Tag Archives: Brexit

News

Increasing input costs lead to inevitable price hikes by businesses

Written by Mr. Kunal Sawhney, CEO, Kalkine Media

Rising inflationary pressure has become a worldwide phenomenon lately, and the UK economy has been suffering from the evils of inflation too. A 2% inflation target was set by the Bank of England (BoE) with an aim to maintain stability in the economy. However, this 2% target has been breached recently, with the Consumer Prices Index (CPI) going up by 5.1% in the 12 months to November 2021. After the inflation level of 5.2% recorded in September 2011, the highest recorded CPI 12-month figure, the BoE is estimating the inflation levels to reach approximately 6% by the spring of 2022.

Both households and businesses have taken the brunt of the pandemic, and even though the Government has stepped up and offered the necessary financial support, coping up with the financial squeeze has been difficult during these rough times. UK households have been dealing with higher food and utility bills, with many of the poorer ones falling into the trap of fuel poverty ahead of this winter.

To counter the impact of rising inflation and soaring prices, the BoE has recently increased the interest rates from 0.1% to 0.25%. The move to raise the interest rate was made for the first time in three years in response to the rapidly rising prices. In 2022, the rates are projected to rise further, with a 0.25% hike expected as early as February. When the inflation levels went up to 5% in 2011, the interest rates were maintained at historic lows, which proves that the BoE is in a weaker position at present. This may be true as the UK economy has been facing turbulence due to a combination of Brexit-related issues and Covid-related restrictions.

Price hike to impact all

The budget of the households has been impacted, the energy prices have been skyrocketing lately due to excessive demand for oil and gas across the globe, which has pushed up the energy prices. Supply chain issues have been further aggravating the problem of inflation, and with a shortage of labour, materials, and haulage services, the prices of goods have soared immensely. Amid all these issues, the Government’s withdrawal of various support measures from hard-hit businesses, like ending hospitality’s reduced VAT, has resulted in a greater rise in prices by businesses to cover their losses. The pandemic and Brexit have together made the recruitment of lorry drivers and hospitality staff quite difficult.

As the living standard of Britons is plummeting due to increasing inflationary pressure, the wage demand is likely to rise and potentially result in a wage/price spiral, which could have a detrimental impact on the economy. The current inflation level, which is already way above the target rate of BoE, has been making Britons more and more pessimistic about the UK possibly moving towards economic stagnation.

The increase in prices of goods is inevitable with the increasing cost of inputs and transportation, and this phenomenon will be witnessed across markets in 2022. With the new Omicron variant of coronavirus causing massive disruptions in the UK economy, it’s hard to predict what’s in store for the UK economy this year, but the rise in prices is certain in the current circumstances and common people, as well as business, will have to look for means to reduce its impact as much as possible.

News

How can government help in easing Brexit’s impact on UK manufacturers?

It’s not a hidden fact that several sectors have been faced with various disruptions and teething problems since the UK’s exit from the EU became effective last year. The UK’s manufacturing sector is one of the sectors that has been weighed down heavily by Brexit along with the rising costs.

How is Brexit impacting the manufacturing industry?

A recent Make UK and PwC 2022 senior executive survey revealed that around 67 per cent of manufacturers in the country were either moderately or significantly impacted by Brexit. UK’s exit from the continent is one of the biggest challenges faced by the industry, doubled down by the hindrance faced by the pandemic.

Bottlenecks due to customs-related delays, low levels of access to the worker pool who come from outside of the UK, higher expenses due to complying with UK and EU’s rules, and other factors are among some of the key challenges for the industry.

Despite all the adversity, the manufacturers hold an upbeat outlook for the sector’s recovery owing to the sector’s resiliency, despite being faced with such issues. However, this recovery requires active support from the government.

Government can aid the recovery of manufacturing

Industry leaders are intending to shift the operations of their businesses out of the UK, in order to avoid facing further disruptions from the supply chain, Brexit, cost pressures. This offshoring of operations may well go on for another 2 years.

But here is precisely where the government has an opportunity to help boost the confidence among industry leaders. Since leaders are facing delays due to bottlenecks at customs, EU-UK trade restrictions, and red tape, one of the first things the UK government can do is to help streamline its processes along with these areas.

