How businesses can navigate 2021’s trade currents
Businesses are having to step up their capabilities and think strategically about their trading arrangements in a way they have not done for forty years—here's what they can do
This article was produced in association with EY
2021 is proving to be a turbulent year for businesses in the UK, as they contend with continued disruption to their operations due to the COVID-19 pandemic, while also navigating the largest shift in the UK’s trading relationship in a generation, all against a backdrop of disturbance from geopolitical and technological change.
There is a saying in trade circles – governments don’t trade, businesses do.
This has never been more true. Businesses are having to step up their capabilities and think strategically about their trading arrangements in a way they have not done for forty years. They are operating in a new environment, sailing in unchartered waters with stronger currents. These new waters encompass: the new Trade and Cooperation Agreement with the EU; the UK-only continuity free trade agreements with 63 countries around the world; and the UK’s Generalised System of Preferences, which provides preferential access to the UK market for many developing country exporters.
EY’s advisors on trade have been working with clients over the past four years to navigate these waters, and have found businesses are going through three distinct phases:
Phase 1: Surviving the rapids
The current levels of disruption mean that many businesses are having to adapt to the new requirements needed to trade, and fast—from building their administrative capacity and auditing their supply chains through to determining the origin of their products and meeting the necessary regulatory requirements.
Phase 2: Wind in their sails
As businesses adjust, their gaze starts to lift. They assess where improvements can be made, including how to adapt their supply chain and provide their services. However, they also start to find new ways of working that maximise the possibilities under the UK’s existing trade agreements, and likewise look to replicate success in different markets.
Phase 3: Looking to the horizon
While Brexit and COVID-19 dominate the thinking of businesses across the UK, there are two key trends that are going to define international trade and will fundamentally change how businesses operate internationally. The first is the increasing digitalisation of trade and the second is sustainability. How and what businesses will be trading, over the course of the coming years, represents a fundamental shift in the global economy.
As the UK looks forward to hosting the G7 and COP26 in Glasgow later this year, 2021 marks an opportunity for the UK to help drive a new mindset and show how trade can support our Net Zero objectives. Businesses have a clear role in making this happen, whether greening their supply chain or investing in new, cleaner, production methods.
EY is helping businesses work together with all stakeholders to ensure that the UK’s trading regime supports companies to increase exports, attract inward investment and build a cleaner future.
Alison Kay is Managing Partner for Client Service, EY UK
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