Retailer JD Sports is to open a 65,000 sq ft warehouse near Dublin to tackle post-Brexit trading problems.
Goods which JD imports from East Asia to GB now incur tariffs when they are distributed onward to its stores across Europe.
To deal with this JD has already opened a warehouse in Belgium but says it needs a specific facility for Ireland.
The company says the Irish facility will become operational in the second half of this year.
It is also considering a bigger facility elsewhere in the EU from which it would process all EU online orders.
In a trading update the firm said: “We continue to review opportunities for a larger permanent facility in Europe which can process substantially all of the volume required for stores and online orders in mainland Europe although it will likely be Autumn 2022 before an enlarged facility would be available for use.”
In February the chairman of JD told the BBC that Brexit had turned out to be “considerably worse” than he feared.
Peter Cowgill said there was no true free trade with the EU, because goods that JD Sports imports from East Asia incur tariffs when they go to its stores across Europe.
“I actually think it was not properly thought out,” he said.
“All the spin that was put on it about being free trade and free movement has not been the reality.”
By John Campbell BBC News NI Economics & Business Editor
The UK’s new trading relationship with the European Union (EU) might only be a few months old.
But some businesses are struggling to adjust to the new trading landscape outside of the customs union and single market.
Firms across four different sectors share their stories of rising costs, extra paperwork and packages that never arrive.
The fashion firm
Ben Taylor and Alice Liptrot have come a long way since they founded their knitwear brand Country of Origin straight out of university.
The couple now employ four other people and sell clothes wholesale to independent shops and to customers online.
About a third of sales, Ben says, came from customers in the EU.
“But since the end of January, it’s tailed off completely.”
Ben says the firm has been caught up in an “onslaught of admin” and about 80% of orders to the EU after Brexit have seen customers having to pay extra charges.
What are the new rules?
New rules have come into force for those in the UK either importing from, or exporting to, Europe.
Exactly what licenses are needed or what duties must be paid depends on what is being exported, its value, where the product originates from and to which country it is being sent, according to government guidance.
From 1 January, the UK government introduced a rule that VAT must be collected at the point of sale rather than the point of import.
This essentially means that overseas retailers sending goods to the UK are expected to register for UK VAT and account for it to HMRC if the sale value is less than €150 (£135).
One customer in the Netherlands was asked to pay an additional €100 (£88) on their order, Ben says, for “government fees”, with no further explanation from customs agents.
Ben adds that the firm is not an “inexperienced” exporter, having shipped goods to Japan and the US. He says the lack of clarity on why certain charges are being raised is “frustrating”.
The next step? “To get some kind of operation going in Europe – moving stock to dispatch from there because this just isn’t sustainable,” he says.
“I just hope this doesn’t put off any other young person who wants to start a small business today.”
The flower grower
Diane Collison has been responsible for helping her firm, Collison Cut Flowers, adapt to post-Brexit changes.
The Norfolk cut flower producer imports 35 million bulbs a year – mostly tulips from Holland, scented stock and lilies.
The government recently pushed backintroducing new checks on most imported plants until 2022. But some of the bulbs imported by Collison’s Cut Flowers count as “high-risk”, so they have already had to make some changes.
Diane has registered the business as a “place of destination”, where plants could be checked by local health teams, and for an EORI number so the firm can bring EU goods into the UK.
Day-to-day, she must email a freight forwarding business details of expected deliveries before they hit UK ports. That’s on top of registering invoices and plant health certificates with UK authorities.
“Each load is probably costing us about £200 extra now – and at about 150 per year that’s not an insignificant amount of money,” Diane says.
The firm may soon need to increase costs for customers.
“But I’m just pleased we’ve managed to get our imports in and what we’ve done is working,” Diane says, adding the firm has only seen deliveries delayed by a few hours so far.
The sausage exporter
Steve Howell’s Foodlynx sells British sausages, bacon and bread to hotels and restaurants across the EU.
Typically it sends one or two trucks out a week and up to six in the peak summer season. But the Dorset-based firm suffered a three-day delay to the one shipment it has made since Brexit.
