Supply chains and logistics: managing the economy’s heartbeat
Modern economies are able to provide a wide range of affordable goods through the operation of extensive and complex supply chains.These have been under severe pressure in the UK in recent years, with Brexit related restrictions, post-covid changes in the Labour market, and increased energy prices the major factors. As a result we have seen periodic shortages of specific products in supermarkets, delays in receipt of goods, and inflationary pressures.
Of equal concern is losing a position within manufacturing supply chains. There is evidence that UK companies are finding it hard to attract new European customers as a result of the barriers now in place, with concerns that post-Brexit barriers would mean their involvement would be less reliable.
Governments and political leaders seem to have been slow to understand the implications of supply chains, in their decisions around movement of people and goods. While there is now greater awareness, it is far from clear that the right framework is in place for the UK economy.
Questions for discussion
How fragile is the UK’s position with regard to regional supply chains, and what impact is this having on business and consumers? Could the position become worse?
To what extent can greater stability and predictability in policy making help UK logistics and participation in supply chains?
Can operational changes at the border or through the planned single window make a significant difference?
Policy Options
Trade Unlocked 2023’s policy partner, the UK Trade and Business Commission, has recently published a comprehensive report containing policy recommendations to the UK Government.
Neighbouring countries choosing a level of integration beyond the UK will inevitably present questions as to the inclusion of our companies in regional supply chains. Many recommendations from the UK Trade and Business Commission report seek to at least reduce obvious barriers.
The report recommends a general policy of ‘alignment of UK and EU regulations’, which would help.
Specifically, the report recommends that ‘The UK should negotiate a new Sanitary and Phytosanitary (SPS) and veterinary equivalence agreement with the EU to facilitate seamless trade in livestock, plants, and related products to reduce barriers in agricultural trade.
For manufactured products, the report recommends that ‘The UK government should work closely with the EU in order to establish a plan for the mutual recognition of conformity assessment results’.
Facilitation of UK participation in supply chains would also be helped by joining the Pan-Euro-Mediterranean convention of rules of origin, which allows content from across the neighbourhood to count as locally produced for the purposes of trade agreements across Europe.
As detailed in the report, a policy to ‘Ensure UK border and customs processes are efficient’ on single window, border operating model, trusted trader programmes, and facilities at Dover could also help remove frictions, as could recommendations to ‘Create a UK visa system fit for purpose’ with regard to labour shortages.