As the dust is settling it is probably worth saying one thing: this is it. No new referendums, no ‘only joking’ – we must now start to unravel the 40 years of marriage and build a new life. This is a new and interesting time and it is a time for the small and medium sized businesses to get organised, to think about what they really want and need to run their businesses. This is your chance to get involved by using the vehicles of trade associations and business groups to make your voice heard.
When Google announced the most searched for terms in the UK after the vote was announced were, “what does it mean to leave the EU”, “what is the EU” and “which countries make up the EU” it was quite clear that we have not been good at researching our decisions. This has got to change. As small and medium sized businesses you represent 4.9 million businesses collectively. This should be a great tool and driver for change. It will not happen if we remain outmoded in our approach to finding out how we can do things better. In times of recession only excellence and technology work for developed countries as the UK.
Join the trade associations and the business groups and tell them what you need to build excellent products, and which regulation is stopping you from doing it properly or which is impeding your company’s growth. This is our chance to make the changes that will help us to grow and to dominate in the world of trade and knowledge is crucial to that growth.
Part of the work that the Institute is renowned for is its qualification and training programme that is useful to all businesses, from start-up to larger global traders. Our commitment is to helping businesses to grow in competence and confidence by using knowledge to gain more trade and, most importantly, more profitable sales.
We also run a Technical Help for Exporters helpline as a support or safety net for anyone trading internationally. Questions are beginning to come in following the EU referendum result. Some businesses who are trading with the EU have expressed some concern as to the future of their business relationships with their EU customers, and what they need to be thinking about now.
The first thing to remember is that little is expected to change in the immediate future. The referendum vote is simply a decision by the UK people, and does not trigger any instant changes. The first stage of a formal exit from the EU will be by the UK government invoking “Article 50 of the Treaty of Rome”. This is something that David Cameron has very cleverly passed to his successor, probably in 3 months’ time, giving the Conservative party the breathing space to elect a leader. Thereafter, there will be a negotiating process of up to 2 years, during which time the UK will remain part of the EU, and goods will continue to move free of customs clearance formalities or import duties.
What happens after the negotiation phase and the formal UK exit will depend on the terms of the negotiations between the UK and the European Council, and there have been a lot of discussions and speculation about what free trade agreements might be possible.
Depending on the outcome of the discussion, it is likely that goods will have to undergo some form of customs clearance process both when goods leave the UK and on arrival in the destination country, regardless of whether any import duty would be chargeable. All of the free trade agreements currently in place with the EU do have this requirement, so it would be prudent to plan in the longer term for this.
With regard to documentation, this will also depend on the outcome and detail of the exit negotiations but it is unlikely that it will be reduced in terms of quantity and complexity.
Currency fluctuation is another matter that you will need to take into account in the coming months. In the short-term, the fall in the value of sterling could present you with opportunities to price more competitively but don’t forget you will also need to take into account price increases for fuel, transport and your supply chain which could increase your unit costs.
The Institute of Export is running a series of workshops in London, Birmingham and Manchester to help businesses plan for all the possible scenarios and to help you plan the next steps to take to spread your risks.
In the meantime, it would be wise to communicate with your EU clients anyway, to reassure them of your continuing commitment to them and calm any nerves or fears that they may have.
Whatever happens in the coming months, we need to remember that the true nature of trade and its long term benefits to your business and to the UK economy will remain unchanged – but that it is also good business sense to prepare for all eventualities!