RetailWeek: Opinion: Why retailers should embrace Brexit
‘I was most surprised to hear that the BRC had declared on behalf of some retailers that shelves would be empty in the event of a no-deal Brexit.
‘I have spent much of my 40 years in business involved in food retail, FMCG, international trade and standards and I have done business on every continent except Antarctica. I was on former Prime Minister Margaret Thatcher’s deregulation task force, twice on the BRC board, and chaired the technical committees of the BRC, IGD and CIES.
‘Given my experience, the one thing I can say about Brexit with certainty is that it affords innovative retailers huge opportunities and provides consumers with a possibility to become better off. And if consumers are better off, so are retailers.
‘The only way in which the UK could possibly have shortages of anything after March 2019 is if our government decide to stop EU products coming into the country – but why would they?
‘EU products will have the same standards as the UK the day after Brexit, just as they did the day before. We can unilaterally adopt recognition of those standards. When it comes to checking of electronic paperwork, there is already a border between the UK and the EU – a border for people (we are not in the Schengen Zone), for VAT, for corporation tax, currency and excise.
‘The border is invisible, as all of these are dealt with by electronic means in advance of, or after crossing borders. The same rule can be applied to customs and tariffs. In fact, it already is for most of our trade with the rest of the world.
‘The World Bank recently reported that, on average, only 2% of goods are checked at borders worldwide, even between countries that have no trade arrangements whatsoever.
‘It would be illegal for foreign powers, including the EU, to impose burdensome checks on goods coming in or going out. As for Calais, the chief of the port has made it clear that no additional checks will be imposed for fear of his business going to other European ports.
‘This is the way international trade works under WTO rules – arrangements which account for most of our exports and for most of the trade that the EU conducts with the rest of the world, including China, the USA and India.
‘As I had reconfirmed at the WTO in Geneva recently, under Article 24 of the General Agreement on Tariffs and Trade, the UK and EU could agree to continue with current arrangements for tariffs and trade from the March 30, until a free trade deal is signed. Yet this would still allow us to leave the EU and make our own way in the world. It just requires a will on both sides.
‘The manifest opportunities for retailers of Brexit include the possibility to create better regulations – permitting more innovation and more flexible employment – better data laws and the ability to avoid future burdensome rules on AI, finance and the precautionary principle, all worth billions. These are especially good for retailers trading domestically or outside the EU, where 90% of global growth will occur in future.
We can also unilaterally choose to remove EU-imposed external tariffs from products coming into the UK, which would make products cheaper. Why should we accept 70% tariffs on canned peaches to protect Italian producers, high tariffs on roasted coffee to protect the Germans, 20% on frozen chicken meat and similar tariffs on flat screen TVs and trainers? All of this would reduce the cost of living, boost disposable income and the economy. Retailers would benefit.
‘Right now, rather than trying to prevent Brexit with scare stories, retailers should be lobbying government to selectively and unilaterally remove tariffs on Brexit day especially on food and goods we do not major on producing in the UK. They should at the same time, be looking to secure consistent and quality supply from around the globe in all seasons. For food and non food in north, central and southern Africa, the Americas and Australasia retailers should be looking to establish new sources of supply.
‘Frozen, cooked chicken meat for ready meals already comes from Thailand and Brazil, fruit and vegetables from across Africa, clothing and footwear from the Indian sub continent, Central Asia and South East Asia. Electronics from Korea, Taiwan etc. Supply chains need to be developed, supplier relationships established and standards enforced.
‘Retailers should be lobbying government to deliver a share of the savings on the £39 billion and the annual net contribution not just in personal or corporate tax cuts but in reductions in business rates, already the highest in the EU, and in infrastructure development; road and rail and human, through education and training. This will not only provide a direct benefit to retailers but also boost consumer spending and the economy.
‘Of course, there are many other benefits, including the control of fisheries and agriculture, quite apart from the political aspects which motivated the leave vote.
‘Even the contentious issue of labour is a two-edged sword. A reduction in a reliance on an unlimited supply of cheap labour in both retail and the supply chain will result in investment and productivity improvement along with higher wages. All of this boosts the economy and consumer spending benefitting retailers. In any event, why shouldn’t retailers devote more effort to training the around 600,000 unemployed under-25s in our country.
‘It is curious then that retailers chose to support the BRC letter.
‘As a former operating board director of Tesco and group board director of Asda and Cooperative Food Ltd, I can understand that change can be daunting and I could speculate on their motivation, but history tells us that it is those companies that embrace the benefits of change that prosper, while those who do not die. Businesses are dynamic, they are not institutions to be preserved. Almost none of the companies that founded the FTSE 100 in the 1980s exist today.
‘Of course, government policy has not helped and retailers would have been better calling on government to declare that the UK was leaving the EU on WTO terms from the very beginning, thus providing absolute certainty.
‘Given that it is likely a majority of retailers’ customers who signed the BRC letter voted to leave, that most people, even those who voted remain, now simply want the matter delivered and done with and that democracy demands it be so, one would have thought companies would be better occupied planning for our imminent exit and looking for the opportunities to boost sales and shareholder returns, rather than still bleating project fear in support of a decision made nearly three years ago.
‘They certainly can’t complain that they have had too little time to prepare.
John Longworth is co-chairman of Leave Means Leave and is on the advisory board of Economists for Free Trade and the IEA. He was formerly director general of the British Chambers of Commerce.
February 4th, 2019: RetailWeek