Custom delays can be resolved by reviewing the current bottlenecks. One of the main reasons for such delays is import checks and certain changes made to the label of goods and other products.

Some ways to address these issues can include, helping to disseminate this product labeling change information to manufacturers in a timely manner as and when any changes take place.

Another method can be to create a checklist by sector and/or trading region, which manufacturers may refer to help and adhere to such rules. These actions can help in significantly cutting down delays.

Access to the migrant worker may be granted by offering longer-duration work visas to them, and by reducing the time taken to issue such visas to EU Based migrant workers.

Some other measures can include accepting inputs from industry leaders on where the government can also better support the sector, creating a robust support package to help attract businesses to maintain operations in the UK, developing a strong long-term strategy for the sector, and much more.

Brexit, News

Brexit two years on: Over 75 per cent of project managers are concerned

Research by Association for Project Management (APM) has found over three quarters of project professionals still have concerns about Brexit’s impact on projects, with increased costs, disruptions and shortages among the main sources of worry.

A national survey of 1,000 project managers found that 78 per cent have current concerns about Brexit, most notably: increased project costs (38 per cent), disruption to collaboration with EU partners (37 per cent) and materials and equipment shortages (37 per cent).

Challenges foreseen

The same survey showed participants’ worries are mostly consistent with the challenges they anticipated before Brexit happened, pre-January 2020. Increased project costs and disruption to collaboration were the most commonly cited concerns at that time. Key shortages ranked fifth in their predictions (36 per cent), however, behind complications due to legislation and legal issues (37 per cent) and reduced access to skills and knowledge (36 per cent).

Among project managers who still have concerns over Brexit, those working in construction say disruption collaborating with EU partners is their biggest Brexit-related worry. In manufacturing, shortages of materials or equipment is the main concern. Those working in healthcare point to project delays as the main anxiety.

An optimistic outlook

Despite current Brexit-related concerns, a similar survey commissioned by APM in July 2021 revealed the effects of Britain leaving the European Union as the second biggest opportunity for the project management profession, after new ways of working.

The recent survey found the most anticipated opportunities from Brexit, pre-January 2020, to be improved access to materials and equipment (37 per cent), reduced complications with legislation and legal issues (36 per cent), revamped supply chain management (36 per cent) and quicker project delivery (36 per cent).

Adam Boddison, chief executive of APM, comments: “Through years of expertise, collated in APM’s latest study, Dynamic Conditions for Project Success, we know the ingredients for a job well done, and they’re what have helped and continue to help the profession navigate the impact of Brexit, among the many other challenges added into the mix since January 2020.

“Challenges are more manageable with strong leadership, clear communication, a diverse team, a sustainable mindset and agility. Therein lies part of the lesser recognised opportunities from Brexit: a chance to overcome adversity and be better at what we do as a result.”

Food & Drink, News

Supply chain issues start to bite for food businesses

More help is needed for businesses struggling with supply chain challenges if consumers are not going to face long-term rising food costs and limited availability. Continue reading Supply chain issues start to bite for food businesses →

Finance and Banking, London News, News, Recruitment News

Brexodus of International Financial Services Talent Hits City

The labour shortages facing the City is not the result of a post-lockdown boom but of a Brexodus of foreign workers, an examination of the current jobs market has concluded. 

Specialist recruiter Randstad looked at changes in the ratios of vacancies to applications for jobs in the City – using the volume of applications as a proxy for candidate volumes.  In the first half of 2020, Randstad said they had 22 applications for every financial services job advertised.  In H1 2021, this ratio fell to 11 applications per job.  

But the change has been driven by a collapse in candidate numbers, rather than a huge uptick in Square Mile hiring.  Randstad says that the number of applications for City roles were down 34 per cent – but the number of vacancies grew 28 per cent.  

Adam Thorpe, director of operations at Randstad UK said,

“Across the UK, we don’t think the labour shortages we are seeing are, on the whole, being driven by a dearth of EU labour in the face of Brexit.  The shortage of HGV drivers is being felt in Germany, France, and the US, for example – the UK’s shortages are no different.

