Given a choice at the start of the year, few people would have complained if Brexit disappeared from the headlines. However, nobody would have wished for a pandemic to replace it, especially one which would take such a heavy toll in terms of human life and economic activity.
International trade, already beset by concerns over Brexit uncertainty, suffered along with most other sectors. According to the latest figures available from the ONS, in the three months to May exports fell by nearly 30% while imports dropped by just over a quarter. The disruption prompted some companies to reassess their supply chains and consider switching to suppliers closer to home.
As the spread of the coronavirus has slowed, Brexit has risen back up the agenda and the government has switched part of its focus to securing a free trade deal. Talks between the UK and EU resumed in April, but the deadline of 30th June to agree an extension to the transition period passed without any conclusion. Negotiations have continued since, and both sides have hinted at making concessions. Various sticking points remain though, particularly the level playing field in terms of state aid, fishing rights and how to manage the Northern Irish border.
Meanwhile, the domestic economy started to recover as lockdown restrictions eased. Growth returned in May, although at a slower pace than expected, and business activity increased in July for the first time since the start of the year.
While Brexit and the pandemic have both weighed on international trade, the long-term implications are likely to be different. As the world gets to grips with the coronavirus and the global economy restarts, at least some of the damage caused by the pandemic may be reversed. However, we’ll be stuck with whatever shape the eventual free trade agreement with the EU takes, or in the worse-case scenario a no-deal Brexit.
Brexit uncertainty seems set to continue for the time being. The Prime Minister didn’t manage to conclude a deal by his self-imposed deadline of the end of July. The next round of talks started on 17th August with the deadline for an agreement pushed back to coincide with the EU’s October summit.
Trying to predict how long the pandemic will continue to affect international trade isn’t easy.
Countries such as the UK, Europe and China are further advanced in their economic recovery than the US, although the threat of a second wave lingers.
In the meantime, there are steps you can take to protect your business. In its latest SME Competitiveness Outlook report, the International Trade Centre (ITC), a WTO associated body dedicated to SMEs, provides some useful advice for companies involved in import and export.
It recommends that SMEs build resilience to help weather a crisis like the pandemic. This involves diversifying suppliers and sales channels and building up cash reserves. Other measures include embracing digital platforms such as video conferencing, ecommerce and online payments, which helped many sectors survive lockdown.
You should also make sure you take advantage of government support like the Coronavirus Business Interruption Loan Scheme (CBILS) while they’re still available. Here at Swoop, we work with all the lenders so we can help you increase your chances of securing funds by matching you with the right one.
To find out more, get in touch with Swoop today.