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CNBC
2 days ago
- Business
- CNBC
Brexit made businesses abandon the UK. Trump's hefty EU tariffs could bring them back
In 2016, the U.K.'s vote to leave the EU prompted many businesses to shift operations to the European continent, taking investment and headcount with them. Fast forward to 2025, and the specter of U.S. President Donald Trump's 30% trade tariffs on the EU, which will kick in on Aug.1 unless a trade deal is reached, could bring them back. "The U.K. could be a big indirect winner" if the threatened U.S. duties on the EU become a reality, according to Alex Altmann, partner and head of the German desk at London-based accountancy and business advisory firm Lubbock Fine. "If the tariff rate for the EU finally ends up anywhere near this 30% level then the U.K.'s much lower U.S. tariffs would offer a major incentive for EU companies to shift some of their manufacturing to the U.K. or to expand their existing U.K. facilities," he noted in emailed comments. "The U.K. has a lot of spare manufacturing capacity after Brexit. A big gap between U.K. and EU tariffs would be a major opportunity for the U.K. to regain some of its lost status as a key European manufacturing hub," added Altmann, who is also the vice president of the British Chamber of Commerce in Germany. As things stand, the U.K. has already struck a trade deal with the U.S. that reduces duties on cars to 10% and grants it the lowest duty on steel imports. London also has a "reset" deal with the EU, after the Labour government under Prime Minister Keir Starmer — who was opposed to Brexit — carved out a trade agreement following years of post-referendum acrimony. The sweet spot the U.K. now finds itself in comes after several years of uncertainty and angst for businesses, as they've tried to navigate a post-Brexit world of more red tape and barriers to export. That's been an ongoing gripe for exporters, given that the 27-country EU remained the U.K.'s largest trading partner after Brexit was finally enacted in 2020. The EU accounted for more than 50% of Britain's foreign trade in goods in 2024, according to the European Commission. A number of big businesses, and particularly financial services firms such as Goldman Sachs and JPMorgan, sought to avoid the transnational regulatory complexities of the post-Brexit landscape by relocating operations and assets to other financial hubs in the EU, such as Dublin, Paris, Amsterdam and Frankfurt. The exodus was ultimately not as dramatic as was initially feared. Supporters and critics argue over the merits and disadvantages of Brexit and the divorce from the EU's single market and customs union, as well as the free movement of goods and people that came with EU membership. Yet most economists agree that Brexit dented U.K. exports, jobs and economic growth. The Office for Budget Responsibility, the U.K.'s independent forecaster, estimates that exports and imports will be around 15% lower in the long run, compared to if the U.K. had remained in the EU. Although economists argue over the impact on the wider economy, it's generally agreed that the U.K.'s GDP is around 5% lower than it would have been, had Britain not voted to leave the bloc. While the U.K. is reveling in its newfound harmony with its American and European business partners, the extent of any windfall that comes as a result of the EU's trading pain with the U.S. remains to be seen. It remains unclear whether Trump's planned 30% tariff on the bloc will actually go ahead on Aug.1. The U.S. president's mercurial nature means the ultimate levy rate could go higher — he previously threatened a 50% tariff — or lower, toward the baseline 10% level that the EU is pursuing. Not everyone agrees that the U.K. could benefit from trade misfortunes that befall the EU, whatever the outcome of last-ditch talks between Brussels and Washington. "First of all, the 30% tariffs for the EU, they're not a given," Carsten Nickel, managing director at Teneo, told CNBC last week, pointing out that any potential post-tariffs shift in business investment from Europe back to the U.K. would be unlikely to happen quickly. "If we were to talk about moving production facilities from Europe to the U.K. because the U.K. has a deal with the U.S. — the time horizon for that is a multi-year, if not decade-long, kind of time horizon," he said. In addition, Nickel noted that the U.K.'s strength remained in financial services rather than in manufacturing, which remains more prevalent in export-oriented countries like Germany and Italy. "The reality is that the U.K.'s comparative advantage is not in high-end manufacturing ... so the idea that you're going with this stuff that you're currently producing in, say, Germany and Switzerland, and you're moving that to the U.K. tomorrow ... it's just not a decision that that a business leader in Europe can take just like that," Nickel said.
The Independent
26-06-2025
- Business
- The Independent
Bank governor flags signs that employment tax hikes are hitting pay and jobs
Bank of England governor Andrew Bailey has cautioned over growing evidence that employment tax hikes are hitting pay and jobs rather than leading to price hikes, but said there is greater 'uncertainty' over the outlook for inflation. Speaking at the British Chamber of Commerce annual conference in London, Mr Bailey said firms are responding to the national insurance contributions (NICs) rise for employers in April. He said while it could see firms pass on the higher wage bills to customers through prices, 'I am beginning to hear a bit more evidence of adjustments through pay and employment'. However Mr Bailey said the recent spike back up in inflation, which stood at 3.4% in May, 'introduces some further uncertainty into the near-term outlook' for price rises. He said policymakers still need to 'squeeze out' stubborn inflation, with recent surges in food costs in particular being watched by the Bank closely. The Bank held interest rates at 4.25% earlier this month, having voted for a cut in May. Mr Bailey said: 'While the significant progress we have made on disinflation has allowed us to cut Bank Rate, we retain a restrictive monetary policy stance to squeeze out remaining persistence in inflationary pressures.' Many economists expect the Bank to cut again in August when it will have its next set of quarterly forecasts. Mr Bailey added: 'Overall, interest rates remain on a gradual downward path. 'But monetary policy is not on a pre-set path, and at the June meeting, there was not a strong enough case to cut Bank Rate. 'As we meet for our August meeting in a few weeks' time, we will assess the situation afresh.' He said there are signs Britain's labour market is cooling, after recent official figures showed the number of people on payrolls dropped by more than 100,000 during May. 'The labour market has been very tight in the past few years. But we are now seeing signs that conditions are easing,' he said. While wage growth continues to outstrip inflation, Mr Bailey said the 'latest data on pay settlements and pay expectations point to a significant decline in wage growth in the year ahead'. But 'normalisation' of salary growth 'still has some way to go' in helping inflation get back to the Bank's 2% target, according to Mr Bailey. He also said that following a strong start to the year for the economy, the Bank believes 'the UK economy will grow at a more moderate pace over the coming quarters'.