“Financial services is different.  The sector has experienced an exodus of Belgian business analysts, Czech compliance specialists, and Dutch data modellers.  That’s why there’s a recruitment crisis and why candidate shortages are plaguing City firms – it’s not as though the Square Mile is offering ‘poverty wages’ to prospective staff.  The UK’s financial services sector has always benefited from immigration, from Nathan Rothschild and Sir Siegmund Warburg, to Michael von Clemm and his vision to create Canary Wharf out of the desolate docklands.  But these people are much less interested in coming to work in the UK’s financial services sector.  Those that were here and went home – hundreds of thousands of them – are worried about coming over being stranded on the wrong side of a border from their loved ones.  The financial services sector as a whole cannot simply go back to how it was before.  This is the economic price of leaving the EU.

“The ranks of the unemployed don’t hold the answer; there aren’t hundreds of financial analysts sitting at home waiting for a call – the jobs that were lost in the past year were disproportionately low paid and insecure.  And the end of furlough might have unlocked a chunk of the labour supply for the hospitality sector but it isn’t going to conjure people to sift M&A propositions or prepare the legal paperwork for takeover bids.  While City employers will train good people in the medium term, that will take years.  In the short-term, we are going to have to look abroad to fill the void for now, presumably via the wider Anglosphere, as we did in the nineties and early noughties.” 

News, Transport

Why the UK’s HGV driver shortage is a culmination of many factors

Special report by Kalkine Media‘s Kunal Sawhney

The UK’s heavy goods vehicle (HGV) driver shortage has been a persistent issue, which later aggravated by the Coronavirus pandemic. The haulage sector in the UK has been suffering from a chronic shortage of HGV drivers attributable to several factors, including Covid-19, Brexit and others.

The issue worsened further due to the pent-up demand and peak seasonal pressure. Previously, the sector was heavily dependent on HGV drivers from the EU. The imposition of COVID-19 restrictions and changes in visa regulations resulted in several non-UK based drivers relocating to their homelands.

Impact on businesses

HGV driver shortage has been the cause for some supermarket shelves remaining empty and caused long queues at gas and fuel stations. BP announced the closure of some of its fuel stations and lengthy queues across its other outlets. Supermarket giant Morrisons warned that food lorry driver shortage could inflate prices of products.

Restaurant and fast-food chains such as The Wetherspoons and McDonalds also raised concerns about the shortage of drivers impacting operations, while some others, such as Nando’s, were forced to temporarily closed down 50 sites due to supply chain issues. Beverage manufacturers such as Molson Coors, Heineken and Coca Cola also announced sourcing and supply chain issues because of driver shortages.

A Bank of England report for April – June highlighted that the transportation delays resulted in a shortage of some items, such as car components and accessories, furniture, and electrical goods. Material shortages also hit the construction and manufacturing sectors.

Is Brexit a major factor?

Implementation of Brexit and the resultant changes in policies for immigrants caused European drivers working in the UK to move back to their home countries or find alternate employment opportunities. When the UK was part of the European Union, drivers could freely move in the EU. However, the implementation of additional border rules post Brexit resulted in non-UK based drivers moving back to their home countries. Additionally, the decline in the value of the British pound against the Euro ever since the Brexit vote, made the country less attractive for EU nationals.

How is it being tackled?

In response to the escalating shortage of food lorry and fuel tanker drivers in the country, Prime Minister Boris Johnson recently, announced plans to offer about 5,000 visas to foreign truck drivers on a temporary basis to combat the issue. The decision came after several businesses, including BP and Tesco, sought government intervention that caused massive depletion of supplies and triggered panic buying.

Several additional examiners from the Ministry of Defence are being appointed to raise the number of HGV driving tests and speed up truck licensing applications. The government also announced the setting up of intensive training programs to train 3,000 people to become HGV drivers, with another 1,000 set to be trained through courses funded under the UK’s adult education budget. The UK has also announced slight relaxation in the Drivers’ Hours rules, which implies that drivers can raise their daily driving limit from nine to 11 hours, two times per week.

In response to the growing anxiety associated with fuel shortage in the country, Kwasi Kwarteng, UK’s business secretary, announced a temporary exemption of fuel companies from the laws regulating competition. This would enable them to share information and optimise supply across fuel stations.

