Hot Topic

EU reset

The UK’s business groups have welcomed the EU-UK reset deal announced in May. The deal does represent a significant breakthrough in ties between the EU and UK and improves the trading relationship between the two while still allowing the UK scope for pursuing trade deals with other nations.

However, it dismantles a fraction of the trade barriers erected post-Brexit and the business groups have called for further progress in certain areas, notably youth mobility. In this Hot Topic we look at the deal and the business reaction to it.

Reducing red tape

The deal will make it easier for British food and drink to be imported and exported as it reduces red tape for businesses which have led to lengthy lorry queues at the border.

Some routine checks on plant and animal health, or sanitary and phytosanitary standards (SPS) will also be removed completely, allowing products like British sausages and burgers to be sold back into the EU again.

A new security and defence partnership paves the way for the UK defence industry to participate in the EU’s proposed new £150 billion ‘Security Action for Europe’ defence fund.

British holidaymakers will be able to use more ‘eGates’ in EU airports rather than having to have their passports physically checked when they travel to the continent, reducing lengthy queues.

Fishing concession

The key concession made by the UK was an extension to the agreement on fisheries by 12 years. This will be a big disappointment to some fishing communities, concerned by an encroachment of rights. However, exports of fish to the EU have fallen by 29% over the course of just a few years and the SPS agreement is likely to help reverse that loss.

Long time coming

Although the government came under fire from some opposition parties, the UK’s business groups responded positively to the deal.

Emma Rowland, Trade Policy Advisor at Institute of Directors, said: ‘The reset of relations between the UK and EU has been a long time coming. Our own research shows that an improved trade deal with the EU is seen as one of the top three factors that would help boost UK growth. Today’s announcements will provide British businesses with relief that some barriers to trading with our closest and largest trading partner will come down.’

Fought hard

Shevaun Haviland, Director General of the British Chambers of Commerce, said: ‘For four years, businesses have fought hard to sustain sales to the EU in the face of a rising tide of costs and paperwork which has severely dented their competitiveness. 

‘A permanent deal to remove unnecessary checks on food and drink exports in both directions is a huge boost; it will cut costs, reduce waste and increase sales.’

Valuable overseas trade

Tina McKenzie, Policy Chair of the Federation of Small Businesses, said: ‘For too long, small businesses have shouldered the burden of unpredictable custom rules and red tape that sap confidence and ambition. 

‘Of course, this deal does not solve every challenge overnight, but it sets a very welcome new tone.

‘International trade is so valuable – firms selling to overseas markets grow faster and are more likely to weather tough times. It is therefore vital that the spirit of this progress is not allowed to unravel.’

Work must not stop

Rain Newton-Smith, Chief Executive, of the Confederation of British Industry, said: ‘The work must not stop here: making the most of this opportunity means not just resetting the relationship but futureproofing it. With the EU as our largest trading partner, continued cooperation will unlock the investment needed to drive growth, protect jobs, and raise living standards.

‘The bleak global trading environment - from escalating geopolitical tensions to sluggish growth - has underscored the importance of deepening ties with trusted, like-minded partners. Looking ahead, continued progress on business travel and youth mobility can help give more momentum to the government's sustainable growth mission.’

Beneficial schemes

Kate Nicholls, Chief Executive of UKHospitality, said: ‘The new agreement with the EU to remove trade barriers is positive news for hospitality businesses and will help to further increase access to high-quality, affordable food and drink for business and consumers alike.

‘We’re pleased that there is a clear commitment to co-operate further on a youth experience scheme.

‘These schemes are beneficial for those already working in hospitality, tourism and other cultural sectors to live and work in either the UK or EU. Not only does it provide economic benefits, but it also provides new opportunities for critical cultural exchange, which ultimately delivers richer experiences for customers.’