MAKING A SUCCESS OF BREXIT
The overriding objective of UK retail is to keep prices low for consumers. Leaving the EU may present some challenges to realising that objective if tariffs and customs red tape are applied to the UK's trade with the EU. Therefore, UK retail's top priority for the forthcoming Brexit negotiations is to secure an agreement that will allow two-way duty-free trade to continue.
Domestic retail supply chains, especially food supply chains, rely upon access to non-UK labour and restrictions to accessing this labour may undermine the ability of these supply chains to meet retailers' requirements and consequently consumer demand. In addition, retail itself employs 120,000-200,000 EU nationals. Retailers believe that it is right that these valued colleagues are given the earliest possible assurance that they will continue to have the right to stay and work in the UK.
UK retail is affected by EU regulation, ranging from consumer information, through environmental protection, product safety, competition law and health and safety in the workplace. Transferring responsibility for these areas from the EU to the UK promises to be a complex and resource intensive process. As far as possible, the government should indicate how it will handle this process and restrict itself to making only those changes to regulation that are strictly necessary in order to make any regulation "work" in the UK. In particular, the government should resist the temptation to make substantive changes to regulation until the process of transferring responsibility has been completed.
Leaving the EU may have implications for the UK's trading relations with other countries. Whilst in the longer term there maybe opportunities to open up new trading relations, the immediate priority will be to ensure that the benefits of the EU's existing preferential trading agreements are still available to UK firms post-Brexit.
It will be an enormous challenge for the UK to negotiate a duty-free deal with the EU, and put in place effective customs procedures within the 2 year time frame envisaged by Article 50. The immediate imposition of tariffs and paperwork, particularly on perishable products, would create complexity and cost at borders. Every effort must be made to avoid that. Therefore, the government should give serious consideration to the need for transitional measures that will help smooth the path of Brexit and ensure that UK firms and consumers are not adversely affected.
For retail at the CBI, contact: Polly Haydn-Jones on 0207 395 8182 or Polly.HaydnJones@cbi.org.uk