Its truck was held up at the port of Le Havre in France as customs officials questioned whether certificates for some animal products had been filled in correctly.
It was moved to another cold storage unit nearby while the issue was sorted out. Steve was charged €3,914 for storage and admin costs.
“Demand dropped off due to Covid last year anyway, plus we, like many others advised our customers to stock up before Christmas to avoid these types of delays.
“Now, the customers are running low on stock and we’re still trying to battle through paperwork, new labelling regulations and compliance.”
“The whole point [of Brexit] was to take back control of our country,” Steve says.
“We have succeeded in doing exactly the opposite because British exporters are completely and utterly blown out the water.”
The car parts dealer
Martyn Wilson set up his classic car parts firm 12 years ago and about 60% of orders are shipped to the EU.
VAT is now applied at the point of sale for parts under £135 – on top of duty charged on car parts at 24%.
Citroen Classic Car Parts typically sends out 130 items per month – but difficulties arose quickly.
“For couriers, I have to supply customers’ contact details – and often have to write to them in French and German to get those, which is a bit of a drama we never had to deal with before.”
Deliveries into Italy, for example, have never arrived and others have been returned due to customers not paying the new charges.
“It has impacted us certainly from the mental point of view. It’s a lot of additional stress and you’re continually on deadlines, trying to get good reviews from customers and make sure things get delivered.”
Martyn points out that he is able to deliver car parts to the US in less than 24 hours – and no tariffs are applicable on those under $700.
“I will muddle on through in the best possible way I can and maybe it’ll push me to think outside the box a bit.
“Perhaps in the long-run it might be good for us, but we’re going through the pain barrier.”
LONDON (Reuters) – Close scrutiny of UK financial firms’ European Union outposts will continue indefinitely, the bloc’s securities watchdog said, as regulators begin a round of new checks on how they are operating.
Hundreds of trading and investment firms from the City of London have set up shop in the EU to avoid disrupting business with the bloc by relocating staff and assets.
The costly investment was vindicated by an UK-EU trade deal that left UK financial services largely cut off from the continent after Britain left the EU’s orbit on Dec. 31.
The European Securities and Markets Authority (ESMA) had checked the licence applications from new hubs in case national regulators were offering sweeteners.
ESMA Chair Steven Maijoor said the watchdog has now begun reviewing how the licences are working on the ground in a process that will continue indefinitely to ensure sufficient activity and senior staff.
“How you structure your business between the UK and the EU, that will be an ongoing issue. There will be new business models, there will be new questions around how can you organise that,” Maijoor told Reuters.
“Although it will not be done in the context of Brexit, the UK and EU will continue to be very interconnected markets and so there will be on a continuous basis questions around how do you ensure proper supervisable entities in the EU.”
The close scrutiny will test post-Brexit relations between Britain and the bloc, already strained by clashes over Northern Ireland and COVID-19 vaccines.
Both sides aim to agree a cooperation pact in financial regulation by the end of March, a first step in restoring trust and potential UK market access further down the road.
A former regulator in the Netherlands, Maijoor is due to step down from ESMA after 10 years at the helm, having overseen a watchdog that has steadily increased its powers and reach.
There is no need for a U.S.-style super-regulator but it would be “very logical” for ESMA to build on the Brexit checks to become the EU regulatory gateway for market participants from any part of the world that want to operate in the bloc.
“If market participants can choose 27 member states to locate themselves then there is obviously a high risk of regulatory competition,” Maijoor said.
EU policymakers breathed a sigh of relief when there was no market disorder in January due to severing most of the City’s access to the bloc.
Maijoor said assessments by UK and EU regulators of risks to market stability ahead of Brexit had proved to be on the mark. EU curbs on City access led to swathes of euro stock and swaps trading leaving London for the bloc and New York without a hiccup.
Regulators focused on stability, not on avoiding splits in markets, he said.
“With Brexit comes fragmentation, that is what Brexit is about, it’s a decision by the UK to leave the EU.”
