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Preparation for Brexit
3rd November 2020
Dear customer,
Preparation for Brexit
If you hadn’t forgotten about Brexit, I’m sure that at the very least you’ve been trying hard to do so! But as if Covid wasn’t enough to deal with, Brexit is unfortunately now very much back on the agenda. So it’s time to think about whether you want to stock up and consider how you might take advantage of some of the new opportunities that it will throw up.
There is quite a lot to cover so for those of you who are already fully up to speed with what’s going on, you can click below to go directly to the part you’re most interested in.
- Is Brexit definitely happening?
- What’s the difference between deal and no deal?
- Will it impact the cost of products I buy?
- What will import duties be if there is no deal?
- Will Brexit cause problems with stock availability?
- Should I stock up?
- What if I am in Ireland or another EU country?
- What new opportunities might arise?
Is Brexit Definitely Happening?
On 1st January 2021, the UK will be completely, definitively out of the EU. Unlike previous false dawns there will be no extension this time. The only remaining question is whether there will be a trade deal of some kind, or not. At the time of writing, the UK and the EU remain locked in negotiations and we have little idea of when this last-ditch effort to secure a deal may end.
What’s The Difference Between Deal and No Deal?
Regardless of whether or not there is a deal, the UK Government has stated that there will definitely be customs controls at the border. However if a deal is struck, it should mean that the flow of goods across the border will be a little smoother than it will otherwise be and tariffs should be lower or possibly even non-existent.
Will Costs Go Up?
As of 1st January 2021, the cost of most items imported into the UK will probably go up for one or both of the following reasons:
- The imposition of import duties on imported products and raw materials
- An increase in transport costs due to new customs formalities and longer transit times
What Will Import Duties Be if There is No Deal?
The UK Government has published a new UK Global Tariff which takes effect from 1st January 2021. This is not set in stone yet, but in the absence of a trade deal, the table below gives you an idea of the level of import duties that will be applied to different categories of imported products.
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8% |
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0% 8%+ |
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8-10% |
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0-10% |
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20% + |
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2% |
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0% 8-20% + |
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12-20% |
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25% |
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20% + |
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6-8% |
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8% 20% + |
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0-6% 12% |
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6-8% |
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6-8% |
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8% |
Will Brexit cause problems with stock availability?
In the short term, yes it will for a number of reasons as under:
- Most importers, including Keylink, will be trying to stock up in November and December and the resulting congestion will inevitably cause some delays
- Many manufacturers are already struggling to cope with demand in the face of Covid-related distancing regulations and absences
- When new customs controls come in on 1st January, this is again likely to lead to big delays at border crossings while everyone struggles to adjust to the new environment.
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Should I stock up? We will do our best to maintain good levels of stock at all times but if there is chaos at the ports or panic buying in December, then we could be faced with stock shortages and no way to replenish our stocks quickly. Our recommendation is that if at all possible, you should plan to gradually build up your stock levels over November and December. If you leave it all to the last minute, we may not have what you need! If you plan to place any exceptionally large orders, over and above what you would normally order, we ask that you place those orders by Sunday 15th November. As many of our suppliers are setting their own cut-off dates for pre-Christmas delivery, we will need to know your requirements by then to ensure we can get the stock in for you. Thank you in advance for your cooperation with this! |
What if I am in Ireland or another EU country?
We very much hope to continue providing you with the same service as always! Our only request is that you try to avoid placing an order in the first few weeks of January to avoid the inevitable delivery complications and delays during the ‘settling in’ period.
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What new opportunities might arise? Consider a 100g bar of chocolate. If it costs £2 now to import, it will go up by 8%, or 16p.Now suppose that same bar of chocolate costs you £2 to make, of which the chocolate cost (ingredients) is only £0.60, the rest being labour, packaging and overhead. Your production cost will only go up by around 5p. So, producing a chocolate bar in the UK will become more competitive than importing it, relatively speaking. |
I hope this newsletter has been helpful in shedding some light on the likely impact of Brexit. But as always, if you have any questions or concerns, please do give us a call and we’d be happy to help in any way we can.
With best wishes,
NB. Please note that all the information given above is given in good faith and represents our understanding of the situation at the time of writing. In the event of a meaningful trade deal, it is quite likely that much of this guidance will have to be updated
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