The impact of Brexit for UK importers

On Thursday the 23rd of June 2016 the UK will vote on whether we should remain in the European Union. Here’s our interpretation of what either outcome would mean for your business if you import or export goods.

Trade Agreements

IN

– Free trade between EU member States
– No Duties or VAT paid on imports from the EU
– Duties and VAT paid on imports from outside the EU

OUT

– Trade agreement would have to be made
– Duties could be returned to zero with a deal in place
– Potential Deals with other countries (China?)

If the UK decides to remain in the EU then it’ll be business as usual.  You’ll be able to trade freely with the other EU countries without paying duties or taxes (just VAT on the carriage).

If the UK votes to leave the EU then the UK would have to strike a new trade deal with the remaining EU members.  This is not uncommon (seehttp://ec.europa.eu/trade/policy/countries-and-regions/).  The EU has successful trade links with countries such as Turkey and Switzerland.  These agreements allow these countries access to the single market of the EU, thus avoiding Duties when trading with them.

The likelihood is that an agreement of this type could take some time so there is a chance that the you would have to pay duties and taxes when trading with EU countries for a short time.  Also, in return for a trade deal the UK would probably have to allow EU citizens to work on its soil and make a few other concessions.

Exit from the EU may open up the opportunity for the UK to make trade deals with other countries as they wouldn’t be limited by EU policy.  The EU charges duties when importing from elsewhere to encourage the growth of its member’s economies.  The UK could potentially sign deals with China to allow importers and exporters more access to the world’s second largest economy.

Money Matters

IN

– No major currency fluctuations expected

OUT

– Currency fluctuations uncertain
– Could cost more to purchase goods from overseas
– Could be easier to sell UK made products overseas (cheaper for buyers)

What we view as the main uncertainty for importers is potential currency fluctuations.  A fall in the pound against the Euro and the US Dollar could have serious consequences for importers.  Most transactions of goods purchased from Asia, the US and other major exporting nations are done in USD.  Global freight rates are also in USD.  A weaker pound would make any purchase of goods from overseas more expensive.

Brexit could potentially lead to a fall in the pound against the Dollar and the Euro as a result of reduced investment in the UK due to uncertainty.  A weaker pound would lead to higher inflation reducing consumer spending and making business borrowing more expensive.

There will be an impact on prices in the UK. The cost of anything that is imported will rise as sterling falls.

Your Brand and Brexit

Not even a consideration for many importers but a vote to leave the EU could cast some uncertainty over intellectual property (IP).  Most IP is protected by the European Patent Office.  That protection would likely remain even in the event of a vote for Leave.

However, some commentators are concerned that a vote to leave would mean the UK would miss out on the proposed scheme simplifying the rules around Intellectual Property in the EU.  This scheme would allow for a single application and arbitration process across the EU.  Not being part of this scheme could result in more cost, and paperwork for UK businesses looking to protect their IP and move into the European marketplace.


Our current Online Summary Rating Score is below (As of December 2017, Rating Score is out of 5)

 

Rating

5.0 stars –
based on 24 reviews
anchor-icon Need a quote? Go