Britain will modernise its listing rules to attract more high-growth and “blank cheque” SPAC company flotations to London, Finance Minister Rishi Sunak said after a government-backed review said the capital was on the back foot after Brexit.
The London Stock Exchange is facing tougher competition from NYSE and Nasdaq in New York, and from Euronext in Amsterdam since Britain fully left the European Union on Dec. 31.
In a bid to keep London globally competitive after Brexit, Sunak commissioned a review of listings rules last November. It was led by former European Commissioner Jonathan Hill and published its recommendations on Wednesday.
“The review has more than delivered and I’m keen we move quickly to consult on its recommendations, cementing the UK’s reputation at the front of global financial services,” Sunak said in a statement.
The Financial Conduct Authority will consult publicly on the proposed changes, though some would require legislation to implement.
The government faces pressure to act – it announced a fast-track work visa scheme last week for fintechs – after swathes of euro stock and swaps trading left London for Amsterdam and New York after full Brexit in December.
But asset managers and company directors warn about eroding corporate governance standards by easing listing rules.
Hill said “the composition of the FTSE index makes clear another challenge: the most significant companies listed in London are either financial or more representative of the ‘old economy’ than the companies of the future.
He added that there was a sense that the financial sector is on the “back foot” due to Brexit and new competition emerging from Amsterdam.
“The recommendations in this report are not about opening a gap between us and other global centres by proposing radical new departures to try to seize a competitive advantage,” Hill said.
“They are about closing a gap which has already opened up. All the recommendations are consistent with existing practices in other well-regulated financial centres in the USA, Asia and Europe,” Hill added.
‘STATE OF THE CITY’
Two changes seek to move London in line with New York and other financial centres by allowing founders to list their company while still retaining significant control.
Hill recommends allowing dual class share structures to give directors and founders enhanced voting rights on certain decisions for five years, a move retail investor groups say is contrary to the “one share, one vote” principle. The minimum “free float” or amount of a company’s shares or in public hands would be cut from 25% to 15%.
Hill also recommends liberalising listing rules for special purpose acquisition companies or SPACs, whose flotations in New York have surged over the past year, with Amsterdam also attracting some recently.
The prospectus, used by companies to set out their initial or secondary offer of shares, should also be fundamentally reviewed to make listing a company faster and simpler, Hill has recommended.
Hill said regulators in Australia, Singapore, Hong Kong, Japan and the EU have an objective to maintain competitiveness of their financial sector and this would be helpful for Britain’s Finanancial Conduct Authority as well.
There should also be an annual “State of the City” report form the finance minister to parliament on the financial sector’s competitive position.
“Continuing to evolve the UK listings regime is key to providing flexibility for companies who want to list in London while maintaining high standards of corporate governance,” said David Schwimmer, chief executive of the LSE Group.
A government-sponsored review of financial technology firms chaired by former Worldpay CEO Ron Kalifa has set out recommendations for government and private sector action to keep the UK competitive, after Brexit left fintechs in Britain adrift from the European Union single market.
The main recommendations are:
* Set up a Digital Economy Taskforce that aligns fintech work done by regulators and government departments;
* Deliver a digital finance package that creates a new regulatory framework for emerging technology;
* Create a 1 billion pound Fintech Growth Fund with institutional investor money to halve the sector’s 2 billion pound funding gap;
* Accelerate growth in Britain’s 25 fintech “clusters”;
* Set up a Centre for Finance, Innovation and Technology (CFIT) to drive a national and international strategy;
* Set up a “scalebox” to support firms that are growing rapidly;
* Create a new visa “stream” to make it easier for fintechs to hire talent from across the world;
* Expand tax credits for research and development;
* Play catchup with New York, Paris, Frankfurt and New York by making it easier for fintechs to list by cutting the minimum number of shares they must make publicly available, and allowing “dual class” shares that give stronger rights to founders;
* Create a suite of fintech indices based on listings of UK fintech to raise the sector’s visibility;
Brexit, COVID-19 and overseas competition are challenging fintech’s future, and Britain should act to stay competitive for the sector, a government-backed review said on Friday.
