The departure of 2020 was probably welcomed by everyone (including Remainers). The arrival of 2021, however, has not been easy for anyone. In fact, according to figures from the Road Haulage Association (RHA), the new year has brought new woes for exporters.
Exports to the EU plummet
According to a survey of RHA members, in January 2021 exports to the EU were down over two thirds (68%) compared to the same time last year. RHA members also believe that up to three-quarters of HGVs arriving from the EU left without picking up goods for export.
In a letter to Cabinet Office minister, Michael Gove, RHA CEO Richard Burnett put these statistics down to the impact of Brexit rather than COVID19. He specifically highlighted the “lack of clarity over how the new arrangements would work” and the fact that “ hauliers, traders and manufacturers were confused, having had insufficient time to prepare” for the transition.
Mr Burnett refuted the idea that the drop in exports was due to the impact of COVID19. He stated, “If anything, the absence of the pandemic would have made it worse, because volumes would be greater.” Describing the situation as “deeply frustrating”, Mr Burnett called for “urgent intervention” to resolve the “devastating consequences” of the post-Brexit changes.
COVID19 versus Brexit
Although the RHA points the finger clearly at Brexit rather than COVID19, it’s reasonable to ask if its position is entirely fair. There are three clear ways in which COVID19 could feasibly have hit exports. Firstly, it caused a general shutdown. If businesses were unable to open to produce goods, then they would also have been unable to export them.
Secondly, it could have hit demand. Quite bluntly, the economic impact of COVID19 was vastly unequal. Some people were barely touched by it (or even benefited from it). Others were (and still are) suffering greatly from it. If customers were not buying, then sellers would not be placing orders for goods. This would result in lower exports.
Thirdly, COVID19 would almost certainly have had an impact on companies’ ability to prepare for Brexit. You could argue that the transition could have been delayed. You could also argue that the government could and should have done more to make it smoother. These are both fair points, but the government was itself distracted by the impact of COVID19.
Where now for exporters?
It would be wonderful to say that all issues had been resolved. Sadly, this is simply not the case. To begin with, it appears that the “Northern Irish question” is far from resolved. That said, the size of NI means that this is probably a minor issue for most businesses. Realistically, the main priority for most exporters is to sort out the situation with the EU itself.
Presently, this may seem like a high (and steep) mountain to climb. After all, it’s hardly encouraging that the UK government and the EU are engaged in a spat over vaccines. On the other hand, the simple fact of the matter is that it’s in everyone’s interests to get this issue resolved.
The cold, hard reality is that the less the UK exports to the EU, the less it has to lose from a tariff war. In fact, if the import/export imbalance tips too far in the EU’s favour, it may even be to the UK’s advantage to raise tariffs.
This would be bad news for the EU at the best of times. Now is not the best of times. The EU desperately needs to restart its economy. It literally cannot afford to alienate one of its main trading partners. Hopefully, therefore, common sense will prevail and a way forward will soon be found.
Please contact us for more information.
Recent Comments