last year when there were two potential dates on which the UK might have left the EU without a deal. Brexit uncertainty has been blamed for slowing retail sales, especially in March 2019 and again in October 2019.
But now that Brexit is a reality, many argue that it’s time to make the most of it – and important to stay open-minded.
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