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It's 'critical' UK finalises Brexit deal, warn South West businesses

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Written by: Admin | Posted 27 November 2018 11:57

It's 'critical' UK finalises Brexit deal, warn South West businesses

The stereotype of international trade is that it is largely carried out by City tycoons or by top corporate figures at huge conglomerates.

The reality, however, is somewhat different.

Much of it is done by people who could not be further removed from that 'fat cat' image.

They are bright entrepreneurs who have developed excellent products, often from scratch, and then worked their fingers to the bone to market them across the globe.

They are people who have started as sole traders and now provide valuable employment and prospects.

And they are people who add great value to Britain’s economy.

As such, their concerns should be listened to.

Those on the economic front line who have extensive dealings in Europe cannot reiterate enough how critical it is that Britain finalises a good deal with the European Union.

Read more: Bristol MPs and business leaders react to Theresa May's draft Brexit deal

Small and medium-sized firms in the region say that to their European customers the prospect of additional paperwork and administration could possibly be an even bigger deterrent to doing business with British firms than potential tariffs or custom delays.

Many fear that critical business relationships built up over many years are being jeopardised by frivolous politicians.

Business West has been working with numerous firms in the West which conduct business with the EU and has provided advice and support.

The organisation’s policy director, Matt Griffith, says that businesses have been absolutely clear that they need political certainty as soon as possible, so that they can make investment decisions.

It isn’t only huge trans-national organisations such as Airbus that are affected either.

Thousands of smaller businesses, which are vital to the region’s prosperity, do significant business in Europe and with Europe.

Among them are audio specialists Crookwood.

The firm is based near Marlborough in Wiltshire and makes some of the world’s finest sound recording equipment.

Artists ranging from Adele to Elton John, via Neil Young and The Grateful Dead, have taped on its equipment.

It is the possibility of additional red tape being imposed that keeps managing director Crispin Herrod-Taylor awake at night though.

He said: “Crookwood is a micro business which makes high quality music recording products.

Read more: This £10m WECA project could 'transform' high streets in Bristol, Bath, Gloucestershire and Somerset

“We export about 98 per cent of what we make and trade globally on the good name of British music products.

“Our biggest market is the EU, which makes up about 50 per cent of our sales. The US was previously dominant, but has been become more and more protectionist since 2008.

"We do sell to the BRICs [Brazil, Russia, India, China] but their markets are highly protectionist and they don’t have enough quality clients for us to sell to. This will change, but not yet.

“Compared to everywhere else, exporting to the EU today is trivial. I can sell something to Brighton or Berlin with equal ease, because of the customs union.

"Outside this union, however, there’s mountains of red tape and my customers will experience hassle, expense and delays in getting their goods, which they won’t get if they buy from my EU competitors instead.

“As a nation, we need to export more, to bring more money into this country to balance the books, but leaving the EU single market and customs union throws a spanner into this, with nobody offering any alternative first-world markets for us to sell to. It’s a mess.”

Some 50 miles to the West, Simon Booth, of Kiddimoto, is also yearning for certainty so that his firm based in the Somerset village of Cheddar can move forwards.

It has experienced rapid growth with its range of top-quality balance bikes, children’s cyle helmets and bike gloves.

To counter customers’ fears he has begun the process of setting up an office within the EU.

Additional bureaucracy is also a huge concern to him, fearing it will add unnecessary costs that will dent its competitiveness.

Read more: UK and EU reach agreement on 'relationship' after Brexit - what it means and key points

He said: “The European market has always been key to the business’s success, and was central to its first major growth phase.

“Approximately 60 per cent of Kiddimoto exports go to mainland Europe. Uninterrupted access to the single market is essential for the business and its ability to remain cost-competitive.

“European product regulations, such as EN71, EUTR and REACH, making complying to standards easy because they are uniform. We will continue to comply with these regardless of Brexit.

“Additional UK regulations would add a layer of bureaucracy that would be unnecessarily costly and time-consuming. EU membership has made it easy to build and maintain strong business relations across Europe, which are already being weakened by Brexit.

“Potential European clients are holding off on making deals with us because they don’t know what the future will be. To counter this we have begun setting up an office in the EU.”

A very similar message is issued by Andrew McDonald of McDonald Consulting.

The South Gloucestershire-based businessman sells innovative and modern furniture to more than 25 countries.

He said he feared increased paperwork would deter customers from using British firms.

Mr McDonald said: “The uncertainty over the customs situation is already affecting our business.

“I was travelling in Belgium, Holland and Germany and met eight customers who said that they were having to consider sourcing from inside Europe to protect themselves from future import administration.

“My feeling is that it is the admin and not the tariffs that are making customers most nervous.

“We send goods into the EC zone 10 to 15 times a week and the extra administration is a ‘complete game changer’ for us.

“It would be hard to over-emphasise the negative impact that a lack of customs union would make to our business.”

Read more: Future proof your talent pipeline with apprenticeships

Matt Griffith, policy director of Business West, said: “We have been talking to small and medium-sized firms across the region to help provide advice and support for coping with Brexit challenges and have own ‘Trading Through Brexit’ website advice service.

“Many local companies have welcomed the stability of finally seeing the withdrawal agreement from the Government, but the potential instability created by some MPs has really unnerved a lot of business folk.

"Some are open-mouthed with despair at MPs who are trying to topple the Prime Minister with just four months to go until a ‘cliff edge Brexit’.

“Many companies are now reaching crunch point before having to make big investment decisions, with many feeling forced into having to move jobs and logistics to Europe to cope with the threat of a ‘No Deal’ Brexit.”

“We welcome the prospect of No Deal being taken off the table– as crashing out would severely damage many small exporters, who would face tariffs or an overnight inability to sell products such as aerospace parts, chemicals, medical products or medicines due to no longer being recognised by EU regulators.

“The big question remains ‘what next?’ particularly on the steps the Government plans to make to live up to its promise of frictionless trade with Europe.”

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