While the government is doing its bit to address the haulage staff shortage in the country, businesses are not behind. They are offering attractive salaries and incentives to draw drivers back to the UK. Ocado announced £5 million spending to increase bonuses and wages of HGV drivers, while Tesco is providing drivers with a £1,000 bonus on joining.

The country needs almost 100,000 more HGV drivers to meet the demand, whatever steps are being taken now should have been done long before, apart from focussing on other key issues like the way people working off the payroll pay tax, working conditions and roadside services, cost of training drivers etc, most importantly the sector’s nature is flexible that has a major role to play and needs to be taken care of urgently for a permanent solution to the crisis.

News

How the Fintech Sector in The UK Is Grappling with New Challenges?

The UK is one of the leading global hubs for the fintech sector, reinforced by its access to an international talent pool, solid investment, and growth, thus leading to a thriving ecosystem. UK-based fintech companies raised about US$ 4.1 billion in funding in 2020 and were one of the prominent sub-sectors driving growth in the broader financial sector in the UK.

The traditional financial sector in the UK is currently facing a dual pressure of tackling the Covid-19 pandemic and Brexit. In addition to these headwinds, traditional legacy banks and financial institutions have also been grappling with rising operating costs, changing customer behavior, regulatory challenges, and new technology.

Future of fintech

Despite the challenges faced by the broader economy due to the onset of the pandemic and Brexit, the use of innovation and technology helped startups in the fintech sector weather the storm.

And for the sector to continue to be a key driver of growth for the UK economy, it should focus on innovation in RegTech, which can target the ever-changing and evolving regulatory landscape and identifying new business models such as partnerships for developing the ecosystem further.

RegTech

As new players join the financial sector and provide users with greater access to banking services, there has been a rising need for financial services companies to tackle a very large amount of data and in ensuring compliance in a seamless manner. Building robust backend processes to address regulatory technology is the next big frontier for fintech firms.

Recently, the UK government has also made significant headway in terms of shaping a new regulatory framework for the financial sector due to Brexit. The Financial Services Bill received Royal Assent on 29 April and was converted into the Financial Services Act 2021. This act aims to develop a regulatory environment that allows for the advancement of technology and innovation.

Partnerships

There has been a small but growing number of legacy financial services companies and banks collaborating with nimbler fintech startups to identify ways to better adapt to the constantly changing business environment. According to consultancy firm Mckinsey, fintech companies with B2B offerings and services increased by 16 percent from 2011 to 2016, thus indicating a rise in partnerships.

The collaborative partnership model between fintech companies and traditional financial services organizations is mutually beneficial as the traditional banks and firms can develop useful tools such as financial money management tools and apps for depositing money for customers. On the other hand, startups benefit by being able to provide services to a larger client base and network. Moreover, partnerships have the ability to be more adaptable to customer behavior and can be scaled up or down depending on their response.

What’s next?

As the pandemic continues into the second year and is expected to persist for few more months, senior management and leaders in the financial sector are increasingly seeking flexible and responsive technology that can be deployed and adjusted to an everchanging business climate in the face of uncertainty. Thus, the next generation of fintech firms will have an even more focus on automation and streamlining processes, which can adapt quickly and effectively while primarily focusing on regulatory and compliance challenges and new business models.

Written by Kunal Sawhney, CEO, Kalkine Group

Brexit, Law, News

Conexus Law Launches New Service to Help Organisations Mitigate ‘Brexit’ Risk

Conexus Law, the specialist provider of legal advice to businesses operating at the intersection of the built environment, technology and people, has launched a Brexit Contract Management and Audit Service. It is designed to help address the many unresolved issues following the Christmas Eve Agreement.

The new service will help organisations manage any potential contract risks and assess existing contractual arrangements that may require attention to ensure continuity of commercially viable relationships post BREXIT. It will include a full audit of all contracts including a review of standard terms and conditions (both signed and those under negotiation), and any bespoke contracts with both suppliers and customers, together with business contracts which touch every business area whether it be IT, purchasing, product, sales and marketing, office services, facilities maintenance, logistics or outsourcing.

In addition advice will be given as to whether a contract has a mechanism or opportunity to exit or re-negotiate its terms should this be necessary. While the service will focus on arrangements with EU suppliers or customers, it can include the full suite of contracts globally (including UK to UK contracts and UK to non-EU contracts).