Britain’s departure from the European Union has cut the sector’s access to the world’s biggest single market, making the UK less attractive for fintechs wanting to expand cross-border.
The review headed by Ron Kalifa, former CEO of payments fintech Worldpay, sets out a “strategy and delivery model” that includes a new billion pound start-up fund and fast-tracking work visas for hiring the best talent globally.
“It’s about underpinning financial services and our place in the world, and bringing innovation into mainstream banking,” Kalifa told Reuters.
Britain has a 10% share of the global fintech market, generating 11 billion pounds ($15.6 billion) in revenue.
But Brexit, heavy investment in fintech by Australia, Canada and Singapore, and the need to be nimbler as COVID-19 accelerates digitalisation of finance all mean the sector’s future in Britain is not assured, the review said.
Britain increasingly needs to represent itself as a strong fintech scale-up destination as well as one for start-ups, it added.
“Leaving the EU and access to the single market going away is a big deal, so the UK has to do something significant to make fintechs stay here,” said Kay Swinburne, vice chair of financial services at consultants KPMG and a contributor to the review.
The review seeks to join the dots on fintech policy across government departments and regulators, and marshal private sector efforts under a new Centre for Finance, Innovation and Technology (CFIT).
“There is no framework but bits of individual policies, and nowhere does it come together,” said Rachel Kent, a lawyer at Hogan Lovells and contributor to the review.
Britain pioneered “sandboxes” to allow fintechs to test products on real consumers under supervision, and the review says regulators should move to the next stage and set up “scale-boxes” to help fintechs navigate red tape to grow.
“It’s a question of knowing who to call when there’s a problem,” Swinburne said.
The review recommends more flexible listing rules for fintechs to catch up with New York.
Ghana and the United Kingdom have signed a new interim Trade Partnership Agreement after days of negotiations, ending the Transition Period following the withdrawal of UK from the European Union
The agreement is expected to provide for duty free and quota free access for Ghanaian goods to the UK market and preferential tariff reductions for UK exporters to the Ghanaian market.
According to a statement released by the Ministry of Trade and Industry, “the agreement will enter into effect following the completion of relevant internal procedures required in both Ghana and the UK”.
Earlier this year, UK companies threatened to reject imports from Ghana as the country and Britain failed to reach a trade agreement, post Brexit.
Banana farmers were the hardest hit, losing about 20% of their exports to the UK and could have lost about 70% more if the agreement was not finalized.
The new agreement is said to reaffirm the deep interest of both Ghana and the UK to strengthen their longstanding trade and economic relationship.
The agreement also reflects the importance of integration between the West African States within the context of the Economic Community of West African States (ECOWAS) and amongst African States within the context of the African Continental Free Trade Area.
Some businesses in Northern Ireland say they have seen an increase in opportunities since the end of the Brexit transition period.
Some sectors have seen disruption, with a political row continuing over the Northern Ireland Protocol.
But a number of firms have told BBC News NI that the new arrangements have given them an advantage.
Newry sandwich maker Deli-Lites has worked with Boots in the Republic of Ireland market for the past four years.
The company has now won the contract to supply the stores north of the border, which used to be done by a firm in Great Britain.
Chief executive Brian Reid said: “It’s had a positive impact on the business, what the Northern Ireland protocol has given us is access to the Irish market and Europe and also access to the market in GB.
“As a businessperson on the ground, I think it’s fantastic we’ve got the best of both worlds.”
The Northern Ireland Protocol means that unlike the rest of the UK, Northern Ireland has remained in the EU single market for goods.
The protocol was agreed as way to avoid a hard border re-emerging on the island of Ireland.
Some businesses have complained that it has caused disruption to their trade with Great Britain.
‘A very significant advantage’
But a Dunmurry-based ventilation manufacturer that supplies the construction industry says it has won a six-figure contract in the Republic because of the Northern Ireland Protocol.
Managing director Declan Gormley said: “I think the real benefit of the Northern Ireland Protocol I don’t think we have fully realised yet is the unfettered access to the EU and to the UK.
