UK Continues Preparing For No-Deal Brexit After Boris Johnson Takes Charge

UK companies are getting ready for a no-deal Brexit even though the new prime minister, Boris Johnson, has indicated he would try to renegotiate the withdrawal agreement with the European Union

BRUSSELS (UrduPoint News / Sputnik - 06th August, 2019) UK companies are getting ready for a no-deal Brexit even though the new prime minister, Boris Johnson, has indicated he would try to renegotiate the withdrawal agreement with the European Union.

At the same time, Johnson has stressed that the United Kingdom would have to leave by October 31, whatever the circumstances are, and Brussels has reiterated it does not want to reopen negotiations on the withdrawal deal.

Johnson himself remarked in his first speech in the parliament as prime minister that the United Kingdom was not as ready as it should be.

At the moment, no import or export tariffs are imposed on most goods trading inside the bloc. If the United Kingdom leaves without a deal, it will have to use the World Trade Organization's rules for its trade with the European Union. This could mean a return to tariffs and customs checks, slowing down trade.

The government before Johnson suggested cutting up to 87 percent of import tariffs in case of a no-deal Brexit to protect consumers. However, zero tariffs on imports would make it difficult for UK businesses to compete and might undermine the country's position at future trade negotiations. The plan was to leave the tariffs for the most sensitive areas of the economy, including some agricultural products.

The UK economy is linked to the rest of the bloc by multiple threads of goods, services and jobs that will be difficult to sever or replace. Furthermore, the impact will be felt beyond the United Kingdom. The Association of German Chambers of Industry and Commerce said in a 2018 survey that about 750,000 jobs in Germany depended on trade with the United Kingdom.

"A theme which has come up repeatedly in the Brexit debate is that 'Europe needs the United Kingdom more than the contrary.' It is based on the fact that the European Union sells much more to Great Britain than the opposite, which is true," Eric Dor, the economy professor at the Lille school of Management in the University of Lille, told Sputnik.

Dor stressed that the UK market was important for the country's trade partners in the European Union.

"The United Kingdom is very exposed in the event of disruption to trade relations with the European bloc, but the impact on the European Union and several of its most important economies would also be very significant.

So, Europe does not need the United Kingdom more than the contrary. A trade war would be very detrimental to both," Dor said.

A no-deal Brexit may hit UK businesses hard, but uncertainty over Brexit is a problem in itself.

"The Withdrawal Agreement was a compromise, but it was a positive step towards much needed business certainty," Tom Sallis, a spokesperson for the Scotch Whisky Association, told Sputnik.

The spokesman for the association stressed that a no-deal Brexit, "particularly in the run-up to a busy festive period at Christmas-New Year," would be very disruptive.

"The substantial costs the industry has already incurred in no-deal planning is money that could have been spent more productively in stimulating economic growth and boosting exports," Sallis said.

SPECIAL NUMBER TO TRADE WITH EU

Under the government program of preparation, businesses trading with the European Union will need an Economic Operator Registration and Identification (EORI) number. The companies that trade with counties outside of the bloc already have one.

Chuka Umunna, the Treasury and business spokesman for the Liberal Democrats, said recently, as quoted in the Guardian newspaper, that only 66,000 out of 245,000 businesses that need the number had acquired it. According to Umunna, "an overwhelming majority" of the companies that export to the bloc are not prepared for a no-deal Brexit.

For UK business owner and exporter Lance Forman, of H. Forman & Son, who owns a salmon smokery and employs 100 workers, "it is grossly exaggerated."

"Leaving the European common market is a great opportunity for British business. As for the documents that the export companies need to get if they want to continue exporting to the European Union, this is not that complicated. Getting an EORI number can be done online, on the website of the ministry. The procedure is simple, clear and free of charge," Forman told Sputnik.

Lance Forman has become a Member of the European Parliament (MEP) for the Brexit Party at the last European election. His career as an MEP may turn out short-lived since the British delegation will leave the EU Parliament if Brexit becomes reality. However, Forman intends to show the resilience of his company on the global market. His businessman's fighting spirit is intact.