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Birmingham Post
Birmingham Post
Business
Lauren Phillips

Brexit deal should be renegotiated says director general of British Chambers of Commerce

The UK economy and businesses would benefit from a deeper trading agreement with the EU, says director general of the British Chambers of Commerce Shevaun Haviland.

Ms Haviland believes the time is right for a renegotiation of the EU-UK Trade and Cooperation Agreement (TCA) signed in December 2020, while stressing that tensions around the Northern Ireland Protocol also need to be resolved.

Speaking at the Chambers Wales international trade event at City Hall in Cardiff she said: "The Northern Ireland Protocol has to be sorted. We want to see a negotiated agreement on that and then move on rapidly to what we can do around the EU-UK Trade and Cooperation Agreement. When the TCA was negotiated, everybody was clear that it wasn't a finished product. It was done with a view that we would then go back and review the areas that weren't complete and that hasn't happened."

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While not advocating for a return to a political union with the EU, Ms Haviland did see the benefit of a UK agreement closer to the European Economic Area (EEA) which the EU shares with Norway, Iceland and Liechtenstein.

"They have a better VAT arrangement than we do," she said. "They don't have 27 different VAT rules. There are lots of things we could do to negotiate, that is not about ripping up the TCA and starting again. That's not what we're saying. But there must be a political will to do this."

This would not only boost export growth for businesses, she said but in turn grow the UK economy.

"We talk about helping the economy to grow, well exporting will do that and it doesn't cost the government (UK) anything. We are about helping our members, our businesses, understand how they can do that, and where the market opportunities. About 10% of businesses in the UK export, about 60% of Chamber members export and the 79 markets around the world is a really big area of opportunity.

"There's two things the government (UK) need to do. They need to fix some of the issues around the EU Trade and Cooperation agreement, which we've outlined in our trade manifesto. And then, where we are putting in place new free trade agreements, we need to help businesses understand how to make the most of those."

Paul Slevin, executive chair of Chambers Wales South East, South West and Mid, agreed that trade will deliver economic growth and, while government can facilitate that, it is up to the private sector to achieve that.

"The simplest way for growth is trade. It's our opinion that governments are there to create the corridors and the frameworks for trade to happen, but it's up to the private sector to fulfill those corridors and to make that trade occur. We believe that there are two routes companies can take," he said.

"You can talk yourself into a dull position, or you can talk yourself into a stimulating position. We work with the businesses who are in the stimulated position to help them to connect with opportunities overseas. It's our mandate to motivate as many companies as we can to put their head above the parapet and go and get that international trade. That is how you grow the economy. Tax adjustments and fiscal adjustments happen after the growth. It doesn't necessarily create the growth, particularly in the shape of the economy that we have here in Wales."

Since Brexit, exports by UK small businesses to the EU are down significantly.

The Office for Budget Responsibility predicted that Brexit will have a long-term effect of cutting UK GDP by a 4%, with the Financial Times estimating such a decline amounting to £100bn in lost output, and £40bn less revenue to the Treasury a year.

Most recently, private equity veteran Guy Hands said the UK economy was "doomed" and heading for a bailout from the IMF without a Brexit renegotiation.

While not calling Brexit an unmitigated disaster, Ms Haviland acknowledged the challenges to trade businesses now face since leaving the EU.

She said: "There is a huge amount of time, money and paperwork for business now and it is really hard. We honestly thought things would get easier by now because businesses would work it out and we would help them work out what the new rules are. I was with a really successful growing tea business the other day who export to Spain. They send the same packages every month with the same paperwork and sometimes the product gets there and sometimes it doesn't. A hospitality business in Somerset which press their own cider, they are a really successful growing business but have had to stop exporting food and drink to Europe because it's just too difficult."

Mr Slevin said the impact of Brexit had been masked significantly by the pandemic with its true effect unlikely to be felt for another six to 12 months.

"Over the last couple of years, confidence has been knocked out of businesses. By Brexit, by the pandemic, by energy, by material costs. The energy and the management time soaked up by all these challenges is enormous. And every time it happens, people keep looking down to protect themselves. We need to look up, step forward, and get those international trade opportunities," he said.

These challenges are also playing out across Wales, with Brexit impacting imports too.

Mr Slevin said: "International trade is not just about exports. 60% of everything that Wales produces has to be imported first, because we have fewer raw materials here. Predominantly our economy is a convertor and value adder, and there are lots of companies across the world who Welsh companies want to deal with to get their raw materials and that's an equally challenging journey. How do you get goods in if you've got to re-export them? It's still a challenge to be able to do that. One of the values that we see in Chambers' international network is the ability to be able to connect with both ends."

While trade to new markets outside the EU are open, issues such as language, currency and different trade processes make it difficult for businesses to offset the loss of European trade, said Mr Slevin.

"Europe is on our doorstep and was very easy to access. While we welcome free trade agreements right across the world, and think they're incredibly valuable, the challenge is there's a lot of hard work on the shoulders of businesses to be able to offset the loss of the European trade by trying to deliver to a country that doesn't speak English," he said.

"It's got a very different culture, very different currencies, and a very different trade process to get there. So while the door is open, the cost of going through that door and the complexity of going through that door is really quite significant. It will take time for businesses to get the confidence to be able to go down that journey. I do believe they still regret the fact that they never truly valued the openness of the European market."

Having said that, both Mr Slevin and Ms Haviland are confident in the appetite of international markets for UK goods citing the Hong Kong trade council as one example.

While renegotiating elements of the EU trade agreement with the knowledge Britain has gained over the last 24 months of trading could potentially see the agreement become "a powerful document", Mr Slevin said.

"Overlay that with work that the Department of International Trade are doing in opening up news markets and we now have some really wide open channels for trade to occur out of Britain, simplistically, without barriers, and hopefully without too onerous tariffs, so that companies feel confident in being able to trade."

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