Economy 7
Summaries of the new Border Operating Model - 16 July 2020
T
£100bn boost for the UK economy The Bank of England will pump an extra £100bn into the UK economy to help fight the economic downturn triggered by the coronavirus pandemic.
B
ank policymakers voted 8-1 to increase the size of its bond-buying programme. The extra monetary stimulus – known as quantitative easing (QE) – will raise the total size of the Bank’s asset purchase programme to £745bn. The Bank’s Monetary Policy Committee (MPC) also voted to keep interest rates at a record low of 0.1%. Policymakers said the jobs market was likely to remain weak for some time, with a risk of higher and more persistent unemployment. Millions of workers have already seen their pay packets shrink as a result of lower pay for furloughed staff. Commenting on the decision by the Bank of England’s MPC to keep interest rates on hold and expand quantitative easing, Suren Thiru, head of economics at the British Chambers of Commerce (BCC), said: “The Bank of England’s decision to significantly expand quantitative easing reflects the unprecedented impact of coronavirus on the UK economy. It is vital that the bank works
with financial institutions to ensure that it translates into on-the-ground support for businesses. “With economic conditions likely to remain challenging in the near term, further easing remains likely. However, with interest rates already at an historical low, extra loosening of monetary policy is unlikely to provide a significant boost to the economy. The central bank has rightly decided against moving interest rates into the negative, which risks doing more harm than good. “The focus instead should be on delivering a fiscal environment that limits economic scarring and helps kick-start a recovery. This should include taking steps to close the remaining gaps in government support, including giving businesses with direct incentives to invest and hire, and stimulating consumer demand through a temporary but significant cut in VAT.” While some businesses have started trading again, others are continuing to take advantage of the government’s furlough scheme to retain staff on their books.
However, a new survey has revealed that some businesses are asking furloughed employees to work, despite this being in direct contravention of the job retention scheme’s rules. A poll of 2,000 furloughed workers across the UK found that 34% had been asked by their employer to commit furlough fraud by carrying out their normal duties despite their employers claiming from the job retention scheme. A further 18% said they had been asked to work for another company linked to their employer, and a similar number (19%) were asked to cover someone else’s job within their organisation. The research by Crossland Employment Solicitors also found that 29% of furloughed workers were asked to undertake more administrative tasks while on the scheme. Under the rules of the scheme, staff who have been furloughed cannot be asked by their employer to continue to work either for them or a company linked to them. The scheme has been extended until October to help firms hit by the coronavirus pandemic.
he Government has provided two summary documents which outline what businesses will need to prepare for. There is one for exports (https://assets.publishing.service.gov.uk/ government/uploads/system/uploads/ attachment_data/file/901063/How_to_ export_goods_from_GB_into_the_EU_ from_January_2021.pdf) and one for imports (https://assets.publishing.service. gov.uk/government/uploads/system/ uploads/attachment_data/file/901061/ How_to_import_goods_from_the_EU_ into_GB_from_January_2021.pdf)
The Export and International Trade’s summary, flags up the key takeaways from the document. (https://www.export. org.uk/news/516880/Governments-posttransition-border-plan-published-today-13July-10-things-traders-need-to-know-.htm) Customs declarations are currently required by HMRC to be completed for all, or the majority of, UK imports and exports, except where the EU single market is concerned.
When the EU exit is completed, it is estimated that the number of annual declarations will rise from the current 55 or 60 million to 260-300 million. This number is irrespective of whether or not there is an EU trade deal (unless the trade deal is an extraordinary one). Companies most affected will be those who when they trade outside the UK only hitherto trade in the EU Single Market. Currently it is believed that the vast majority of those customs declarations (CD) are completed on behalf of traders by intermediaries such as customs brokers and freight forwarders. There is concern that the market will not be able to cope and there has been a suggestion that the government have raised those concerns with BCC which helped prompt them to investigate a role for CCIs. British Chamber of Commerce (BCC) has been working on a scheme – ChamberCustoms – which is based on a company backed by i2i/SGS which has developed software and trained staff to gear them to assist UK importers and exporters to complete CD. We will be participating in the scheme and are working on a business plan on how we will roll it out.
July 2020