Yahoo
28-05-2025
- Business
- Yahoo
UK companies shift focus from EU exports amid trade challenges
The number of UK businesses exporting solely to the EU dropped by 19% in 2024 to 14,300 from 17,800 in 2023, according to Lubbock Fine, a London-based chartered accountancy firm. Meanwhile, businesses importing and exporting exclusively to non-EU countries rose by 12% to 132,000. This shift highlights the impact of post-Brexit regulatory changes and recent trade agreements. Alex Altmann, partner at Lubbock Fine and head of the firm's German desk, noted that the decline in EU-focused exporters underscores the significance of the EU/UK trade agreement signed on 19 May 2025. The agreement aims to reduce veterinary checks on plants and animals transported from the UK to the EU, potentially easing some trade barriers. The trend of UK businesses moving away from EU trade is attributed to fears of red tape and regulatory divergence since Brexit. Altmann, also the vice president of the British Chamber of Commerce in Germany, said: 'The paperwork involved in trading with the EU has pushed many UK businesses away from their largest export market. Let's hope that the May 19 agreement is a first step in reducing red tape. The problems caused to UK businesses by Trump's tariffs shows that the EU will remain a key market.' The regulatory divergence is exemplified by the introduction of the UKCA safety mark, replacing the EU's CE mark. The change, along with increased customs inspections, has added to the challenges faced by UK exporters. Altmann said: 'More regulation means more paperwork – which is time consuming and expensive for businesses. On top of that, slow movement at the border causes delays for customers. 'UK exporters often find client relationships have been damaged to the point where their customers find alternative suppliers within the EU.' The recent UK-EU trade deal, while a positive step, leaves several issues unresolved. Altmann pointed out its narrow focus, which primarily addresses fishing and food exporters, leaving out significant sectors like manufacturing and professional services. 'These sectors account for a large portion of UK exports so they should really be a priority for the Government. What is also needed is a long-term commitment by both parties to streamline regulation. This will reduce business uncertainty and increase investor confidence – both of which will contribute to sustainable growth,' he explained. "UK companies shift focus from EU exports amid trade challenges" was originally created and published by International Accounting Bulletin, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Sign in to access your portfolio
South China Morning Post
21-05-2025
- Business
- South China Morning Post
British firms in China lament burdensome environment, but commitment to market remains
For the fifth straight year, more British businesses report that doing business in China has become increasingly difficult. And they are once again calling for a more favourable policy environment where 'rules that are clear, fairly enforced and consistently applied', according to the latest position paper by the British Chamber of Commerce in China. As political disputes threaten to upend the global economic order, China also has an opportunity to distinguish itself if barriers can be removed, the chamber said. And despite the challenges they are facing, British firms 'continue to demonstrate substantial engagement with, and commitment to, the Chinese market'. For British firms doing business in China in the past year, there has been a growing sense of unease around regulatory opacity, rising compliance costs and complexities, geopolitical uncertainties and a perceived depreciation of foreign firms in China's evolving industrial policy, the chamber said in the paper published on Wednesday. The trend now reflects deeper structural and geopolitical concerns far beyond the lingering effects of the pandemic in the early 2020s that centred on travel restrictions and logistical disruptions. 01:26 China's Xi doubles down on self-reliance, rallying officials to bolster manufacturing China's Xi doubles down on self-reliance, rallying officials to bolster manufacturing Meanwhile, the percentage of firms feeling confident about China's long-term outlook has declined, year on year, even as many continue to see opportunity, the report said. Compounded by escalating tensions between China and the US – including technological decoupling and national security disputes – many British firms now find themselves caught between the competing superpowers and are delaying investments not just in China, but globally with any China exposure.
Western Telegraph
27-04-2025
- Business
- Western Telegraph
Hayscastle's Hywel George in top 10 Africa business leaders
Hywel George from Haycastle established a consulting business in Kenya five years ago. He said: "It was initially a project to help raise funds for a Maasai girls' education programme we established in response to a film exploring the lives of girls growing up in Maasai land. "But the company grew rapidly - at one time being described by the British Chamber of Commerce in Kenya as the 'fastest growing British company in the country.'" Griot Consulting Kenya Ltd, employing 25 people in East Africa, delivers social impact investment projects, linked to the creation and sale of carbon credits. The company has taken more than 1,000 water boreholes into management since 2020, ensuring the delivery of clean drinking water to at least half a million people living in rural poverty. It is also re-establishing mangrove forests along the Kenyan coast. This is made up of 100 hectares in Kilifi County and 1,200 hectares in the county of Lamu. Mr George's achievements have been recognised in the April edition of African CEO Magazine.
