Business

Firms frustrated by post-Brexit trade red tape

Published

2 years ago

December 22, 2022

Firms are “banging their heads against the wall” two years after post-Brexit trading began, a new report suggests.

The British Chambers of Commerce (BCC) said businesses were still grappling with EU trading arrangements and more red tape.

It comes as a separate report from the Centre for European Reform suggests Brexit may have reduced UK trade by around 7%.

But the government said Brexit “opens new opportunities for UK businesses”.

The Trade and Cooperation Agreement, which was struck late on Christmas Eve 2020, meant goods and services could still flow between the UK and EU without tariffs after Brexit.

The British Chambers of Commerce (BCC) questioned 1,168 businesses and 514 said they traded overseas or were otherwise affected by the agreement.

More than half of these firms said they were struggling with the new rules which mean they have to deal with new forms, checks or other processes.

One retailer in Ayrshire said leaving the EU “made us uncompetitive with our EU customers”. The retailer had to build a base in the EU or it would have lost its EU trade.

“This has cost our business a huge amount of money which could have been invested in the UK had it not been for Brexit,” the retailer said.

‘Nightmare’

A manufacturer in Dorset, meanwhile, said that even importing parts to fix machines has been a “nightmare”.

“Brexit has been the biggest ever imposition of bureaucracy on business,” it said.

As businesses face the prospect of a likely recession, the BCC is urging the government to have “an honest dialogue about how we can improve our trading relationship with the EU” and look to reduce red tape even before the deal is reviewed in 2026.

It has made 24 recommendations – including reaching a swift agreement on the future of the Northern Ireland Protocol, the rules governing trading in Ireland.

Political uncertainty surrounding that has, some economists have said, deterred investment in the UK.

Meanwhile, the Centre for European Reform said that changes related to Brexit may have reduced UK trade by as much as 7% this summer – and damaged investment by even more: meaning that UK economic output is 5.5% smaller than it would otherwise have been.

That is a bigger impact than assumed by the government’s official forecaster, the Office for Budget Responsibility (OBR), which has said there will be a 4% hit to productivity.

However, in March the OBR predicted that imports and exports would be 15% lower in the long run, and that new trade deals with the rest of the world would not make much difference to trade volumes.

Businesses that trade across the UK’s borders have faced a triple whammy in the last few years: pandemic-related lockdowns around the world, a cost of living crisis heightened by the fallout from the war in Ukraine, and a change in trading arrangements with our biggest partner, the EU. Disentangling the impact of Brexit has been tricky.

But the report from the BCC underlines that the extra formalities, including paperwork and checks, are posing costly problems for some companies.

An earlier study from researchers at the London School of Economics found that the range of goods of exports being sent to the EU has shrunk, suggesting perhaps that the extra red tape may have deterred some smaller companies from exporting altogether.

It also claimed that cost of food from the EU has risen faster than that from elsewhere, bumping up grocery bills.

Economists disagree about the economic effects of Brexit.

But most would agree that the UK has failed to realise overall economic gains from leaving the EU – not yet, anyway.

Trade effects

John Springfield, deputy director of the Centre for European Reform, said that in the second quarter of 2022, Brexit meant the economy was £33bn smaller than it would have been had the UK voted to remain.

He added that Brexit’s effect in stifling the economy meant the government had to raise taxes to find an extra £40bn to fund public services.

Other economists dispute these numbers, saying that the pandemic and the cost of living crisis, heightened by the fallout from the war in Ukraine, has made assessing the impact of Brexit problematic.

David Henig, a trade expert and director of the UK trade policy project at the European Centre for International Political Economy, said it is small traders who will be the hardest hit.

“What has happened is that it used to be pretty seamless to trade with the EU and it’s now more like trading with anywhere else in the rest of the world. But that’s not easy, particularly for those that trade particular goods and sensitive goods, especially things like chemicals, food and drink,” he said.

“Smaller traders who perhaps aren’t that experienced outside the EU are finding it a bit of a shock now, what they have to do to trade with the EU. And that is having an impact.”

The government said that the Brexit trading deal was “the world’s largest zero-tariff, zero-quota free trade deal”.

“Despite difficult global economic headwinds, UK-EU trade is rebounding, with recent data showing that UK trade to both EU and non-EU countries is above pre-Covid levels,” a spokesperson said, adding exporters had been provided with “practical support” with post-Brexit trading arrangements.

“We’ve also removed 400 trade barriers across 70 countries in the past two years, removed tariffs on £30bn worth of goods and cut £1bn business costs arising from current retained EU law,” the spokesperson added.

However, the food, farming and fisheries minister Mark Spencer admitted there was “more we can do” to cut UK-EU red tape.

“Of course, there’s always more that we can do to try and ease the way for the passage of trade. We’re very keen to do that,” Mr Spencer told Times Radio.

