In the face of a perfect storm
It has been described as ‘the perfect storm’. Just how much damage the double impact of Brexit and Covid will inflict on Lancashire’s international trade remains to be seen.
Nationally, three in four businesses are concerned about a further economic shock arising from a non-negotiated exit from the EU - the UK’s biggest trading partner - according to survey data from the CBI.
It also highlighted that business preparations for the end of the transition period have stalled or gone into reverse since January.
Meanwhile, the coronavirus pandemic continues to wreak havoc on industries such as civil aerospace as the world struggles to get to grip with the so-called ‘new normal’. Lancashire has already suffered job losses as a result.
A National Audit Office report has spelled out the challenge, warning the pandemic and measures introduced by governments, including restrictions on travel, have “inflicted an unprecedented shock to global trade.”
Miranda Barker, chief executive of East Lancashire Chamber of Commerce, says that while things are difficult, the county’s manufacturing exporters are doing better than their counterparts in other parts of the country.
She says: “Comparing notes with other chamber chief executives around the UK it appears Lancashire’s have held up better. We haven’t seen the catastrophic impact on exports that other parts of the country have suffered.
We should be looking to take advantage of markets depressed by Covid
“Our manufacturers have managed, one way or another to keep going. Some overseas customers and suppliers may have failed, you can’t influence that.
“In normal circumstances exporters can switch somewhere else if one market is impacted but this has had a global impact and that is what makes it so difficult.”
She believes that the realisation of that is making businesses look to their supply chains to ensure they are more controllable – and that could be of benefit to the county as companies look to ‘re-shore’.
When it comes to the end of the transition period with the EU, Miranda echoes the frustration felt by many export businesses. As the clock continues to count down the UK’s exit from the Single Market and Customs Union, she says that much remains unknown when it comes to the future trading relationship with Europe.
The majority of firms have neither the time nor resources to prepare for a non-negotiated EU exit
Miranda highlights the current lack of detail from the government regarding the UK’s post-transition arrangements for moving goods across the Irish border as just one area that is frustrating manufacturers. Things, she says, “are far from clear”.
There is help out there. The chamber continues to offer government funded support to businesses and Miranda is urging companies to draw on all the support so that they can be prepared and ready.
She believes Lancashire companies that are experienced in international trade will get through the difficulties – pointing to the fact they are used to working in a myriad of different markets.
However, she fears the current uncertainty, coupled with the growing impact of Covid-19, will put off many businesses that might have been looking to explore overseas opportunities for the first time.
And she says: “That’s not good news for the economy as we try to come out of this. We should be looking to take advantage of markets depressed by Covid.
“But Brexit is hampering our ability to make the most of any recovery and Covid is impacting on our progress in making any EU deal. It is a vicious circle and it is going to be anything but a smooth ride.”
In 2019, the UK exported £701.2bn of goods and services to overseas countries.
The Department for International Trade (DIT) and UK Export Finance (UKEF) are developing a new export strategy which will reflecting the UK’s exit from the EU and the government’s economic response to Covid-19.
Meanwhile, according to the CBI study, 27 per cent of manufacturers have seen their preparations for the end of the transition period go backwards since January.
Dame Carolyn Fairbairn, CBI director-general, said of the findings: “An ambitious deal with the EU is essential to shield firms from a further trade shock at a time when they are least equipped to cope.
“What’s clear from this wide-ranging survey is that the majority of firms have neither the time nor resources to prepare for a non-negotiated EU exit.
“While many larger firms have long had plans in place for a no-deal outcome, smaller firms will struggle to cope with a double dose of disruption.”
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