The Impact of Brexit on UK Supply Chains

Since the Brexit vote in 2016, businesses within the UK as well as those that deal with them have been mired in uncertainty. The tangible implications of the Brexit vote took years to be revealed as attempts to negotiate a deal with the EU were lengthy and the UK also sought to establish new trade agreements with countries outside of Europe.

Despite the further complications of Covid-19, at the beginning of this year, the UK officially left the EU, with a deal agreed upon in December 2020. Now that we have official legislation surrounding the departure, we will be looking at Brexit’s impact on supply chains in the UK.

Temporary mitigation

The first thing to note at this stage of the UK’s departure from the EU is that the Trade and Cooperation Agreement (TCA) has come with temporary measures to help businesses transition into these new practices with minimal disruption to their operation. This means there are additional deadlines for businesses to make all the necessary changes to fall in line with the new legislation.

In January, the UK left the Customs Union and traders importing standard goods had to begin keeping sufficient records of imports, but safety and security declarations were not yet required. In addition, the UK Global Tariff came into effect for trades with all countries where there wasn’t an EU trade agreement rollover. Exports from the UK to the EU are also now subject to the full EU MFN tariffs.

There are also some upcoming changes of note. The EU Settlement Scheme registration date is the 30th June 2021, which could have implications for the workforce of some UK businesses if any employees are yet to apply for the scheme. On the 1st July 2021, the UK Border Operating Model ends and the full border controls on goods entering the UK will apply.

What could all this mean for UK supply chains?

While each of these changes has tangible implications, such as additional documentation requirements and compliance costs, Brexit could have an additional impact on the way supply chains are shaped going forward.

One such change could be businesses in the UK trying to keep as much of their operation onshore as possible in order to avoid any red tape, extra costs or restrictions on goods being imported from overseas. Conversely, more UK businesses may start looking outside the EU to try and establish new lucrative trading opportunities.

Transparency will also become an essential factor for supply chains. In order to trade with the EU, UK businesses will need to ensure transparency throughout their supply chain so that they can be sure their products are meeting the requirements of the ‘Rules of Origin’ agreement with the EU. This is not just for the finished product itself, but also all the components that went into its manufacture.

Changes to the way products are tested will also affect supply chains. UK bodies will no longer be able to certify products for sale in the EU under the TCA, which means that businesses supplying their products to both the UK and the EU will need to have the products tested and certified by separate regulators.

 

While the UK may have formally exited the EU, some changes are yet to be formally introduced. There will doubtless be further adaptations in the months and years to come, as the UK establishes itself as an independent in the market. The best approach for supply chains is to stay informed of all changes to legislation and to remain proactive and vigilant so that they can capitalise on new opportunities and avoid disruption.

If you are looking for advice on managing your supply chain during these turbulent times, you can take a look at our supply chain solutions.

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