Brexit is forcing major retailers to consider pulling out of Northern Ireland

    0
    32

    Boris JohnsonGetty

    • Major retailers are considering pulling out of Northern Ireland due to the additional trading costs caused by planned new Brexit border checks.
    • Industry figures tell Business Insider that one major supermarket chain is considering pulling out.
    • Northern Irish business groups and politicians warn that the cost of new checks and processes will be felt hardest by the province’s poorest families, who can’t afford price rises.
    • Boris Johnson insists any new trading barriers will be minimal.
    • Visit Business Insider’s homepage for more stories.

    Major retailers are considering pulling out of Northern Ireland due to the increased cost of trading with the rest of the UK as a result of planned new Brexit border checks, multiple industry figures have told Business Insider.

    Boris Johnson’s government is due to implement new checks on trade crossing the Irish sea once the UK leaves the European Single Market and the Customs Union at the end of the Brexit transition period at the end of December.

    A number of major retailers, including one of the UK’s most prominent supermarkets, are considering pulling out of Northern Ireland amid fears that new costs could render them financially unviable, multiple senior business figures have told Business Insider.

    Aodhan Connolly, director of the Northern Ireland Retail Consortium, said the cost of new checks and processes across the Irish Sea would be a “make-or break-issue for Northern Ireland retailers” considering their futures.

    “For many months we were looking at what products will become unviable, now we are looking at what business models will be unviable,” he said.

    “There are going to have to be some very hard decisions made.”

    The UK government last month published a paper setting out its plan for implementing the Northern Ireland protocol in time for January 2021, when the Brexit transition period is scheduled to come to an end.

    The protocol, agreed by the UK and European Union last year, is designed to prevent a contentious hard border on the island of Ireland. However, it will lead to new customs and regulatory checks between Northern Ireland and the rest of the UK.

    Johnson’s government has said it will build infrastructure at three Northern Irish ports to carry out new checks on goods of animal origin. There will also be customs checks on goods entering Northern Ireland from the rest of the UK.

    While Northern Irish business leaders welcomed the publication of the paper, they are now urging the UK government and EU to provide specific details on what specific trading arrangements businesses must prepare for in January.

    A collaboration of business groups in the province, called the NI Business Brexit Working Group, on Friday, published a detailed report asking 67 questions about how the protocol would work in practice.

    David Henig, the director of trade at the European Centre For International Political Economy, warned that barriers to GB-NI trade, and disruption to businesses, would be even greater if the UK and EU fail to strike a new free trade deal.

    “It’s time the UK government recognized this and start engaging properly with the consequences, particularly as they’re refusing to extend the transition period,” he told Business Insider.

    Negotiators failed to make a breakthrough in the latest round of trade talks this week, with the EU’s chief negotiator Michel Barnier on Friday saying “this week there have been no significant areas of progress.”

    However, Prime Minister Johnson is insistent that he will not create time for further negotiations by extending the transition period, despite warnings about the damage leaving the EU without a trade deal would do to British business.

    Stephen Kelly, CEO of Manufacturing Northern Ireland, told Business Insider that preparing for new trading arrangements in January was being made even harder by a lack of communication from Johnson’s government.

    Kelly said the level of engagement with the UK government on how Northern Ireland should prepare for Brexit had worsened since Johnson replaced Theresa May as the UK prime minister.

    “Theresa May’s was a participative approach, reaching out far and wide, with a succession of ministers and officials coming to Northern Ireland,” he told Business Insider.

    “The current approach is very much hold tight and don’t tell anyone anything unless you really have to.

    “It isn’t acceptable, it isn’t strong enough, and it isn’t appropriate. At the end of the day, we are the people who will deliver this Brexit deal and make it a success or otherwise.”

    Louise Haigh, Labour’s Shadow Northern Ireland Secretary, urged the UK government to step up its planning for January 2021, warning “time is running out and businesses need certainty now.”

    She told Business Insider: “With 70% of goods from Great Britain destined for Northern Ireland’s high street, even the smallest increase in cost will have a serious knock-on effect for consumers.

    “The Government needs to face up to their responsibility and start communicating very clearly what mitigation is going to be put in place to help NI businesses and consumers deal with checks they did not ask, or vote for.”

    Business Insider has asked the UK government for comment.

    Brexit changes will create a ‘perfect storm’ for poorest

    David Frost Michel BarnierOLIVIER HOSLET/POOL/AFP via Getty ImagesNorthern Irish politicians and business groups also warned that additional costs would lead to price rises which would be felt hardest by lowest-income households, with many set to struggle to afford everyday goods.

    “The levels of [personal] debt in Northern Ireland are higher than in the rest of the UK, and the levels of savings are lower,” John French, Chief Executive at The Consumer Council Northern Ireland, told Business Insider this week.

    “It really is a perfect storm for the most vulnerable in society.”

    Northern Ireland is one of the poorest parts of the UK, with discretionary household income — the amount of money left in people’s pockets after tax and essential spending — around half the UK-wide average.

    Of the lowest 25% of earners in Northern Ireland, average weekly discretionary income is -£8.69 a week, according to research by the Centre for Economics and Business for The Consumer Council published in April.

    However, a 5% increase in food spending, caused by costly post-Brexit trading barriers, would make this rise by £2.37 a week, a 27% increase. A 20% increase in food spending would cause the deficit to increase by £9.48, a rise of 109%. 

    New Trussell Trust research published this week found that while the need for food bank support had increased by 89% in the UK since April and the escalation of the COVID-19 crisis, it had increased by 142% in Northern Ireland.

    “It’s the poorest households that we are most concerned about,” The Consumer Council’s French told Business Insider.

    Stephen Farry, the Alliance Member of Parliament for North Down, Northern Ireland, said “there’s a genuine danger that the outworking of the protocol will have a major impact on households in terms of process and choice.”

    He told Business Insider: “This comes on the back of long term problems of lower households incomes in UK terms, the impact of austerity and now the uncertainty of what lies ahead economically as a result of Covid-19.”