With the Brexit deadline creeping ever closer, the reality of a no-deal situation is becoming increasingly likely. The Institute of Directors has found that 29% of 1,200 firms surveyed had moved part of their business overseas or were planning to do so due to the increased risk to operations in the UK. These precautionary measures have resulted in an estimated £800 billion worth of assets being moved out of the UK according to one report.
New research has revealed that international shoppers boost the UK economy by an average of £1,850 per transaction during their stay here as the UK is crowned second in the EU for tax free shopping. It remains to be seen how this will be affected by the UK’s exit from the single market.
Small and medium-sized enterprises are said to be facing ‘life and death’ situations in which they ‘don’t know what they don’t know’ according to Ready for Brexit boss Paul Hodges. Most will have been incorporated and operated under the single market and as such will be unfamiliar with applicable World Trade Organisation elements. Any long-term contracts pre-dating the referendum are unlikely to provide for a no-deal eventuality meaning extra cost re-drafting and re-negotiating.
Dyson has taken the bold approach of moving over 100 back office jobs overseas as it prepares to relocate its headquarters to Singapore. The company, founded by ‘prominent Brexiteer Sir James Dyson’, has deflected calls of hypocrisy, claiming the move is not due to Brexit but rather in the ‘hopes of building an electric car factory’ overseas ‘amid increasing sales and manufacturing operations in the region’.
More than half of over 2,000 UK consumers surveyed say Brexit will not impact spending habits in 2019. Consumers located in the North East were least concerned with 70% saying their spending would be unaffected while in London 41% said they had already changed their habits with an additional 14% confirming they would do so in 2019. Businesses looking for continued growth will need to tailor their approach to a changing market with Lisa Hooker, head of consumer markets at PwC, stating consumers are becoming more cautious with purchases, ‘shopping around more, buying fewer little luxuries’ and planning ‘to cook at home more’.
According to a report by the Ministry of Housing, Communities and Local Government Select Committee, high street retailers are paying more than their fair share of tax while online retailers are not contributing enough. The committee concluded that the Government needs to level the playing field as MPs push for consideration of an online tax while urging high street retailers to adapt and offer what online retailers could not. Helen Dickinson, chief executive of the British Retail Consortium, has spoken of a ‘damaging and outdated business rates system, which drives up the cost of doing business’ and ‘is a major factor in store closures as well as hindering the successful transformation of our high streets’. However Dickinson does not think raising online taxes is the solution due to retailers blurring the line between digital and physical presence; eight out of the top ten internet retailers also have physical shops.
Another report by Centre for Cities proposes that the secret to saving the high street lies in fewer shops. The report points to knowledge-based office jobs such as those in the legal, marketing or finance sectors as the key to supporting city centres and these should be the focus to replace failed shops. Andrew Carter, chief executive, says: “We must remember that a successful high street is the result, not the driver, of a successful city economy.” An abundance of office jobs creates demand for high street leisure and shopping areas.
As discussions continue on the impact of our ‘fast fashion’ industry, Parliament’s Environmental and Audit Committee, chaired by MP Mary Creagh, has published an in-depth report into how fashion can improve its sustainable and ethical credentials which includes a number of recommendations. One such proposal, aimed at tackling the 1 million tonnes of textiles discarded a year (300,000 of which ends up in landfills) is to implement a 1p tax per garment sold on retailers and producers to go towards better clothing collection and recycling in the UK, with consumers being encouraged to buy less, re-use and repair before they recycle. The report goes on to suggest new business models, greater transparency on how clothes are made and fairer conditions for the worker. It can be read and downloaded in full here.
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