Retailers are among the business groups in Northern Ireland calling for the EU and UK to work together to find solutions to post-Brexit friction – fast. The call comes as recent data suggests the transportation and storage industry has been the hardest hit by Covid and Brexit – with 9.6% of firms in the sector now permanently closed. Meanwhile, garden furniture is reported to be in short supply thanks to these issues plus the Suez Canal closure – and it seems shoppers are turning to secondhand instead.
Retailers calling for Brexit solutions
The Northern Ireland Business Brexit Working Group – which includes the Northern Ireland Retail Consortium and the Northern Ireland Chamber of Commerce and Industry – has called on the UK government and the EU to work together to find “immediate solutions” to the trade friction being caused by the post-Brexit trade agreement, and the Northern Ireland Protocol.
The call comes ahead of this week’s meeting of the Specialised Committee and Joint Committee on the Ireland/Northern Ireland Protocol.
A spokesman for the group says: “We cannot afford another missed opportunity at the Joint Committee as we saw earlier in the year. “We continue to hear that the EU and UK are committed to their assertion in the preamble to the Ireland/Northern Ireland Protocol that they are ‘determined that the application of this Protocol should impact as little as possible on the everyday life of communities in both Ireland and Northern Ireland’, but it undoubtedly is having an impact and will increasingly do so as more stringent requirements come in from October.
“We are heartened by the increased level of engagement that we have had in the past few weeks and months, however, we need to see that our faith in this process is justified by the delivery of solutions. We need to see that not only are we being heard and understood, but that both the UK and EU are willing to work together to deal with the impact of the Protocol.
“We want to ensure that trading arrangements under the Protocol can work to benefit business and communities across Northern Ireland, now and in the future. In order to build confidence in the process, we need some quick wins that will de-dramatise the current situation in Northern Ireland and show communities that they are being heard; but we also need long term solutions designed and delivered in tandem business to keep trade flowing.”
The group says that the protocol has enabled trade to continue to flow, and that farming and agrifood businesses would be much worse off without it. But it also says that solutions are now urgently needed.
Effect of Covid – and Brexit – hitting transportation and storage businesses hardest
More businesses are failing in the wake of Covid-19 in the transportation and storage sectors than in the hospitality and accommodation sector, according to ONS figures. David Jinks, head of consumer research at delivery comparison website ParcelHero, says that’s because of Brexit.
Only 75% of transport and storage businesses were up and running in the second half of May (May 17 to 30), while 9.6% said they had permanently closed, according to the latest ONS Business Insights analysis.
By contrast, hospitality businesses in the accommodation and food services category were more likely to be open (83.3%), while 1.6% had permanently stopped trading, and 85% of arts, entertainment and recreation businesses are open, with 14.3% on a temporary break. And 95.4% of retail businesses are open, with 3.9% on a temporary break. Across business, the ONS figures suggest, businesses are recovering, with 33% of those still trading saying their turnover was down – the lowest level since June 2020 –and 13% saying turnover is up. Some 8.1% of workforces are on furlough leave, down from 19.9% in late January.
Jinks says: “To put the results into context, we might have expected the accommodation and food service activities sector to have been significantly more damaged by lockdowns than transportation and storage. After all, no one was able to go on holiday or eat out for months. That proved not to be the case, however. During the latter half of May, only 1.6% of eateries and hotels reported they had closed their doors permanently; 15.1% remained closed temporarily and 83.3% had resumed trading.”
He adds: “The report is obviously grim news for transport and storage companies. It also strikes a warning note for anyone hoping to see evidence of an economic recovery. The logistics sector is an indicator of the economy. When manufacturers and retailers are doing well, their transport providers are busy; similarly, when UK companies begin to struggle, transport and warehousing is the first sector to show an immediate decline.
“The root of the problem is that freight transport companies are particularly exposed to the impact of Brexit. This is on top of issues caused by the pandemic. It’s extremely concerning that Customs problems have not got any better since Brexit regulations first hit in January.”
Since the Northern Ireland Protocol came into force at the beginning of this year, ONS figures have repeatedly shown that exporters – including online retailers – are sending fewer goods from Great Britain to Northern Ireland since Brexit. The latest figures, covering May 3 to 16, show that 39.2% of exporters are still reporting increased challenges around paperwork and 26.8% around Customs duties, while 8.6% have complained of disruption at the UK borders.
Setting the context
In May, figures from the Office for National Statistics (ONS) suggested that UK trade with EU countries was almost a quarter lower in the first three months of this year than it was three years ago. It fell to the point that it was lower than the amount of trade done with non-EU countries in the first quarter, which also fell.
UK trade – the sum of imports plus exports – with the EU was 23.1% lower in the first quarter of 2021 than it was in the same quarter in 2018, according to the ONS report. And it was 20.3% down compared to the previous quarter – the last three months of 2020 – although the ONS report suggests evidence of stockpiling at the same time, making it harder to see the impact of the end of the Brexit transition period.
At the same time, trade with non-EU countries also fell – by 0.8% compared to the same period in 2018 – but remained at a higher level than trade with EU countries. The chart above shows declines in UK trade both at the start of the UK national lockdown last March, and, more sharply, at the end of the Brexit transition period.
Meanwhile, shortages of garden furniture are reported thanks to factors including the Suez Canal blockage, Covid-19 restrictions – and Brexit.
Secondhand mobile marketplace Shpock says it’s seen a 157% rise in home and garden sales, as shoppers are forced to buy secondhand goods instead – and at the same time cut down on the CO2 emissions related to producing new goods and shipping them around the world.
Iyesha Cheema-Bradshaw, brand and content manager at Shpock says: “In a challenging environment for buyers where summer products are in short supply it is the ideal time to turn to quality secondhand platforms like Shpock. We’ve noticed a sharp increase in garden sales as buyers look towards platforms with a plentiful supply of quality items. It is a sustainable means of shopping and items are typically a fraction of the retail price. The recent introduction of our delivery for bulkier items up to 30kg means even more possibilities for buying garden goods.”
And Hugh Fletcher, global head of consultancy and innovation at Wunderman Thompson Commerce, adds: “Post-Brexit trade arrangements and Covid-19 restrictions have culminated in a perfect storm for business – and none have been impacted more acutely than those in the retail sector. With demand for garden furniture and picnic blankets sky-rocketing thanks to a rise in domestic holidays, there can be only a handful of winners in the competition for goods from overseas.
“What’s more, with social distancing measures still firmly in place, it isn’t just consumers on the hunt for BBQs and gazebos. Hospitality venues up and down the country are creating new spaces outside for their customers to drive sales and footfall over the summer, and domestic consumer supply chains are shouldering the burden.” He says that retailers need to make sure their procurement processes are watertight and that backend systems are properly updated in order to benefit from the post-lockdown boom.