“We’re a free and open trading nation. We want to work closely with our EU colleagues, we want to try and reduce that red tape if there is any red tape on their side of the Channel, so of course we want to keep those channels of trade open in both directions.”

Writes /BBC/

Reports /TrainViral/

Business

Six tonnes of cocaine found in banana shipment

Published

5 months ago

July 16, 2024

Sniffer dogs in Ecuador have found 6.23 tonnes of cocaine hidden in a banana shipment, police say.

The dogs alerted their handlers, who seized 5,630 parcels filled with a white substance that later tested positive for cocaine.

The shipment was destined for Germany, officials said, and would have been worth $224m (£173m) had it reached its destination.

Five people had been arrested following the discovery, according to the prosecutor-general’s office.

Police said they had found the massive cocaine haul during a routine inspection of container stored at Posorja deepwater port south-west of Ecuador’s largest city, Guayaquil.

The cocaine parcels had been hidden beneath crates of bananas destined for export.

One of those arrested in connection to the drug discovery was a representative of the export company responsible for the shipment, whom prosecutors said had been present at the inspection and gave officials the names of the four other suspects.

They include the managers of the banana plantation where the cocaine is suspected to have been added to the fruit shipment, as well as the driver who took the container to the port.

Ecuador has become a major transit country for cocaine produced in neighbouring Peru and Colombia, with transnational criminal gangs using Ecuador’s ports to ship the drug to Europe and the US.

Last year, Ecuadorean security forces seized more than 200 tonnes of drugs, most of it cocaine. Only the US and Colombia seized more drugs in 2023.

Gangs have caused a wave of violent crime in Ecuador, leading President Daniel Noboa to declare a state of emergency and deploy tens of thousands of police officers and soldiers in an effort to combat them.

These security forces have stopped large amounts of cocaine from being shipped to Europe.

In January, officers found the largest stash ever to be seized in Ecuador – 22 tonnes of cocaine – buried in a pig farm.

However, extortion, kidnappings and murders remain high in the Andean country.

Reports /Trainviral/

Business

Thailand expands v-free entry to 93 countries

Published

5 months ago

July 16, 2024

Thailand has expanded its visa-free entry scheme to 93 countries and territories as it seeks to revitalize its tourism industry.

Visitors can stay in the South-East Asian nation for up to 60 days under the new scheme that took effect on Monday,

Previously, passport holders from 57 countries were allowed to enter without a visa.

Tourism is a key pillar of the Thai economy, but it has not fully recovered from the pandemic.

Thailand recorded 17.5 million foreign tourists arrivals in the first six months of 2024, up 35% from the same period last year, according to official data. However, the numbers pale in comparison to pre-pandemic levels.

Most of the visitors were from China, Malaysia and India.

Tourism revenue during the same period came in at 858 billion baht ($23.6bn; £18.3bn), less than a quarter of the government’s target.

Millions of tourists flock to Thailand every year for its golden temples, white sand beaches, picturesque mountains and vibrant night life.

The revised visa-free rules are part of a broader plan to boost tourism.

Also on Monday, Thailand introduced a new five-year visa for remote workers, that allows holders to stay for up to 180 days each year.

The country will also allow visiting students, who earn a bachelor’s degree or higher in Thailand, to stay for one year after graduation to find a job or travel.

In June, authorities announced an extension of a waiver on hoteliers’ operating fees for two more years. They also scrapped a proposed tourism fee for visitors flying into the country.

However some stakeholders are concerned that the country’s infrastructure may not be able to keep up with travellers’ demands.

“If more people are coming, it means the country as a whole… has to prepare our resources to welcome them,” said Kantapong Thananuangroj, president of the Thai Tourism Promotion Association.

“If not, [the tourists] may not be impressed with the experience they have in Thailand and we may not get a second chance,” he said.

Chamnan Srisawat, president of the Tourism Council of Thailand, said he foresees a “bottleneck in air traffic as the incoming flights may not increase in time to catch up with the demands of the travellers”.

Some people have also raised safety concerns after rumours that tourists have been kidnapped and sent across the border to work in scam centres in Myanmar or Cambodia.

A fatal shooting in Bangkok’s most famous shopping mall last year has also caused concern among visitors.

Reports /Trainviral/

Business

Royal Mail will deliver letters forever

Published

5 months ago

July 16, 2024

The prospective new owner of Royal Mail has said he will not walk away from the requirement to deliver letters throughout the UK six days a week, as long as he is running the service.

“As long as I’m alive, I completely exclude this,” Czech billionaire Daniel Kretinsky told the BBC.

Mr Kretinsky has had a £3.6bn offer for Royal Mail accepted by its board.

Shareholders are expected to approve the deal in the coming months, but the government also has a say over whether it goes ahead.

Currently the Universal Service Obligation (USO) requires Royal Mail to deliver letters six days a week throughout the country for the same price. But questions have been raised over whether the service could be reduced in the future.

In an exclusive interview with the BBC, Mr Kretinsky also said he would be willing to share profits with employees, if given the go-ahead to buy the group.

