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View from the Chair

Amid uncertainty, businesses urgently need answers

28th Jul 2020

VIEW FROM THE CHAIR

Ian Henry, President, Northern Ireland Chamber of Commerce and Industry

Many businesses depend on trade with the home nations more than any other partner. According to the Northern Ireland Statistics and Research Agency (NISRA), Great Britain remains the “most significant single market” for external sales for businesses in Northern Ireland, accounting for 15.4% of total sales.

That is why the plans laid out by government earlier this month around the future of the internal market (the market between England, Scotland, Wales and Northern Ireland), are extremely important to businesses here.

Under plans which are currently open for consultation, the aim is to ensure that businesses across the UK can continue to benefit from ‘seamless’ internal trade, when the Transition Period ends in December 2020.

From 1 January 2021, the UK government estimates that powers in more than 70 policy areas, previously exercised at an EU level, will flow directly to the devolved administrations. Agriculture, fisheries, food standards and environmental policies will revert back to the UK Government and the devolved nations, creating the possibility of divergence in these areas. Because NI is economically integrated with both GB and ROI/EU, then the more divergence between the UK and EU in future, the more difficulties there will be for trade to and from Northern Ireland. This has always been the case but has also been made more explicit by the Protocol. In what is a legally binding document, what the UK does in upholding it will affect its reputation when it comes to doing deals with other countries, not just the EU. It also performs an important function in giving NI free access to and from the EU’s single market.

It is therefore critical that business groups and their members in all four nations of the UK examine the detail of these proposals and respond to ensure that no business faces additional costs when trading between the four nations of the UK, now or into the future. The UK government and the devolved administrations must also work together to create a clear framework that gives businesses in every nation of the UK the same opportunities to trade and compete following the end of the transition period. After all, a fragmented system would create additional costs, bureaucracy and supply chain challenges that could disrupt operations for firms across the UK.

Whilst government asks businesses to respond on these proposals, what NI businesses need from government in return is clarity and progress vis-à-vis access to the GB market, including legislation on unfettered access. Those trading across the Irish Sea have been told to prepare without knowing what to prepare for. Earlier this month the Northern Ireland Affairs Committee delivered an extremely critical verdict on the government’s approach, condemning it for leaving businesses unprepared for the end of the transition period. The report also claimed that the Government has shown a lack of understanding and an overly political approach to post-Brexit trading arrangements in Northern Ireland, leaving businesses in the dark.

Businesses and business groups have welcomed repeated commitments from the UK Government to allow NI goods unfettered access to GB and to be placed on the GB market – but we now need to see legislation on this. The NI Affairs Committee has also questioned this claim and called for more clarity for businesses by 1 October 2020.
As we have been warning for some time, businesses still need detailed answers on a wide range of practical questions if they are to plan for change. That need is only intensifying as the end of the transition period comes into sight. For the majority of our members, the overriding concern is the lack of time for smaller businesses and their intermediaries to react to any new systems that will be put in place. Some of the larger companies can react quicker but the majority of smaller companies aren’t fully informed. At NI Chamber, the team facilitates trade documentation and provide customs training but we are concerned, from a practical perspective, how companies and their intermediaries are able to deal with this in the timeline now available, particularly as HMRC don’t have the computer system they’re proposing to use tested.

With so many uncertainties remaining, and only five months to go, businesses urgently need answers to all of their questions. Government must urgently provide this and with practical considerations, not politics, at the heart of future policy.