28 Oct 2020
By Richard Muir, Deputy Chief Executive of Glasgow Chamber of Commerce
There is consensus that where there is strong connectivity commerce will follow and flourish. This concept dates back to the Silk Road, the trade route which connected East and West and was central in developing economic, cultural and political interaction from the second century BC until the 18th century.
Roll forward to 2020 and it’s hard to remember a time of greater business uncertainty, with connectivity from Scotland to the world, including our near neighbours in Europe, under real threat.
Combined with the challenges of the pandemic we are potentially sleepwalking into further uncertainty, with a no-deal Brexit scenario and its consequences more likely by the day.
Manufacturing SMEs are already having to contend with strains on their supply chains as well as a significant drop in demand during the Covid-19 crisis, with 60 per cent experiencing problems, according to a survey by the Manufacturing Growth Programme. A poll of more than 1,000 businesses on a recent British Chambers of Commerce Brexit webinar revealed that with less than 70 days until the end of the transition period, only 10% were confident they were ‘fully prepared’.
A no-deal scenario will result in WTO Rules applying to the EU, with tariffs payable on some goods, Rules of Origin and Export Health Certificates being required, the loss of some continuity trade deals and an estimated requirement for an additional 220 million customs declarations.
Just under half of UK exports and just over half of UK imports involve EU countries, with the EU being the only destination for 180,000 companies who export. With policies such as automatic number plate recognition and checks on lorries arriving at ports in south-east England, connectivity from the UK to Europe is going to be further hampered.
This while air routes have dramatically decreased during the pandemic. Aircraft holds ordinarily carry about 80% of our export goods such as whisky and seafood, but with flight volumes currently at 1970s levels, the threats to international trade are obvious.
So what needs to be done? Firstly we need to do everything we can to protect our connectivity. Where and when it is safe to do so we need to restore routes, with the introduction of mass testing at airports and ports. We must raise awareness among businesses and particularly importers and exporters of the need to put in place customs declaration arrangements and the need for an extensive training programme. We should encourage the use of Scottish ports such as Clydeport’s Greenock Ocean Terminal by importers to avoid the logjam of 7,000 lorries and two-day queues at Dover which was recently forecast by Michael Gove.
Thought should be given to retraining recently-unemployed workers with skills to fill posts required to process millions of customs declaration documents. The launch of initiatives such as the Business Growth Fund Programme by Glasgow City Council will help companies with much-needed business support plans and strategies, including in international trade. Glasgow Chamber has run virtual trade missions for Scottish businesses to China and Italy and welcomed an incoming mission from Bulgaria, and companies are winning contracts and forming joint ventures as a result of the relationships developed on these missions.
More of the same is essential. We must also continue to nurture our network of passionate Global Scots, senior business people happy to share knowledge and contacts with companies in the early stages of their international trade journey.
Despite the challenges of Covid and the Brexit transition period, there are many international trade opportunities if we keep connectivity strong and allow commerce to flow.