Imports and Exports After Brexit: What is UK’s Trade Strategy?
By Jenny Hooper, Jan 30, 2019, Category: General News
Here is the deal: over half of the UK’s imports come from the other 27 nations in the EU, whereas almost half of the UK’s exports go to the EU. Predictably, by the end of 2020 when Brexit finally takes effect, this will all be up for an unpleasant renegotiation.
Small and medium-sized businesses in the UK have long since warned that they expect trade to be reduced when Brexit finally pushes through. This prospect was supported by the most obvious and immediate effect of the referendum result, which was the lowered value of the pound. It’s worth noting that a currency’s value can be an immense reflection of the general consensus on its economic future, thus, experts believe that Brexit means a slowing economy. Simply put, those businesses that depend on imported goods and raw materials from outside the UK face an increase in the cost of doing business.
The customs union
Britain is also a part of the customs union, which means that it enjoys the advantages of trade liberalisation or the easy transit of goods across national borders. The thing is, UK’s separation to the customs union may also be another outcome once Brexit takes hold. This would result in the UK losing the benefits of free trade and suffering a much harder process for goods to travel.
Especially for SMEs with complex supply chains, trading will likely involve a great deal more paperwork, making it almost impossible to do business.
UK’s Trade Strategy
The British Chamber of Commerce (BCC) continues to encourage its members to be ‘more proactive’. Additionally, it is advised that as a general approach to trade, retaining the current trade engagements could serve as a useful principle after Brexit for the UK. This means that since all of the UK’s trade agreements are via the EU, maintaining all of its current FTAs would mean that there would be no change in this respect as all existing trade arrangements would remain in place.
While this strategy is unlikely to be that easy to achieve, there is the possibility that some of the other nations could find it easier to do a trade deal with the UK since it does not represent 28 different national interests.
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