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British Trade And Retail Has A Shot At A Sunny Future In A Post-Brexit World

20/01/2017 13:55 GMT | Updated 20/01/2017 13:55 GMT

Ordinary British consumers could be forgiven for feeling slightly lost amidst the lofty rhetoric of "red lines", "brighter futures" and "new relationships". But the manner of Britain's exit from the European Union will have a profound impact on the goods that Britain imports, the products that UK consumers buy, and the prices they pay. Although leaving the single market has constrained the UK's options, and there is ongoing confusion about the Government's intentions on the EU customs union following the Prime Minister's speech, there are real reasons to be optimistic about British trade and retail in a post-Brexit world.

Retail, and the trade that supports it, is woven into the fabric of our everyday lives. For many people these days, an array of fresh foods is just a stroll or a five-minute drive away, while getting a new dishwasher for next-day delivery can simply mean reaching for your mobile phone. Choice and quality have improved over the past few decades as intense competition between retailers continues to transform the experiences of shoppers. But perhaps the greatest enhancement delivered by retailers to the overall standard of living in the UK has come through lower prices.

Leaving the EU and its single market throws many of the things we currently take for granted up in the air. Against a backdrop of low margins and rising costs, Britain now needs to secure an ambitious new deal that works for British shoppers, which doesn't hit them with the costs of new import tariffs at a time when the pound is already weakened.

Certainly, leaving the single market has reduced the options for maintaining a barrier-free trading relationship between the UK and the EU. But the Government is right to pursue an opportunity to secure a win-win deal that works for the UK economy, by enabling retailers to keep prices down for consumers, while allowing the EU to continue benefiting from its open-trade relationship with the UK.

Following the Prime Minister's speech, we now know that the Government has an ambitious plan with the right priorities. The direction of travel looks bright but there are still big challenges ahead. The biggest of these is the Government's proposed handling of Britain's membership of the EU customs union, which allows trade to occur between the members of the Union without having to face customs checks and charges. This arrangement only works because the members of the customs union agree to apply exactly the same customs rules and tariffs to products imported into the EU, regardless of where they actually enter the union. This is called the Common External Tariff.

The Government is clear that it wants to maintain tariff-free and frictionless trade with the EU, which are benefits that flow directly from the customs union. Yet it has also said that it does not want the UK to be tied to the Common External Tariff in the future because it wants the flexibility to cut its own new trade deals with other countries. This means varying the rate of duty it charges on imports from that applied by the EU. Delivering tariff-free and frictionless trade whilst gaining the freedom to stray from the EU's Common External Tariff will be one of the most difficult of the Government's stated ambitions to make reality.

The course the Government has now set can be a bright one for retailers and consumers, where there are opportunities to not just preserve the openness we already have with the EU in the short-term, but also reap the benefits of new trade deals offering even lower prices and more extensive choice in the long-term. It's a path that can lead to better products, better shopping experiences and better jobs. Although numerous dangers and obstacles lie ahead in the quest to turn ambition into reality, British retail now has a shot at an exciting future in a changing, post-Brexit world.