The departure of the UK from the EU single market and customs union at the end of 2020 marked a significant shift in the trade dynamics between the two entities. The complexities of post-Brexit relationships are further compounded by external factors such as the Covid pandemic and geopolitical tensions, making it challenging to isolate the direct effects of Brexit on trade.
Understanding these dynamics has become crucial for strategic planning and decision-making as businesses begin to trade in the EU from the outside.
Opening A Business Bank Account In The EU
One of the primary steps for businesses looking to expand into the European market is setting up a business bank account. While the EU is known for its intricate regulations, the good news is that non-residents can indeed open a business bank account in Europe. However, the process may require physical presence, specific documentation, and sometimes, a justification for the need to open such an account.
For those who wish to bypass the traditional banking bureaucracy, there are alternative solutions. Platforms like Silverbird offer a streamlined approach to opening a UK bank account for non residents in the EU, UK, or US. With an easy onboarding process, Silverbird provides global accounts, facilitating large international transfers and offering local EU/UK bank details, including IBAN. This digital approach not only simplifies the process but also offers a cost-effective solution for businesses.
The reasons for opening a European business bank account can vary, from accepting payments from European customers, and growing business operations in Europe, to requiring European payment processing. Regardless of the motive, understanding the requirements and choosing the right platform or bank is crucial for a smooth business operation in the European Union.
Understanding the Trade and Co-operation Agreement
After the Brexit vote, the UK and EU eventually established the Trade and Co-operation Agreement (TCA) to uphold their long-standing trade relationship. This pivotal agreement ensures that goods can be traded without tariffs, safeguarding the economic bond that has thrived for years.
While the TCA has been a beacon for tariff-free trade, it has also ushered in non-tariff barriers. Businesses now face regulatory checks and customs declarations, occasionally causing border delays. Notably, the Trade and Co-operation Agreement doesn’t encompass services, a vital part of the UK’s economy, leaving service providers uncertain about the near future.
The TCA is a blend of rights and responsibilities, crafted to ensure both the UK and EU can engage in fair trade. As the business world adjusts to this new deal, grasping the TCA’s subtleties becomes crucial in order to thrive in an evolving UK-EU trade scenario.
The Significance Of The Trade Deficit
The UK’s trading dynamics with the EU took a new turn in 2022. A striking £92 billion trade deficit with the EU emerged, indicating that the UK bought more from the EU than it sold. Why does this matter? Well, for starters, it underscores the UK’s continued dependence on EU products and services, even in the post-Brexit era. It’s also a stark contrast to our trade with non-EU countries, where we enjoyed a £5 billion surplus.
This deficit isn’t just a number; it’s a reflection of the broader trade landscape. It raises questions about the challenges UK businesses might be facing when trying to sell to the EU. On the flip side, it suggests that the UK market might be a lucrative destination for EU exporters.
EU’s Role In UK Exports Over The Years
A closer look at the UK’s export trends reveals a changing narrative. Once, the EU was the cornerstone of the UK’s export market, gobbling up a hefty 50-55% of our exports between 1999 and 2007. Fast forward to 2022, and that figure has slimmed down to 42%. This isn’t just a blip on the radar; it’s indicative of a broader shift in the UK’s trading focus.
What’s behind this change? After Brexit, new trade deals and the emergence of other global players have had a hand in reshaping the UK’s exports. There’s been a concerted effort from the UK to bolster trade relationships outside the EU, leading to a richer, more varied export mix.
While the EU remains an essential partner, this drop in share highlights the UK’s evolving trade ambitions. It’s a call to action for UK businesses; keep nurturing those EU ties, but also venture out and seize opportunities in other booming markets.
The evolving landscape of UK-EU trade relations post-Brexit presents both challenges and opportunities for UK businesses. From understanding the intricacies of the Trade and Co-operation Agreement to navigating the £92 billion trade deficit, businesses must stay informed and agile. The significance of setting up financial footholds, like opening business bank accounts in the EU, cannot be understated, especially for those looking to expand their European footprint.
UK businesses must seize opportunities, address challenges head-on, and foster a spirit of collaboration with their European counterparts. The future of UK-EU trade may be complex, but with informed decisions and forward-thinking, prosperity lies ahead for both parties.
