There are serious concerns that new trading barriers thrown up by Brexit could see some UK food manufacturers and their staff relocate to the EU.
The concerns were raised in a recent report by the Environment, Food & Rural Affairs Committee which highlighted the impact of strict new trading rules on exporters of fresh seafood and meat to the EU.
But does setting up an EU base offer a solution to food manufactures that are struggling with Brexit red tape and costs? Or do the drawbacks outweigh the potential benefits, particularly for small and medium-sized businesses?
The pros of being in the EU
There’s no doubt that having a physical presence in the EU means far less paperwork to deal with and fewer costs for UK exporters.
There are no customs formalities and declarations in the Eurozone to hamper cross-border trade and you don’t have to prove where your goods originate from to enjoy tariff-free trade. That means fewer delays at ports and less risk of food products spoiling in the back of stationary lorries.
Another big benefit of being in Europe is not having to register for VAT in different countries – one is usually enough – and there are no complicated sanitary and phytosanitary (SPS) checks to slow things down.
Being closer to your EU customers also means being able to provide a more efficient service. They don’t have to worry about onerous customs procedures if they import from you, or customs duty and import VAT.
The cons moving to the EU
But moving operations to the EU is not a viable solution for every business and the set-up costs associated with relocation are likely to be considerable. Then there are the costs and disruption associated with moving employees out of the UK, or hiring new staff from within Europe.
Relocation also means getting your head around complicated foreign rules and regulations for setting up in the EU. These can differ from country to country which can make things confusing.
If setting up a base in the EU isn’t feasible for you, there are other ways to reduce costs when exporting from the UK. Try consolidating goods in one weekly shipment, for example, rather than export items daily to reduce costs and minimise delays.
It’s always a good idea to work with well-established freight agents and carriers who know the ropes and can deal with customs procedures efficiently.
Having direct access to millions of EU consumers and businesses, and the promise of hassle-free trade, makes relocation an attractive option. But this shouldn’t blind you to the potential drawbacks of setting up operations in Europe.