Brexit: 26 unanswered questions for business with fewer than 100 days to go

23 September 2020

The British Chambers of Commerce (BCC) has published a critical update of its Brexit guidance dashboard containing 26 key questions that remain unanswered with just 98 days to go until the end of the Brexit transition period.

The leading business group published the document alongside new research which suggests business preparation for the coming changes is low due to the unprecedented challenges facing them.

• 26 unanswered questions reflect fundamental aspects of business operations, including UK/EU customs checks and rules of origin
• Just 38% of firms have done a Brexit risk assessment in 2020, compared to 57% in 2019
• BCC seeks clarity for businesses and an immediate resumption immediate resumption of weekly business preparedness summits with senior ministers

The BCC’s Brexit guidance dashboard compiles 35 questions most frequently raised by businesses, many of which apply in a deal or no deal scenario. The BCC gives just nine a green status, indicating there is sufficient information available to plan. 19 are amber, indicating some information is available, and seven are red, indicating there is inadequate actionable information.

Many of the unanswered questions reflect fundamental aspects of how companies operate. Among other things:

• Firms do not know what rules of origin will apply after the transition period, preventing them and their customers from planning and potentially creating unprecedented new administration and costs;
• There is no clarity on how food and drink due to be sold in the EU and Northern Ireland is to be labelled;
• Very limited guidance on the movement of goods from Great Britain to Northern Ireland; and
• No information on the UK Shared Prosperity Fund, key to ‘levelling up’ the regions and nations – despite years of calls for clarity.

The lack of information for firms is compounded by new BCC research released today, which found that just 38% of firms had completed a Brexit risk assessment this year, compared to 57% in 2019 and 35% in 2018.

The research also found that more than half (51%) of firms surveyed had not taken any of the eight steps recommended by the government to prepare for changes in the movement of goods between the UK and the EU. This includes fundamentals of operation for trading businesses such as checking on the need for customs declarations and assessing the possible impact of changes on existing customers and suppliers.

The lack of information with which to plan and potential deadline fatigue presents further challenges to firms up and down the UK that have faced reduced demand, ongoing government restrictions and sustained cashflow challenges due to the Coronavirus crisis.

The leading business group – which represents 75,000 firms of all sizes and sectors across the UK employing nearly six million people, and works with over 30,000 companies that trade internationally each year – has written to Cabinet Office Minister Michael Gove seeking action for businesses and urgent discussions to help firms prepare.

BCC Director General, Adam Marshall, said: “With just 98 days to go, business communities face the triple threat of a resurgent Coronavirus, receding government support schemes, and a disorderly end to the transition period.

“Significant unanswered questions remain for businesses, and despite recent public information campaigns, base levels of preparedness are low. Many firms say they’ve heard talk of deadlines and cliff edges before, and others are still grappling with fundamental challenges as a result of the pandemic and have little cash or information with which to plan.

“While we recognise that some of the questions facing businesses are subject to ongoing negotiations between the government and the EU, other matters are within the UK’s own hands. The government must ramp up engagement with business urgently – to the levels seen prior to previous ‘no deal’ deadlines – to ensure that the real-world issues facing firms get tackled immediately.

“The ‘Check, Change, Go’ campaign gives the impression that Brexit-related changes are like getting an MOT – whereas the reality is that for many businesses, they’re more akin to planning a moon landing. Businesses need honest communication about the complexity of the changes they face – and stronger encouragement to act.”

A summary of the BCC’s Exiting the UK – Urgent Issues for the End of Transition

1. The UK exited the EU on January 31, 2020. The Transition Period will end on December 31, 2020, at which point UK businesses and their trading partners will have to adapt to new rules and practices. Negotiations to establish a trade arrangement between the UK and EU are underway, and a ‘no-deal’ exit is still wholly possible.

2. The British Chambers of Commerce has evaluated the quality of official guidance to assess whether it provides sufficiently clear, complete, visible, timely and actionable information which businesses can use to prepare for change. This is not an assessment of the impact of a deal or no-deal exit or a judgement on the desirability of the policy change in each case. It is an assessment of how well businesses can act on the basis of the guidance available. This is consistent with our approach to previous milestones for the UK’s exit from the EU.

3. Of the 35 issues most often raised by companies to us, only nine are marked green, with seven red and 19 amber. A red mark indicates wholly inadequate information on which to plan.

Key red areas are:

• EU Structural Funding – EU Structural Funds will have provided, it is estimated, over €10 billion into the UK in the period 2014-2020, triggering just around another €9 billion in matched funding. From the end of 2020 this funding will cease.
  A ‘Shared Prosperity Fund’ was highlighted as a replacement by successive UK Governments, including in the current Government’s 2019 manifesto, the previous administration having committed to consult by 2018. At present, we have seen no substantive detail on how the Fund will operate and there has been no consultation.
  There remains no actionable information for businesses on how the funding gap this creates will be managed. There is a clear risk of funding ‘cliff edges’ for many programmes, including in areas with significant ‘Levelling Up’ needs
• Food and Drink Labelling – food and drink goods produced in the UK will not be able to use EU logos after 1 January 2021. There remains no actionable guidance on what new labelling businesses must use to sell these products in both the EU and Northern Ireland in just over 100 days
• Dispute Resolution – when trading commercially with companies in the EU, UK companies need to know how disputes with their trading partners will be resolved once the Court of Justice of the European Union ceases to have direct jurisdiction. There is presently very little to no information about how this will happen
• Tariff Free Imports from Less-Developed Countries – under the EU’s Generalised Scheme of Preferences (‘GSP’), certain goods from certain countries can be imported at low or zero tariff rates. The UK Government has said it will largely replicate the scheme, but we have not seen details of the new administrative design of it
• Rules of Origin – these allow certain manufactured goods to be treated as manufactured in a particular place, even where their components have been sourced from, designed in or partly manufactured elsewhere, for the purposes of (preferential) tariff schedules. Outside of a number of agreed ‘roll over’ arrangements, there is very little certainty about how these crucial rules will operate in future
• GB to NI Trade – should the Northern Ireland Protocol come into force, subject to alteration at law, goods moving from GB to NI will be subject to full customs procedures (unlike goods moving in the other direction). Irrespective of the clauses of the Internal Market Bill, there is very little detail on how these will work agreed with the EU. The Border Operating Model explicitly excludes this border
• Quotas – quotas are limits on a specific good which can be exported or imported at a set tariff rate. There is currently no guidance on tariff rate quotas or the underpinning administrative procedures for UK businesses.