A study carried out by the University of Warwick’s Centre for Competitive Advantage in the Global Economy (CAGE) has revealed that the average UK worker has already lost a week’s wages as a direct result of Brexit.
According to the study, in the first year following the Brexit referendum, the average worker had to spend more than £404 as a result of rising prices.
In order to maintain the same lifestyle, the average UK household was required to spend £7.74 more per week.
Commenting on the findings, Dennis Novy, Economics Professor at the University of Warwick, said: ‘It is clear that the average UK household is already paying the price for voting to leave the EU.
‘The economic effects of leaving the EU will depend crucially on the outcome of the ongoing negotiations between the UK and the EU. But even before Brexit has actually taken place, the referendum shock of June 2016 has already had substantial economic costs for the typical household.’
A survey conducted by the Institute of Directors (IoD) has found that nearly a third of IoD members are looking to move their operations abroad due to the uncertainty surrounding Brexit.
The survey of 1,202 company directors also revealed that more small firms are looking to relocate than previously anticipated. 15% of small firms are ‘actively considering’ setting up operations outside of the UK. Furthermore, 8% of small businesses have already relocated overseas, while 4% plan on doing so.
Of those looking to relocate, 69% stated that they plan on setting up operations in the EU; 22% are considering setting up in both EU and non-EU countries; and 7% are seeking to relocate to non-EU countries.
Commenting on the survey, Edwin Morgan, Interim Director General of the IoD, said: ‘While the actions of big companies have been making headlines, these figures suggest that smaller enterprises are increasingly considering taking the serious step of moving some operations abroad.
‘We still have a chance to stem the flow, and provide enough certainty to the firms that are considering moving but haven’t yet done so.
‘The UK’s hard-won reputation as a stable, predictable environment for enterprise is being chipped away. Our political leaders must keep this in the front of their minds as we enter this critical phase of negotiations.’
Chancellor Philip Hammond has announced that this year’s Spring Statement will be delivered on Wednesday 13 March.
The 2019 Spring Statement will be the second of its kind: in the 2016 Autumn Statement, the Chancellor announced a major shake-up of the government’s fiscal timetable. This saw the abolition of the Autumn Statement, in favour of an Autumn Budget and a Spring Statement.
This year’s Statement will be delivered just 17 days before so-called ‘Brexit Day’ – the day that the UK is set to leave the EU. Many expect Mr Hammond to deliver an emergency Budget if the UK leaves the EU without a Brexit deal.
The Spring Statement is used by the Chancellor as a way of responding to new economic forecasts produced by the Office for Budget Responsibility (OBR), and to discuss long-term issues ahead of the 2019 Autumn Budget.
The government retains the right to make changes to fiscal policy during the Spring Statement.
HMRC has confirmed that Brexit will not affect the introduction of Making Tax Digital for VAT (MTD for VAT).
MTD for VAT is set to come into effect from 1 April 2019 for businesses which have a taxable turnover above the current VAT registration threshold of £85,000. As part of the initiative, firms must keep some records digitally, and must submit their VAT returns via an Application Programming Interface (API).
Experts previously suggested that HMRC would have to delay the introduction of MTD for VAT if the UK was to leave the EU without a Brexit deal. However, in a recent letter, Jim Harra, Deputy Chief Executive of HMRC, wrote: ‘Our system is already live and by the end of February we’ll have written to every affected business, encouraging them to join the thousands of others who have registered.’
In 2018, the British Chambers of Commerce (BCC) called for HMRC to postpone the introduction of MTD for VAT until April 2020, citing a ‘lack of awareness’ of the scheme and its requirements amongst UK firms.
The BCC stated that a delay of a year would ‘provide extra headroom’ to HMRC, allowing it to support businesses with MTD-related issues.
Business groups have responded to the outcome of the vote on Prime Minister Theresa May’s Brexit deal.
The Confederation of British Industry (CBI) warned that ‘no deal’ is ‘hurtling closer’. Carolyn Fairbairn, Director General of the CBI, said: ‘A new plan is needed immediately. This is now a time for our politicians to make history as leaders. All MPs need to reflect on the need for compromise, and to act at speed to protect the UK’s economy.’
Meanwhile, the Federation of Small Businesses (FSB) urged MPs to ‘work together to end the Brexit impasse’. ‘The UK is due to leave the EU in just ten weeks, and yet businesses still have no idea what kind of circumstances they should prepare for,’ said Mike Cherry, National Chairman of the FSB.
‘Many small businesses would be adversely impacted by a chaotic no deal exit. It is vital that there is a transition period, to give smaller firms time to adapt to whatever the final outcome turns out to be.’
The British Chambers of Commerce (BCC) stated that businesses now find themselves ‘facing the unwelcome prospect of a messy and disorderly exit from the EU’ on 29 March. It continued: ‘The overriding priority for both government and Parliament must now be to avoid the clear danger that a no deal exit on 29 March would pose to businesses and communities across the UK.’
Business groups have responded to the postponing of the vote on the draft Brexit deal.
Prime Minister Theresa May intends to meet EU officials and European leaders in order to ‘discuss with them the clear concerns’ MPs have in regard to the deal.
The Confederation of British Industry (CBI) said that the delay is ‘yet another blow’ for businesses seeking clarity. Carolyn Fairbairn, Director General of the CBI, said: ‘Investment plans have been paused for two and a half years. Unless a deal is agreed quickly, the country risks sliding towards a national crisis.’
Meanwhile, the British Chambers of Commerce (BCC) stated that business is ‘intensely frustrated’ by the delay. Dr Adam Marshall, its Director General, commented: ‘Businesses are clear that time is rapidly running out. With just over 100 days to go until 29 March, many are already enacting contingency plans in the absence of clarity from Westminster.
‘Businesses need clarity and precision on the UK’s future relationship with the EU and with other key trading partners. Businesses are clear that they do not want a messy and disorderly exit, which both government and far too many firms are under prepared for.’
The Institute of Directors (IoD) called for the government to be ‘clearer’ on its contingency plans. Stephen Martin, Director General of the IoD, said: ‘Many companies are still in the dark about what HMRC and border agencies would require the day after Brexit if there is no transition period. Partly because of a lack of information, only 14% of IoD members say they are fully prepared to manage no deal, highlighting the scale of the challenge if a withdrawal agreement isn’t ratified.’
HMRC has written to 145,000 UK businesses to urge them to begin preparing now for a potential ‘no deal’ Brexit scenario.
The letters, which have been sent to VAT-registered businesses which trade only with the EU, explain changes to customs, excise and VAT in the ‘unlikely event’ that the UK leaves the EU without a deal.
The letters urge affected firms to take three actions now:
- Register for a UK Economic Operator Registration and Identification (EORI) number.
- Decide whether a customs agent will be used to make import and/or export declarations, or whether declarations will be made by the business via software.
- Contact the organisation responsible for moving goods (for example, a haulage firm) in order to ascertain whether the business will need to supply additional information to complete safety and security declarations, or whether it will need to submit these declarations itself.
HMRC intends to write to businesses in the future in order to instruct them on any additional actions they will need to take, and when.
Further information on the issue can be found here. Businesses can keep up-to-date with the latest Brexit advice by registering for HMRC’s EU Exit Update Service here.