“That gives us a very significant advantage over competitors based in the UK.
“What we now need to remove is that in four years time the advantages could be voted away.”
Portadown-based cheesemaker Ballylisk has also seen a rise in demand from customers in the Republic of Ireland and in Great Britain.
Managing director Dean Wright said: “A lot of the French and European cheese coming in here will leave a void and I do think local retailers are looking to that.”
He added: “There’s certainly serious opportunity on the two islands here – why should we go into Europe when we have a very good market on our doorstep that maybe hasn’t been tapped into?”
Invest NI is responsible for helping businesses selling into other markets, but also selling Northern Ireland as an location for investors.
Chief executive Kevin Holland said the unique position Northern Ireland is now in with dual market access helps to sell the potential of Northern Ireland.
He said: “In the past five to 10 days I’ve had companies from New Zealand, the US, Britain and Europe talking to us about how this works now and whether this is an opportunity for their businesses.”
More than 15,000 direct and indirect jobs are currently being affected negatively due to the failure of Ghana and UK to sign a post Brexit trade agreement that allows Ghanaian fruit producers’ tariff free access to the UK market as exists under the Economic Partnership Agreement (EPA).
Ghana and UK failed to finalize a trade agreement before the end of the BREXIT transition on December 31, 2020. This means exorbitant tariffs for Ghanaian banana, cocoa and other fruit exporters who are now trading under the Generalised Scheme of Preferences (GSP).
For the banana sector, exporters who were previously trading under the Economic Partnership Agreement (EPA) with the EU, without payment of tariffs, now have to pay 95GBP tariff per ton of banana Affected companies that are Fairtrade Certified producers and members of Fairtrade Africa (FTA) namely the network of all Fairtrade Certified Producer Organisations in Africa and the Middle East are: Golden Exotics Limited (GEL), Volta River Estates Limited (VREL) and Blue Skies Company Limited.
These Fairtrade Certified Producer organisations together employ over 5,000 direct workers and create more than 10,000 indirect jobs.
As Fairtrade Certified organisations, these fruit producers ensure safe working conditions, fair wages, protect workers’ rights, and most recently the Banana producers have committed to working progressively towards paying living wage to workers in the next 3 to 5 years.
The banana producers’ association of Ghana comprises of 3 companies; Golden Exotic Limited, Musahamat Farm Limited and Volta River Estates Limited situated in the Greater Accra and Eastern regions with a surface area of about 2,500 hectares and a workforce of about 4500.
These companies also provide an additional 10,000 indirect employment. The industry has been actively exporting bananas for the past 26 years to the EU market to which the UK belonged until BREXIT came into force as from 1st January, 2021.
Two of these companies are Fairtrade certified and altogether, the three companies export about 85,000 MT of bananas annually with about 60% of exports going to the UK market. Fairtrade bananas exported to the UK are considered a premium product that allow companies to earn social premiums that help to improve infrastructural development in local communities where the companies and its employees are located.
The currently delay by the Ghanaian and UK governments in concluding and signing an agreement to allow tariff free access of these producers to the UK market means an increase in the cost of their business resulting from significantly high tariffs they have been required to pay since 1st January, 2021.
The Golden Exotics Limited (GEL), which exports around 45,000 tonnes of Fairtrade and organic bananas to the UK each year, had to pay a £17,000 duty on its first post-Brexit shipment to arrive in the UK this year. Ghana’s Volta River Estates Limited (VREL) plantation exports around 9,500 tonnes of Fairtrade-certified bananas to the UK each year for sale at Co-op and Waitrose supermarkets.
Banana is a perishable product with a strict weekly export regime – Fairtrade members are bound to pay these exorbitant tariffs on a weekly basis. It had to pay a duty of £16,000 on weekly shipments of nine containers of bananas.
An additional £53,000 has been paid for three more deliveries since then. The introduction of these new tariffs therefore puts a heavily unsustainable burden on these companies.
