No one knows…
That’s the summary of what the trading relationship between the EU and the UK will be at midnight 31 December 2020. Sound familiar? It could be a comment from a year ago, two years or even three years, yet it is the current Brexit update, fresh from BEIS (Department for Business, Energy and Industrial Strategy) who, in conjunction with the Spanish Chamber of Commerce, held a Brexit Briefing at the BEIS conference centre yesterday for member companies doing business in the UK.
In this briefing, we were updated on business-readiness for Brexit, importing and exporting and trade service agreements between the UK and EU. As any of the negotiations have yet to start for these, there is exactly nothing new to add to what has been outlined in the existing withdrawal agreement. If you have managed to read it, you will know it has no actual detail on how trade will be conducted.
If you are tired of Brexit (you probably are) then you can stop reading now. But, to borrow a popular phrase, it’s probably more accurate to say it’s now “same same but different”. While it’s still absolutely the case that we don’t know what trade will look like between the UK and the EU come 2021, we do know that we will be leaving the EU on the 31st January this year, as the bill has been passed and is being ratified in the Lords. This means we will continue for the rest of the year under the same trade rules as before but, as we will be legally out of the EU, we will be free to strike new trade deals with other countries as well as a new agreement with the EU itself. Secondly, since the UK now has a Conservative majority parliament, anything that is proposed and agreed on by Boris Johnson and his negotiators will likely be voted through without impediment, unlike last year’s death by a thousand cuts voting stalemate. But ultimately what that trade agreement will look like is the trillion-pound/euro question.
Third Country concerns
One of the main concerns echoed around multiple corporate members of the Spanish Chamber was the concern of ‘third country’ processes and tariffs being applied to Spanish goods and personnel in the UK, as that will make it more difficult and expensive to trade with the UK. A concern no doubt shared by all EU businesses trading with the UK under EU regs. Sadly, there was little comfort to be had about this, aside from confirmation that the UK government has said it wants the new agreement to be similar to a Canada Plus Plus model (with the EU yet to react to that) and reassuring words that no one wants to see the prohibitive-to-trade third country rules being applied to Spanish businesses coming into the UK.
There was a lighter note as the HMRC representative quipped that his presentation on Brexit is now considerably shorter than it was last year, no doubt due to the removal of the myriad of possibilities such as a second referendum, a snap election, revoking article 50 and of course the cliff edge of no deal, the latter of which is still a possibility if negotiations break down in the coming months. Although it’s good that we are now spared the alternate reality discussions, we now revert back to the “we are leaving on the 31st Dec 2020 no matter what” mantra à la last year’s 30th March deadline.
Movement of people
Not to be deterred, we asked about movement of people in the other direction, into Spain, as a lot of our business is translating paperwork for visa applications for non-EU nationals living in the UK. We wondered if the rest of the UK population will eventually have to go through the same red tape when visiting Spain. The answer was that this will become clear as negotiations begin. The same answer that was given to almost every question raised.
An important reminder
The take-home message from the briefing was that detail and clarity will come as negotiations start in the next few months and the current sentiment from the UK government is that they are seeking to get a frictionless as possible trade deal. From our perspective, as small-business owners, it was some (cold) comfort to see large Spanish companies such as Santander in the same boat as us, in that they are seemingly powerless to affect the outcome of Brexit. Most importantly, perhaps, it was vital that the government was reminded by the businesses in the room that Spain is the 7th largest investor into the UK in the world.