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Budget 2018: the Chancellor has revealed there is no plan for a ‘No Deal’ Brexit

Budget 2018: the Chancellor has revealed there is no plan for a ‘No Deal’ Brexit

On the day of the Budget (29th October 2018), Ian Baxter, founder of Baxter Freight, shares his views on whether the Chancellor will need to call another Budget if we end up with a no-deal Brexit.   

“What we have learned from the Chancellor’s Budget announcement is that he really isn’t planning on a no deal Brexit which may be the biggest thing to cheer of all his announcements! Nor does the Government have an adequate plan to deal with the directly foreseeable consequences of leaving the Customs Union whether in March or at the end of a transition period. Let me be clear: both of these scenarios would have significant and negative consequences for British business and the Public Finances. If the Government believes there is any real prospect of either happening then we will need a plan to deal with them.

“If we were to end up with a ‘no deal’ Brexit this would require a completely new Budget announcement and economic forecast from the Government. Today’s £500m no deal funding, £2.2billion Brexit funding or £15 billion Brexit contingency would not touch the sides of the problem. As well as emergency funding for HMRC’s customs capacity we would need to provide support for the implications for business which might face shutdowns (at least temporarily) of huge production lines and laying off staff from the likes of Nissan, Honda, Toyota and Jaguar Land Rover – just some of the multinational corporations with large parts of their manufacturing in the UK – as well as significant extra costs of doing their day-to-day business.

“Of course, the obvious reason the Chancellor hasn’t revealed the true cost of a ‘no deal’ Brexit to the UK is that letting the EU know this truth wouldn’t help our negotiating position at this crucial stage. Regardless of the type of deal negotiated, we need to be prepared for all Brexit eventualities. In practical terms, this means training more customs officers and building up HMRC’s IT capacity and physical infrastructure at the UK’s borders. So, whilst the final Brexit outcome is unclear, we are yet to see a tangible commitment to urgent investment in these areas. We can only hope the Government ends up getting a deal which makes such preparations unnecessary.”

Reaction

Other members of the logistics community has also given their reaction:

"Online retailers have been driving demand for big box logistics floorspace in the UK by improving supply chains to address the growing demand from customers to receive their goods as soon as possible. The introduction of a ‘new digital services tax’ for the bigger corporates by 2020 may create an small impact further down the line for companies but with large corporates needing to meet the demand from customers it is unlikely to hamper demand for logistics floorspace across the UK in the short term."

Tessa English, Industrial & Logistics Research Lead, JLL

“We are naturally disappointed not to see the Chancellor make an announcement on scaling back red diesel, particularly for transport refrigeration. We know ministers recognise the urgency of improving Britain’s air quality, so although the Budget was a missed opportunity, we will continue to engage with ministers and civil servants to make the case for scaling back red diesel. Clean technologies will continue to be undercut as long as the price of diesel is artificially lowered.”

Dearman CEO Scott Mac Meekin

“The £420m announced in today’s Budget to repair potholes is a drop in the ocean when you consider that work that will cost more than £8billion is needed to rectify years of under investment in our road network.  The damage caused by potholes to the UK’s logistics fleet is adding unnecessary cost to the operation of vehicles tasked with keeping Britain trading, and FTA is concerned that the funding released by the Chancellor today will mean that operators will continue to incur these unreasonable costs at a time of extreme trading pressure.  More could and should have been done to help the logistics sector at such a critical time in the nation’s trading history.  It is a lost opportunity.

“The freeze on the Heavy Goods Vehicle HGV VED for 2019-20 is to be welcomed, and FTA is particularly pleased to hear that the government is set to maintain the difference between alternative and main road fuel duty rates until 2032.  This will support the de-carbonisation of the UK transport sector and give operators confidence to invest in alternatively fueled vehicles.”

Christopher Snelling, Head of UK Policy, Freight Transport Association (FTA)

“CBRE is broadly in agreement with the Chancellor’s short term economic forecast, though we think he may have underestimated the potential for a Brexit bounce in 2020. There were no other real surprises for property in the Budget though the devil is sometimes in the detail. For example Oliver Letwin’s review on the pace of housing development doesn’t seem to have thrown up anything radical while the worthy high streets package had already been announced. Further cash for infrastructure and city growth is always welcome, though the abolition of PFI raises questions over the future role of private financing for such projects.

“The most interesting announcement was the new Digital Services Tax which will not only affect online retailers but the full range of tech giants, and it is not an online sales tax so it may not close down the debate on high street competitiveness.”

Miles Gibson, Head of UK Research, CBRE

“Mr Hammond suggested that he will offer Independent retailers with a Rateable Value (RV) of less than £51,000 savings of up to 1 third against their existing bill. This will be in place through until the next revaluation in 2021. However independent businesses with an RV of less than £12,000 already receive 100% relief. RVs between £12,001 and £15000 receive a tapering discount from 100% to 0%. Those RVs up to £13,980 currently receive more relief than offered by the chancellor today.

“What the Chancellor’s announcement doesn’t take into account are those businesses with multiple sites and those businesses looking to grow and expand into larger premises. Both are key to the High St and its wellbeing. We would have liked to have seen the Chancellor go further and reduce the CPI linked growth on annual bills for all businesses across all sectors.”

Tim Attridge, Head of UK Rating, CBRE

"There would be no need to announce potentially upgrading the Spring statement into a new hard-Brexit budget if it were really to have no impact on today’s spending plans.

"There is a lot for retailers and consumers to applaud in today’s budget; but speaking as a business at the coalface of customs borders, we believe the new tariffs and delays a no-deal Brexit would create would make today’s announcements unsustainable."

ParcelHero’s Head of Consumer Research, David Jinks MILT

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