Businesses welcome zero-tariff Brexit deal but warn of hard months ahead


British businesses welcomed the EU trade deal with wearied relief after four years of negotiations finally secured zero-tariff arrangements on goods with the largest market for UK exports and imports.

The announcement on Thursday prompted companies around the UK to scramble for details about what it will mean for their operations, with only a week before the UK leaves the EU’s customs arrangements.

Bosses said that it had been essential for the UK to avoid tariffs, which would have hit sectors such as manufacturing, farming and retail particularly hard.

Helen Dickinson, chief executive of the British Retail Consortium, said that given four-fifths of Britain’s food imports came from the EU, the zero-tariff agreement “should afford households around the UK a collective sigh of relief”.

John Allan, chairman of retailer Tesco and the vice-president of the CBI, the employers group, said that a “deal, albeit a limited deal, will be welcomed by most businesses. It removes uncertainty for importers and exporters.”

Manufacturers welcomed an agreement over so-called rules of origin — allowing them to self-certify and ensure that the processing of goods also counts under the zero-tariff regime.

Stuart Rowley, president of Ford Europe, said: “It is now important to understand the detailed rules of origin which will apply and to create as smooth a transition as possible by maximising flexibility as businesses adjust to the new trading environment.”

Steve Elliott, chief executive of the Chemical Industries Association, cautioned, however, that failure to secure access to data under EU Reach – a regulatory regime – would “leave the industry facing a bill of more than £1bn in unnecessarily duplicating that work for a new UK regime”.

But City of London firms were resigned to losing market access to EU clients with the end of “equivalence” of rules.

Paul Manduca, chairman of insurer Prudential, said he regretted that financial services had not been considered in the agreement, but added that common sense had more broadly prevailed in a deal that would reset the relationship between the UK and EU.

William Vereker, chairman of bank Santander UK and former Downing Street business envoy, said: “We should not forget that large parts of the UK economy are outside the scope of this agreement and the future relationship for much of the service economy and the financial services sector in particular has yet to be fully defined.”

Other professional services also worried about being left without market access after losing “passporting rights” under the deal. Qualifications for professionals such as doctors, engineers and architects must be recognised in each state.

Advertising boss Martin Sorrell said that the benefits of the accord were “more ‘psychological’ than material, as compared to no deal”, adding that “no longer should western Europe dominate our trade patterns. We have to do what the Germans do so effectively. Export until we drop . . . We have to be a ‘Singapore on steroids’ or ‘on Thames’ to avoid further marginalisation.”

Companies are still worried about border delays and disruption to integrated regional supply chains. The EU warned of more red tape and delays, with value added tax and excise duties on some products. UK producers selling to EU and UK markets must meet both sets of standards and regulations, and fulfil all compliance checks by EU bodies, with negotiators having failed to agree equivalence of conformity assessment.

UK food exports will need health certificates, and border checks will be carried out systematically. Ms Dickinson said that the UK and EU needed to find “new ways to reduce the checks and red tape that we’ll see from the 1 January”.

Stephen Phipson, chief executive of manufacturers’ group, Make UK, said the sector would “cautiously welcome” the trade agreement, which avoids the catastrophe of no deal. But he said that there were “many months of further hard work yet to come”, calling for an adjustment period.

One Airbus executive said there were some “good signs” in the deal: zero tariffs, continued market access for a broad range of sectors, a UK-led subsidy system and continued participation in some EU programmes such as Horizon Europe, a scientific research initiative.

But Paul Everitt, chief of ADS, the UK trade body for the aerospace, defence, security and space sectors, said the agreement “does not meet all our ambitions and [we] will examine the full legal text to ensure priority areas including aviation safety and chemicals regulation, customs and border control, and Northern Ireland are appropriately addressed”.

Still severely weakened from the economic toll of the coronavirus pandemic, many smaller companies also say they feel unprepared for any disruption from Brexit, even now a deal has been agreed, with little spare cash or resources available to ease the transition. Business groups are fighting for extra financial support for small companies.

Jonathan Geldart, director-general of the Institute of Directors, said: “The clock is still very much ticking for businesses. There is very little time for directors to prepare their organisations.”

Additional reporting by Peter Campbell


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