Brexit threatens Christmas

Brexit threatens Christmas

With little over three months, until the UK leaves the European Union, a clear transition and plan ought to be in place by now. However, Brexit is in the midst of its most tumultuous point to date. Not only is a no deal appearing even more likely as Theresa May battles with Parliament to approve her deal, but the wholly new alternative of ‘no Brexit at all’ has recently been brought to the table.

Saving the high street

However, assuming the UK stays on track to leave the EU come March 2019, recruiters and retailers alike are becoming increasingly concerned for the future.

While the summer heatwave brought in a gust of high spirits and high spending, the months that followed paint a glum picture for the future of high streets in Brexit Britain. Retail sales fell by 0.5% in October from September while November exhibited the worst results since October 2017 – excluding one dry spell in Easter. The financial crash and curbed consumer spending that came with it in 2008 still haunt retailers’ nightmares. Yet with a shocking November turnout, sales dipping to some all-time lows and even huge names being forced to closed their stores, nerves are resurfacing across the industry once more.

Exacerbating anxieties, online giants are dominating the public’s shopping habits: during Black Friday a record of every one in three pounds were made online. Attempting to tackle the problem, Visa has launched a Christmas campaign to encourage shoppers to support their local high streets. The motion comes after a flurry of closures from some namely high street veterans rippled through the UK; Debenhams, House of Fraser, Homebase, Marks & Spencer, New Look, John Lewis and Patisserie Valerie have all either been forced to close stores or have struggled to keep afloat. Toys R Us were forced to close all of their remaining stores this year, too.

However, with Brexit just beyond the horizon and little clarity on the UK’s future trade deals, Samuel Tombs, the chief UK economist at Pantheon Macroeconomics claims the decline in spending this season is the “first real sign that consumers are tightening their purse strings due to uncertainty about Brexit.” He continued, “the lack of clarity about how Britain will leave the European Union in less than four months’ time has weighed on consumer confidence.”

Staffing crisis ahead

Yet it is not just consumer spending retailers should be worried about. Hospitality, food and drink, retail and the haulage and logistics sectors rely heavily on EU migration. According to a Confederation of British Industry (CBI) report, over 58% of poultry workers are non-UK citizens while in the horticulture industry, up to 60,000 staff members are recruited every year from the EU and beyond; 75% of workers in this field currently originate from Bulgaria and Romania alone. A further 170,000 EU nationals work in retail in the UK.

The prevailing problem Brexit imposes onto these industries which are intrinsically reliant on one another is that the UK government have decided to utilise the current immigration system onto EU settlers past 2019 (or 2021 depending on whether the UK agrees upon the deal). This means that all EU nationals looking to work in the UK would need a Tier 2 Visa. However, this would spell disaster for these industries since the high requirements of this visa type would refuse entry to most workers. Not only must migrants earn a minimum of £30,000 a year to be eligible for the visa, but they must also have £1,000 in personal savings and pass an English language test. Aggravating recruiter woes, the Tier 2 Work Visa is annually capped at 20,700 meaning priority is usually given to applicants who earn much higher than the preliminary boundary. The CBI estimate that near 96% of EU hospitality staff would be deemed ineligible for this visa which rings alarm bells for retail staff.

If a retail revolution does begin by a Brexit big bang as retailers quickly move into the digital world, HGV and delivery drivers will also increase in demand. Yet 63% of HGV drivers currently employed in the UK are age 45 and over while 14% are due to retire in just the next five years. Industry experts fear a 52,000 shortage of drivers after Brexit since recruiters will struggle to replenish workforces under the new immigration rules.

Carolyn Fairbairn, head of the CBI warns the business community fear the financial requirement would mean many of their workforces would struggle to win a visa and that “people earning less than £30,000 make a hugely valuable contribution to our economy and society”.

Brexit threatens Christmas

Underprepared for a no deal Brexit

Although Chancellor of the Exchequer, Philip Hammond’s 2018 budget plan promises bounteous monetary relief to the “strivers, grafters, carers and shopkeepers”, Hammond claims a no deal Brexit jeopardises the plan. His rescue mission includes slashing business rates by a third and a 1.5bn boost for near half a million small businesses and retailers.

The months – and years – of wave after wave of insecurity, uncertainty and instability brought by Brexit has proven disadvantageous to many UK businesses who have suffered in the interim of waiting for reassuring news. As a result, Retail Economics claim over a third of UK retailers claim they are underprepared for a no-deal scenario.

However, very little can be prepared when the outcome of a no deal is extremely bleak: Mark Carney the governor of the Bank of England claim import prices could rise to as high as 10% in the worst-case scenario or at least 6% in the best. An increase in these shipping costs would mean smaller businesses and shops will struggle to compete in the market entirely.

If EU migration continues to plummet in anticipation of Brexit (as it has in recent months hitting a six-year low), the headlines of food rotting in fields and stock failing to reach ‘just on time production’ lines due to trade border confusion might actually become a reality this time next year.

Without a proper plan that caters to all levels of expertise, skills and lower income earners, Christmas 2019 could involve a drought of turkeys and derelict brick and mortar stores, pushing people further into the evil arms of Ecommerce and next day delivery – providing recruiters can fill the vacancies. However, while the disparity between Christmas 2016 and Christmas 2019 couldn’t be further apart, a poor immigration system means Brexit will bring an eternal winter for retailers all year long. Without a revised immigration system, avalanches of staff shortages, rota gaps, stock scarcity and snowed under delivery services await in the future – problems that many businesses simply cannot prepare for.

By Olivia Bridge, a specialist content writer and political correspondent for the Immigration Advice Service, a leading law firm for UK Immigration Lawyers

By | 2018-12-17T09:58:01+00:00 December 17th, 2018|Economy, Politics|Comments Off on Brexit threatens Christmas

About the Author:

Stacey is CashLady's resident Author and Content Manager who's strengths lie in Finance, Technology and Lifestyle topics. With over 5 years in the industry, she has a focus both on written content and visual design.