The government must compromise to deliver Brexit and give retailers much-needed clarity, says Mat Morris, external affairs adviser on Brexit for the British Retail Consortium (BRC).
The current political deadlock over the question of how the UK leaves the European Union is creating chaos in Westminster, and massive uncertainty for businesses and consumers. Retailers are dealing with the day-to-day impact of this uncertainty on multiple fronts: they are spending millions of pounds on contingency planning for a no-deal Brexit, while also contending with the slowing consumer spending arising from an unclear future.
It is no secret that we at the BRC have campaigned strongly against no deal, and urged politicians to reach a deal that delivers tariff-free and frictionless trade post-Brexit. Nonetheless, we meet regularly with government to discuss no-deal contingency planning in order to support our members. Retailers have already spent hundreds of millions of pounds over the last few months to increase stock, seek alternative solutions for logistics and transit, and ensure they and their suppliers are as ready as possible for that scenario. This increased cost is a direct result of MPs’ failure to compromise in Westminster.
The Cooper-Letwin Bill, today (8 April) being scrutinised in the House of Lords, would require the prime minister to seek an extension to the Brexit process and rule out a no-deal departure. Senior figures in Brussels have indicated that the extension would need to be a long one, although the UK could exit before any proposed end date if the House of Commons were to accept Theresa May’s withdrawal agreement. However, with patience running thin among some on the EU side, an extension is not guaranteed and there remains a serious risk that the UK will exit the EU on 12 April without a deal.
Research based on World Bank and Centre for Economic Performance studies shows that the cost of non-tariff barriers under a no-deal Brexit would be 7% for non-food products. These arise from regulatory burdens and customs procedures, higher transit costs and delays associated with trading with the EU as a third country. New barriers arise in VAT accounting, flows of data between countries, and compliance checks as we become an independent member of the of the EU’s Common Transit Convention (CTC), which is used for moving goods between EU member states and some additional countries such as Turkey and Norway. All this increases costs for an industry already under pressure from changing consumer behaviour, new technology and rising public policy costs.
Whatever your opinion of the options on the table, we have reached a stage where “perfect” is no longer an option. MPs must compromise to ensure the UK secures a transition period and the next phase of the negotiations. That outcome delivers greater certainty for retailers, allows them to plan properly for the future and helps them to do what they do best: provide a high-quality service to their customers.