However, he appeared to reject the idea of employees having a stake in Royal Mail, which unions have called for in exchange for their support.

The Royal Mail board agreed a £3.6bn takeover offer from Mr Kretinsky in May for the 500-year-old organisation, which employs more than 150,000 people. Including assumed debts, the offer is worth £5bn.

But because Royal Mail is a nationally important company, the government has the power to scrutinise and potentially block the deal.

As well as keeping the new government on side, Mr Kretinsky also faces the task of convincing postal unions that the proposed deal will benefit employees.

The USO is a potential sticking point for both the government and unions.

Royal Mail is required by law to deliver letters six days a week and parcels five days a week to every address in the UK for a fixed price.

How well this has actually been working in practice is a different matter. Ten years ago, 92% of first class post arrived on time. By the end of last year it was down to 74%, according to the regulator Ofcom.

Last year the regulator fined Royal Mail £5.6m for failing to meet its delivery targets.

Royal Mail has been pushing for this obligation to be watered down. It wants to cut second class letter deliveries to every other weekday, saying this will save £300m, and lead to “fewer than 1,000” voluntary redundancies.

‘Unconditional commitment’

Mr Kretinsky has committed in writing to honouring the USO, but only for five years.

And after that, in theory, the new owners could just walk away from it.

However, Mr Kretinsky told the BBC: “As long as I’m alive, I completely exclude this, and I’m sure that anybody that would be my successor would absolutely understand this.

“I say this as an absolutely clear, unconditional commitment: Royal Mail is going to be the provider of Universal Service Obligation in the UK, I would say forever, as long as the service is going to be needed, and as long as we are going to be around.”

Mr Kretinsky added that the written five-year commitment was “the longest commitment that has ever been offered in a situation like this”.

Woman's hand posting a letter into a red post box

Another potential stumbling block for the deal, however, is how the company will be structured.

Unions would like to see the company renationalised, but Dave Ward, general secretary of the Communication Workers Union (CWU), told the BBC that would be “difficult in the current political and economic environment”.

Instead, what the CWU is pushing for is “a different model of ownership” – that is, where the employees part-own the business.

To get its support for the takeover, the union wants employees to share ownership of the company, along with other concessions including board representation for workers.

It says profit sharing is “not going to be enough to deliver our support and the support of the workforce”.

If the union doesn’t get what it wants, it won’t rule out industrial action, Mr Ward said. Its members went on strike in 2022 and 2023.

Although Mr Kretinsky said he is “very open” to profit sharing, he is not in favour of shared ownership.

“I don’t think the ownership stake is the right model,” he said. “The logic is: share of profit, yes, [but an] ownership structure creates a lot of complexity.

“For instance, what happens if the employee leaves? He has shares, he is leaving, he is not working for the company, he [still] needs remunerating.”

Mr Kretinsky said he didn’t want to create “some anonymous structure” but instead “remunerate the people who are working for the company, and creating value for the company”.

The union is also concerned about job losses and changes to the terms and conditions of postal workers’ contracts.

Mr Kretinsky has guaranteed no compulsory redundancies or changes in terms and conditions but only until 2025.

“If we are more successful, and we have more parcels to be delivered, we need not less people, but we need more people,” he said. “So really, job cuts are not part of our plan at all.”

He said if the management, union and employees work together, “we will be successful”.

Another concern is the potential break-up of the business.

The profit for Royal Mail’s parent company last year was entirely generated by its German and Canadian logistics and parcels business, GLS. Royal Mail itself made a loss.

Mr Kretinsky has promised not to split off GLS or load the parent company with excessive debt, although borrowings will rise if the deal goes through.

But he has a way to go to convince the CWU.

“I can’t think of any other country in the world that would just just hand over its entire postal service to an overseas equity investor,” Mr Ward of the CWU said.

However, Mr Kretinsky said that the postal unions “do understand that we are on the same ship, and that we need this ship to be successful, and that if we are there, we don’t have any real problems to deal with, because the sky is blue, and it’s blue for everybody.”

The union cannot stop this deal but the government can block it under the National Security and Investment Act.

Business Secretary Jonathan Reynolds has said he will scrutinise the assurances and guarantees given and called on Mr Kretinsky to work constructively with the unions.

Mr Kretinsky may say that he and the unions are ultimately on the same ship but, as things stand, they are not on the same page.

Who is Daniel Kretinsky?

Daniel Kretinsky started his career as a lawyer in his hometown of Brno, before moving to Prague.

He then made serious money in Central and Eastern European energy interests.

This includes Eustream, which transports Russian gas via pipelines that run through Ukraine, the Czech Republic and Slovakia.

He then diversified into other investments, including an almost 10% stake in UK supermarket chain Sainsbury’s and a 27% share in Premier League club West Ham United.

The Czech businessman is worth about £6bn, according to reports.

Royal Mail

Reports /Trainviral/