Brexit will also impact trade between the UK and global markets and between the EU and global markets, with likely increased customs and duty requirements and costs. All of this will be taken into account when setting the scope of the contract audit.

Ed Cooke, Founder at Conexus Law, said: “Although The Christmas Eve Agreement gave some clarity, businesses continue to be faced with uncertainty. There are clear implications for many areas such as supply chains, imports and exports and employment that will affect the technology and datacentre sectors and our service will ensure full visibility of the commercial impact of Brexit on the business.”

Brexit, News

Limitations to EU visa options could impact staffing levels in health and social care

With the latest data from the Office for National Statistics (ONS) revealing that approximately 192,000 EU workers are employed in health and social care, the Association of Professional Staffing Companies (APSCo) has warned that the sector could face a significant skills shortage when the Brexit transition stage ends.

Data published by the ONS revealed that 6% of the UK’s health and social care workers employed between 2017 and 2019 were EU nationals, while 6% of all key workers in the country were from Europe. With the Migration Advisory Committee recommending that social care workers are added to the Shortage Occupation List in September and a number of healthcare roles already identified as in short supply, the UK could face a shortfall of staff if employment routes aren’t suitable for relevant European workers.

As Tania Bowers, Legal Counsel and Head of Public Policy at APSCo, explains, the limitations of the post-transition visa options for EU nationals has the potential to impact skills availability for those on the Shortage Occupation List, including health and social care:

“For those sectors that rely on EU talent due to a short supply of in-country resources, the changes to how you can hire from across Europe post-transition present a real challenge, particularly for those recruiting flexible workers. The details published so far on the points-based immigration system provide a disappointing lack of detail around the movement of and access to highly skilled independent professionals across Europe.

“Under the Skilled Worker route an individual has to have a job offer and be sponsored by a licensed sponsor to gain access to this – an option that isn’t viable for independent professionals seeking to work on multiple projects. The Tier 1 Global Talent visa is also very limited in scope and, as a result is not suitable for independent professionals. While the document recently shared by the Government references a broader unsponsored route within the points-based system which will allow a smaller number of the most highly skilled workers to come to the UK without a job offer, the Home Office has made clear that this will not open from January 1st 2021.”

“Without a visa route that is geared to attract highly skilled contractors into the UK and, with lucrative opportunities available to these individuals in other countries, few are likely to willingly tackle the UK’s immigration system post-transition. Given the sheer number of EU workers employed in roles that are on the Shortage Occupation List, this potential drop in numbers is concerning to say the least.”

News, Recruitment News

Trade body responds to the Prime Minister’s “Build Back Better” plan

The Association of Professional Staffing Companies (APSCo) has welcomed the Prime Minister’s announcement that the Government will invest in future-proofing the UK’s skills through more flexible Apprenticeship options, a new Lifetime Skills Guarantee and a ‘radical change’ to the nation’s education and training, but warns the immediate impact may be limited.

Tania Bowers, Legal Counsel and Head of Public Policy at APSCo commented:

“The move to a more flexible training and skills development approach in the UK is something we welcome. We’ve long called for a relaxation around the Apprenticeship Levy rules to make the scheme more suitable for today’s modern world and during lockdown the flaws of the current apprenticeship funding became apparent. Despite millions of people finding themselves out of work looking for new employment opportunities or on furlough, businesses were unable to use their levy pot to fund training. While we wait to review the full details of the new flexible options for Apprenticeship funding, it is our view that these changes need to be made swiftly to support those coming off furlough into potential unemployment.”

“For skills short sectors that rely heavily on STEM experts, the Prime Minister’s plans to encourage more of the UK’s adults to retrain in specialist technical fields certainly looks set to bolster skills in the future. However, as these training courses can take years to complete and the offer won’t be available until Spring 2021, the plans don’t address the immediate challenge that the country’s employers are going to face after the Brexit transition period.

“Come 1st January 2021, employers in sectors that have historically been reliant on hiring flexible resources from across Europe to fill skills gaps – including IT, construction and engineering – will face a real struggle to source these experts. The details published so far on the points-based immigration system provide a disappointing lack of detail around the movement of and access to highly skilled independent professionals across Europe.”