Trading with the EU Post Brexit
By Astrid Geeraerts Head of Investment at Flanders Investment & Trade in the UK
We’re now more than two years on from Brexit rules taking effect (1st January 2021). Sadly, almost a third of UK companies, suffered a decline or loss of business. How have others successfully risen to the challenge and even used it to expand their business? What lessons can we learn from the first two years? At Flanders Investment & Trade we have been working closely with many UK companies and helped them manage the challenges.
Brexit presented traders with three main challenges:
- Managing the new regulations in multiple EU countries -. Many British traders quickly decided that an effective way of managing the new bureaucracy was to lessen the burden by setting up a base within the EU. In practical terms this meant that the trader only needed to enter the bloc once and manage that entry, rather than trying to manage multiple different countries. This was the preferred option, even if the company was trading directly with consumers.
- Managing border delays – We know that border delays were a major issue at the beginning of last year, with the food sector worst affected. The problems have eased, but there are still occasional issues that can cause a major headache for both the exporter and the customer relying on the supply being delivered. We recommend, where possible, maintaining stocks so last-minute border issues have less of an impact on the customer. However, an EU base ensures you can manage delivery timetables again, giving back certainty to supply, without the risk of border delays.
- Pricing competitively – Brexit () followed by inflation, have obviously added to costs, so many British companies have had to review their pricing, while ensuring that they are still in line with their EU based competitors who aren’t paying duties. While some traders gave up, and decided it was impossible to compete, others reviewed their costs to look for new ways to keep prices down. Some traders started to offer reductions for bulk orders. However, once again, those with an EU base used it to their advantage and worked on extending their customer base across the EU, to achieve economies of scale and so bring down unit costs.
In Flanders we saw an 183% jump in the number of UK investment projects in the first six months of 2021, so it was clear that many companies were choosing Flanders as their EU base. The factors that are important to traders include:
- A central location in Europe – residents of Flanders and those living within 500km of the region account for 60% of all of Europe’s purchasing power.
- Strongly developed infrastructure (see below)
- Proven exporting power – according to the World Trade Report, Belgium (including Flanders) is one of the top 15 exporting countries in the world
- Compact and condensed networks within the region
- A highly innovative culture – thanks to its tightly knit business ecosystem including academic institutions, the Government and private sector firms
- English spoken highly proficiently and widely, highly skilled workforce, ranked as the fourth most productive in the world (Source: WEF)
- World renowned knowledge centres and R&D initiatives – ranking in the top 5 within Europe and in the top 15 worldwide when it comes to spend on R&D (Source: WEF)
- Affordable and competitive supply chain costs; prime rent in Flanders is one of the lowest in Western Europe
- Similar corporation tax rates and laws to the UK and no business rates. Comparatively easy to start a business or incorporate a company in the region
Transport infrastructure is a major consideration for most traders. Flanders has three international seaports, three international airports, one of the world’s densest road networks and an extremely well-connected railroad and inland waterway networks. The highways of Flanders link to those of France, Germany, the Netherlands, and those of the UK via ferry links and the Channel Tunnel. As a result, logistics companies and distribution centres are able to transport goods from Flanders to most major European markets within 24 hours and of course time was of critical importance during the pandemic.
In addition, Brussels Airport provides state-of-the-art infrastructure and has a specialised hub for storing temperature sensitive pharma and biotech, so they can be quickly exported globally. It was the first airport in the world to receive the CEIV (Centre of Excellence in Pharmaceutical Handling) Pharma certification.
Energy has also recently emerged as an important consideration when it comes to deciding on an EU base. The energy crisis has affected the whole of the EU, but due to the massive growth in the production of sustainable energy in Flanders, the region is less vulnerable to gas supply issues.
Flanders Investment & Trade exists to help companies manage the many challenges of trade. The UK remains one of our important markets, so we are here to help traders not just survive Brexit but thrive. We are now two years into seeing what works and why problems have arisen. There is nothing more gratifying to us than when we help a company turn the challenges of Brexit into business opportunity. We can give you the benefit of that experience and help you learn from the mistakes of others. We can introduce you to banks, regulators, other companies in your sector and potential partners. As an official government organisation, we have no commercial bias and offer our services at no cost to you.