UK exporters seek assurances over post-Brexit future

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at 2016.10.30
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UK exporters seek assurances over post-Brexit future

For UK exporters, last week’s decision to expand capacity at Heathrow was a welcome one: one-third of British exports by value leave the country from the airport, the vast majority of them in the hold of a passenger jet.

Among the cargo is tea, grown in Cornwall, destined for China. “We as Brits have made the Chinese national drink our very own national drink and then export[ed] the whole experience back,” says Jonathon Jones, managing director of Tregothnan, Britain’s first commercial tea grower.

It is this sort of search for new and bigger markets that Liam Fox, the new trade secretary, wants post-Brexit Britain to pursue if it is to “forge a new role” for itself “at the forefront of global trade”. But if Britain is to succeed as Mr Fox envisages, transport infrastructure is only one item on businesses’ wishlist.

Exporters are seeking assurances over the UK’s future trading relationships — hence the interest in just how Theresa May, prime minister, persuaded Nissan it should keep investing in Britain — and want support from the government to boost trade once Britain is out of the EU.

“The chancellor’s Autumn Statement needs to include measures that support businesses looking to access new export markets,” says Mike Spicer of the British Chambers of Commerce, “including expanding support for trade fairs and missions”.

Although the share of British exports going to the EU has been declining, the bloc remains the UK’s main export market. Britain now has to negotiate a whole series of new arrangements, from tariffs to customs checks and mutual recognition of product standards. As for countries outside the EU, the UK will have to strike new deals to replace Brussels-brokered treaties, as well as being free to make its own arrangements where none presently exist.

The outcome matters for the exporters whose goods — from Scottish salmon to milk powder, bicycles to vaccines, as well as Cornish tea — are lined up in a Heathrow warehouse waiting to be loaded on to flights bound for destinations across the globe. This warehouse, one of five run by the Dubai-based cargo handling group data, operates 24 hours a day, seven days a week.

But Lee Hopley, chief economist at EEF, the manufacturers’ organisation, is cautious about the prospects for a big boost for British exports. “If there were easy wins, we would probably already have got them,” she says.

Many hurdles to trade expansion existed before the Brexit vote. For a long time world trade grew twice as quickly as global economic output, but this gap has narrowed and many countries have introduced protectionist measures. The World Trade Organisation found its members had introduced 154 new trade-restrictive measures between October 2015 and May 2016, including tariff increases and customs procedures.

Transport infrastructure is a longstanding issue — “you need to make it easy to get goods around and out of the UK”, says Ms Hopley. But a third runway at Heathrow faces years of legal, logistical and financial obstacles, while work is yet to begin on the High Speed 2 rail link.

Many routes out of Heathrow are operating at capacity for cargo. “The more [the government] can do things that build confidence that they have got a plan … helps to build that kind of reassurance that … things are happening” said John Holland Kaye, chief executive of Heathrow. He believes the decision to allow a third runway at Heathrow is “part of a Brexit plan that says, ‘we are going to be outward-looking to the growing markets of the world’.”

Another problem is a shortage of skilled employees. Dave Belmont — company secretary of Acorn Stairlifts, one of the world’s largest stairlift manufacturers, based in Yorkshire — says he needs more foreign-language speakers to help sell their products overseas.

Acorn Stairlifts already exports to 84 countries and Mr Belmont says the Brexit vote has provided an “added boost” to seek out other markets. The fall in the pound since the referendum has already made their goods cheaper to dealers they sell to overseas, increasing demand, and has allowed Acorn’s foreign subsidiaries to increase profit margins.

He likens the warnings about Brexit to fears in the 1970s that nuclear war was imminent. “You can only control what you can control … you have a choice, either sit on your hands and worry or get on with business.”

Fashion Enter, a social enterprise manufacturing clothes at a factory in Haringey, North London, is a UK company also benefiting from sterling’s depreciation as it makes its goods more competitive with imported alternatives. At the same time, Jenny Holloway, the company’s boss, is among those considering a move into exports for the first time.

Fashion Enter has struggled to find appropriately skilled British workers, however, and most of its workforce is from eastern Europe. If the final Brexit deal includes strict limits on the numbers of EU migrants, that could hurt the company, though it has started its own training programme.

The EEF’s Ms Hopley says part of the problem for British exporters is that various governments have supported different groups of companies at different times, depending one which ones it favoured. This does not help businesses, she says. “It is a long game — you need consistency.”

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Published at Sun, 30 Oct 2016 06:16:28 +0000

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