Comments from Charles Brook, Partner at Poppleton & Appleby.
For most of the UK population, Brexit will seem like last year’s big deal in the swell and the wake created by COVID-19.
Indeed, with all of the economic and social damage created by Coronavirus and the impact that will be experienced for potentially years to come, some may wonder why we should get all heated up again over Brexit which you might be forgiven for thinking cannot possibly make matters worse. This, however, would be wrong.
If Britain doesn’t affect a structured Eurozone Trade Agreement before the end of this year we will still be facing the fall-out from a so-called “hard Brexit” and the financial toxicity created by the cocktail of that and COVID-19 is difficult to imagine.
The most positive impact of Coronavirus (yes, there are some) is the speed at which it has generated an evolutional change in numerous aspects of commerce.
Businesses have primarily been shaken out of a stupor that has plagued the UK economy for almost ten years; forced to accelerate their development and plan for an uncertain future at varying rates in the hope that they will not only survive the pandemic but will also thrive as the shape of new normality emerges.
Just as with COVID-19, Brexit will have its winners and losers, and they will be incredibly difficult to predict. With or without a Trade Agreement, those that have met the challenges of COVID and evolved to survive are likely to be more able to survive the consequences of Brexit.
The obvious candidates likely to experience the most dramatic impact of any Brexit are unchanged from when the debate started so long ago; Farming and Agriculture, International freight and logistics, Financial Services, Pharmaceuticals, Heavy Manufacturing, Aviation and Automotive. All obvious candidates for both wins and losses from tighter regulation, tariffs, currency instability, trade friction and competition.
No individual or business will fail to experience a consequence of Brexit, although not everyone will necessarily attribute what they experience to be the actual cause.
After the initial stutter of the financial markets and the consequential blip in the price of fuel at the pumps, most consumers daily experience of the impact of Brexit will show itself in the price of their daily shop, the price of a family holiday or the health of their pension scheme.
Meanwhile, the almost inevitable additional financial cost to importers will depend upon the net shift in their fortunes depending what proportion of what they export is hit by tariffs when compared to the relative profit in what they can still export.
Cross-border logistics are bound to be hit strongest by regulatory barriers, bureaucratic expense and fuel costs and these may combine to make their own customers’ goods uncompetitive in the face of lower tariff transactions between residual EU states.
However, given a little time (which in my opinion is likely to be around 18 months), I believe that the pre-Brexit economic situation will re-establish itself. The industry will adapt to the changes and, in some way, we may have the steep climb of COVID adaptation to thank for that.
Even Agriculture and Fisheries will eventually find a way forward although changes in food production and manufacture seem incredibly slow due to the genuinely long-term seasonal pace at which any adaptations are forced to evolve.
The mobility of employees within the service sector is now assured far more than pre-COVID.
Individuals are already becoming accepting of the need to change their career aspirations and choices and perhaps (this is possibly an enormous hope) we will be less dependant upon the rest of the World to deliver to us the key workers to do the less aspirational jobs upon which significant sectors of our economy seem to depend.