The UK companies seeing the upside of Brexit

As many UK ports struggle with delays and falling trade after Brexit, in Liverpool Stephen Carr is hiring 150 dock workers. “We are at 80-90 per cent capacity at the moment and growing,” said Carr, the commercial director of Peel Ports, which counts Liverpool as one of its UK shipping hubs.

The Covid-19 pandemic and new border controls with the EU have upended business models across the continent and the economic impact is starting to be felt. Fish and meat have been left to rot because of delays and complicated paperwork. Many companies have stopped delivering to and from the UK because of increased charges.

Economists predict leaving the EU will reduce the UK’s prosperity but, amid the disruption, opportunities are available, argues Mark Gregory, UK chief economist of EY, the professional services firm. “Brexit is a process not an event and the winners and losers will only become clear over time.”

Liverpool, the UK’s fifth biggest container port, in north-west England, is one of the early winners, gaining traffic from southern rivals as logistics companies try to avoid congestion at the busier Channel crossing points.

In recent months three new services into Liverpool have started, following investment of more than £400m. One brings unaccompanied containers from Santander in northern Spain weekly. “That would have driven through France and gone across the Channel before,” said Carr.

Another has won transatlantic freight trade, destined for northern England, from the congested southern port of Felixstowe. Rather than risk delays there, shippers load it on to a smaller vessel that stops at Liverpool.

The third is Liverpool’s first link with east Asia in decades. Shipping line CMA CGM stops in Dunkirk to offload containers and collect others from northern France and Belgium before heading to Liverpool.

Some EU retailers have also decided to hold more stock in the UK to ensure they can guarantee delivery times amid border delays. One UK logistics operator, who declined to be named, said it was opening warehouse space for EU clients. “We are working with a Polish company,” it said. It holds stock and delivers for EU customers in the UK, while its Polish counterpart does the same in the EU, limiting border crossings.

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“There will be a lot of these partnerships,” it said. 

Gareth Fry of Statiflo, which has moved its warehouse from Europe to Macclesfield © Mark Waugh Manchester Press Photography Ltd

Some manufacturers have reshaped their operations to make the most of the changed trading environment.

Statiflo, a maker of static mixers used in the water and other industries, has switched its warehouse to supply countries outside the EU from Germany to its Macclesfield base. “We could have built up our German operation but we have the expertise in the UK,” said Gareth Fry, managing director. It exports to more than 80 countries and is used to dealing with customs paperwork. “The problem is that companies who only sold to Europe were not really exporting. They don’t know what to do now,” Fry said. 

West Midlands engineering company Brandauer has benefited from the drop in the pound © Daniel Graves

For Brandauer, a 160-year-old family-owned engineering company, the drop in the pound caused by Brexit has boosted overseas demand for their products. The Birmingham-based firm expects to grow beyond its pre-pandemic size this year and is recruiting.

“We have won business in France, Netherlands and Germany recently,” said Rowan Crozier, chief executive. “We have not lost a single EU customer.”

Brandauer, which makes precision components which go into cars, razors, medical devices and the Large Hadron Collider in Cern, exports 75 per cent of its output.

Bar chart of Investment projects in previous three years, change from 2015 to 2019* showing Some UK sectors have seen more interest from European investors

EY’s Gregory said he expects manufacturers will shift production for the UK into the country, while they shut operations that are part of EU wide supply chains. So even as EU overall inward investment dropped in the four years after the June 2016 Brexit referendum it increased in some sectors as companies prepared to make products in the UK for the British market.

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“There is likely to be growth in UK investment in sectors such as food and advanced manufacturing as supply chains shift in response to the new trading requirements while export-oriented sectors such as automotive and financial services could well experience capital outflows,” he said.

Inevitably, given the extra red tape and paperwork associated with the EU-UK deal agreed by the two sides on Christmas Eve, one big growth market is bureaucracy

Line chart of Investment projects in and out of the UK (with the EU) showing UK investors open operations in the EU ahead of Brexit

Watford-based accountancy firm Hillier Hopkins became an accredited customs agent after the government said UK businesses would need to make 255m customs declarations a year, up from 55m before Brexit. 

Ruth Corkin, a former HMRC staffer, used government funding for training and has now employed an apprentice to help. “We could see there would be a market,” she said. She added that the software needed to fill in declarations was too expensive and complicated to operate for small companies so her service was vital and getting busier.

HMRC’s Customs Declaration Service (CDS) is difficult to access by businesses and is still being developed. At the moment the old Chief system is being used for most transactions and can take between three and 12 months to register and secure the software needed.

“It is so time-consuming. If it carries on like this I will have to reduce my VAT work. That will mean hiring someone else,” added Corkin.

Simon Hart, international lead partner at RSM, the accountants, said he expected the system to bed down. “We are going to have to get used to more paperwork. If you are best in class people will come to you regardless of whether they have to fill out some paperwork,” he said.

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Opportunities and headaches — how one firm has taken advantage of Brexit red tape

Ruth Corkin has more than 30 years of experience in VAT calculations and tax returns but the new customs system is the hardest thing she has dealt with.

It recently took her a day to fill in the online forms to send a van full of motorcycle spare parts from Romania to her client in Hertfordshire. 

She outlined the costs involved, many of which are now passed on to small traders. Software to connect to the HMRC system can cost from £500 a month to nearly £5,000 per month, plus extra for each declaration filed. To bring goods to some ports you also need to pay for a “badge” to access their container inventory system. That costs £1,000 per port annually, though Dover does not charge. 

Before the van left Romania it had to file a customs declaration in Romanian so the supplier had to pay a local agent. 

“I then filled everything in and got a red light. It told me I needed a preference certificate. I know from my training that you don’t need a preference certificate. 

“You then have to put the name and International Maritime Organisation number of the ferry you are going on. I knew it was a DFDS at the time so I googled and found it.” 

After the connection to HMRC’s Customs Handling of Import and Export Freight (Chief) system cut out several times she finally filed the declaration.

“Next morning at 9am the customer called saying the goods had turned up at the client’s address without the declaration being received by the client from the system. They were stunned,” she said.



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