Brexit might have been done and dusted nearly 10 weeks ago but its negative effects on the retail industry are still emerging with a new forecast that leaving the EU will create a £5.25bn “black hole” in ecommerce sales.
Earlier this week, it was revealed that Brussels has threatened to take legal action against the UK over its unilateral decision to extend the grace period covering new checks on parcels and food shipments to Northern Ireland.
The European Parliament has also postponed setting a date to ratify the Brexit trade deal, with some MEPs warning it may never be passed if the UK continues to make up its own rules.
The UK move means there will now be no new checks on supermarket goods, parcels or medicines moving from the UK to Northern Ireland for six months, as part of plans to help businesses adapt to the new rules, including the controversial “proof of origin” measures.
But a new study from delivery company ParcelHero claims that increased red tape and duties mean UK traders could face a 35% drop in sales of products sourced overseas, opening up a £5.25bn black hole due to lost trade and increased costs.
The report examines just how great the impact of Brexit may be on UK traders and the damage that could be created by the unravelling of Northern Ireland customs plans.
ParcelHero head of consumer research David Jinks said: “The Government’s Brexit rollout is going to hell in a handcart. The Prime Minister must return to the negotiating table to sort out the escalating issues facing the UK’s beleaguered retailers.
“[Our] report reveals that the crisis around ‘proof of origin’ – where exactly an item was made and sourced – means 35% of UK retailers and traders importing from the EU are experiencing major problems. As the crisis unfolds, it’s likely we will see a corresponding 35% drop in ecommerce imports, which will cost UK importers £5.25bn in higher prices on goods, lost sales and border fees.
“To add to Britain’s Brexit woes, the Government is now facing legal action by the EU after it unilaterally decided last week to extend the grace period on parcel checks and agri-foods at Northern Ireland borders until October. Under the terms of the Northern Ireland Protocol, the region remains a part of the EU’s single market for goods. Parcels arriving from Great Britain were due to undergo EU import procedures from April 1.”
Jinks branded the introduction of new checks and potential tariffs on parcels sent within the UK itself “ludicrous”, adding that Government is simply kicking the problem into the long grass.
He concluded: “In the case of both EU-UK ecommerce imports and Great Britain-Northern Ireland parcel shipments, the big problem is new tariffs on products originating outside the EU or UK. Clothing valued at over £135 is likely to incur tariffs of around 12%, for example. This is certainly not free trade. Axing this requirement would eliminate the need for checks on the majority of parcels and resolve most of the areas of disagreement between Britain and the EU.”
UK retailers axe deliveries to EU over extra Brexit costs
Specialist online retailers pull the plug on UK deliveries
Five golden rules of devising an ecommerce strategy
Decision Marketing at 10: The next 10 for ecommerce
Two-fifths of Brits vow never to return to the high street
Agile not fragile: Checking out the new retail landscape