Christian Kesberg, Austrian economic delegate in London, on the effects of Brexit on the business of Austrian exporters. What has changed for Austrian companies since Brexit and where they can get support.
Exchanging the pound for the euro – the British never wanted that anyway. At the beginning of the year, the United Kingdom closed the unpleasant chapter of EU membership for many. After long negotiations and preparations, Brexit became a reality 100 days ago. Much has changed in the country since then. Also for those who deliver goods or services to the UK.
What does the British exit from the European Union mean for Austrian exporters and is trading with the island nation still worthwhile? trend.at spoke about this with Christian Kesberg, the Austrian business delegate in London.
Strong slump at the beginning of the year
The first few weeks since the implementation of Brexit did not bode well. EU deliveries to the United Kingdom collapsed by 29 percent in January 2021 after the UK left, those from Austria to the UK by 24 percent.
However, Kesberg does not want this development to be understood as pointing the way. Rather, he considers pull-forward effects to be responsible for the sharp decline in UK imports. Exports in December 2020 were 15 to 30 percent higher than the average for the year as a whole.
Despite the now higher bureaucratic hurdles such as customs forms, Kesberg does not expect any significant effects for Austrian exporters from Brexit. “The difficulties caused by Corona are much greater than those caused by Brexit,” the trade delegate is convinced. “Austrian companies had four years to prepare for it and many took advantage of it.”
Third country status
According to the WKO expert, the extent to which the individual companies that export to Great Britain are affected by the British exit from the Union depends to a large extent on the size of the company. Great Britain is now treated like an EU third country. For many larger companies that previously had trading partners outside the EU, this is more or less business as usual. The consequences of the Brexit in the handling of their business affect them only marginally: “They usually already have branches in England or departments that constantly deal with requirements for exporting to third countries.”
Around 95 percent of Austrian companies that export to the Kingdom are large companies. 250 of these have their own branches in the UK, 100 of which have between 200 and 700 employees on site. The who’s who of Austrian companies – from Magna to Wienerberger – also sell and produce some of their goods in Great Britain. One fifth of Austria’s export volume is accounted for by the electric jaguars that Magna produces in Graz on behalf of the British manufacturer.
Deliveries of goods are becoming more expensive and laborious, but no less lucrative.
But numerous niche players also deliver to the UK. “Not much will happen to them as a result of Brexit. For all these big companies, the business will be just as interesting and lucrative as it was before Brexit, ”Kesberg is convinced.
Because of the bureaucratic hurdles, the effort increases, but the average costs are comparatively low. Doing business with the British is therefore still worthwhile. “The Brexit will make deliveries of goods to Great Britain a little more expensive and laborious, but no less lucrative,” explains the WKO expert. If there were any uncertainties, such as which shipping documents or customs form would be required, or if information on requirements for trade were required, the Chamber of Commerce’s foreign trade office would be of assistance.
Problem children SMEs
The situation is somewhat different for small and medium-sized enterprises (SMEs) that have no experience of trading with EU third countries and that lack the know-how to do so. “We helped quickly and effectively to overcome bureaucratic hurdles – and have never received so much positive feedback,” says the WKO man. However, he notes: “Our SMEs are often much better prepared than those in the UK. Above all, the new customs regulations and tax issues are causing problems for these companies. “
The question of whether it is worthwhile for smaller companies to continue exporting to the UK often depends on how many orders are processed each year. “If the order volume is low, the question is how effectively the employees who are entrusted with the job cope with the new requirements,” Kesberg points out. The question of whether it is worthwhile for smaller companies to continue exporting to the UK often depends on how many orders can be processed per year: “With a low order volume, the question is how effective the employees entrusted with the new ones Meet requirements. ”
Kesberg does not share the fear of some companies of losing valuable time with trucks in traffic jams for hours or even days in front of Calais or Dover – which could make goods even more expensive. He considers reports about this to be far exaggerated: “Like the big companies, large freight forwarders are well prepared for the new trade regime.”
It gets a little more expensive to do business, however. On average, higher costs of around two percent are calculated for exporters. “The lower the trading volume and the more sporadic the trade, the higher the costs,” Kesberg knows from discussions with companies.
The other side of the canal
On the other side of the English Channel, Kesberg does not think the situation is so favorable. 25 percent of British exporters also want to throw in the towel there. Kesberg: “Many of these companies are surprisingly poorly prepared for Brexit. Some Austrian companies ask us to help their trading partners in Great Britain, as they are overwhelmed with the formalities. “
One of the reasons why British companies are struggling with the new regulations is the lack of support from fragmented interest groups, the expert believes. There is no compulsory chamber membership as in Austria. Not even ten percent of the companies are organized in different associations and chambers, so the support and range of information is correspondingly low.
London remains a banking metropolis
The trade delegate considers the often forecast large emigration of banking departments from the financial metropolis of London to be far exaggerated. Kesberg: “Of the one million employees in UK finance, 8,000 jobs have moved to the EU so far. Most of those who remained will stay there and London will also remain the largest financial center in Europe – even if the industry does not grow. ”
For Kesberg, the reason for this is obvious: the EU was an important business partner, but not an indispensable one. So far, only a third of the transactions concerned Europe, the rest were global transactions. “This know-how cluster cannot be transferred elsewhere.”
In addition, despite Brexit, there is currently great confidence in the UK. The outlook for the economy is brightening from week to week and from vaccination to vaccination. The economy has been growing again since February and there is again substantial investment. The credits are gushing and the pockets are well filled because of continued wages in the form of short-time work in lockdown. Bankhaus Berenberg expects economic growth of 6.1 percent in the UK for 2021, and it should continue at a similar pace in 2022.
Info and assistance for doing business with the British
The information gathered on the new rules and hurdles for doing business with Great Britain can be found on the website of the Chamber of Commerce at
A brief overview of the new trade and cooperation agreement, which was drawn up by the relevant specialist departments of the WKÖ, can be found under Trade and cooperation agreement between the EU and the United Kingdom – an analysis by the Austrian Chamber of Commerce