Anthony Blay, Director of Agric, VREL said: “Volta River Estates exports about 85% of its volume to the UK, having developed long term trade relation with the COOP and Waitrose supermarkets. The company cannot survive this level of tariffs even in the short term, putting the jobs of its 700 direct employees at risk”.
George Kporye, Golden Exotics’ Corporate Affairs Manager added that the tariffs should be waived in the interim and the deal concluded in days, rather than weeks. “We had to reduce the volumes because of the uncertainties of reaching a deal on time,” he said.
Ghanaian banana exporters risk losing their market to other African exporters who were able to broker some transitionary agreement with the UK before the deadline and are therefore not subject to duty payment. Most Latin America banana exporting countries also reached a deal with the UK.
Exports from Ghana can therefore not compete with these other origins at the current rate of tariffs, needlessly threatening the survival of an otherwise successful industry. This situation is applicable to related industries like canned tuna, cocoa processing, processed fruits/salads, pineapple etc., with the UK being a major destination.
The resultant effect of the rising cost of business for these companies as a result of these tariffs is that new jobs would not be created, some current jobs would be lost and efforts made towards ensuring workers in Fairtrade farms earn a living income would be thwarted.
This situation coupled with the impact of Covid19 makes the situation even precarious Fairtrade Africa welcomes the joint announcement by the Ghanaian Ministry of Trade and the UK Department of Trade earlier this month that an agreement has been reached to allow tariff free access, however we call on both the UK and Ghanaian governments to immediately sign an agreement to bring this into effect.
Fairtrade Africa also requests that exporters be compensated for the tariffs already paid as it will be unfair for them to bear the brunt of the two governments delay in finalising an agreement.
Thirdly, Fairtrade Africa requests that the government of Ghana involves all key stakeholders especially the producers in the negotiation process and ensure they are fully and speedily informed on the negotiation process.
These requests will collectively ensure that jobs are not only protected or secured but that new jobs are created and that Fairtrade plantations can keep to their commitment to paying workers a living wage.
Fairtrade Africa is committed to supporting its members by advocating to remove bottle necks in trade that impact negatively on livelihoods. Working together with all stakeholders across different sectors both in public and private sector, we ensure that our member organisations thrive in order to support their workers and communities.
Credit card giant Mastercard is to raise the fees it charges merchants when UK cardholders buy goods and services from the EU by fivefold.
It has sparked fears that consumer prices could rise if merchants choose to pass on those costs, especially on items not available from UK retailers.
Transactions with airlines, hotels, car rentals and holiday firms based in the EU could all be affected.
Mastercard attributed the move to the UK’s decision to leave the EU.
It added that “in practice” UK consumers would not notice the move.
The change affects the “interchange” fees Mastercard sets on behalf of big banks, so that its customers can use their payment networks.
From October, Mastercard said it would increase these fees to 1.5% on every transaction, up from 0.3%.
The EU introduced a cap on such fees in 2015 after concerns they pushed prices up for consumers and unfairly burdened companies with hidden costs.But Mastercard said that since the end of the Brexit transition period, the cap no longer applied to many payments between the UK and European Economic Area (which also includes Iceland, Liechtenstein and Norway).
It said its new policy was in line with a deal it made with the EU on fees for purchases from outside the EEA.
“As a result of the UK leaving the EEA, Mastercard will adapt interchange rates on UK cards to the commitments it gave the European Commission in 2019 for non-EEA card transactions,” the company said.
“In practice, only EEA merchants making e-commerce sales to UK cardholders will see a change.”
Kevin Hollinrake, chair of the parliamentary group on Fair Business Banking, told the Financial Times, which first reported the story, that the move “smacks of opportunism”.
And Callum Godwin, chief economist at CMSPI, the global payments consultancy, said airlines, hotels, car rentals and travel groups would be hit.
“[This will happen] anywhere the consumer is in the UK and the merchant is in the EU,” he said.
He added that many firms in these industries were already struggling due to the pandemic.
Visa, Mastercard’s larger rival, has not announced plans to change its fees but told the FT it was keeping the issue under review. Companies in the UK and EU are already facing added costs and delays due to post-Brexit trade rules brought in on 1 January.