Chancellor’s hint toward regulatory divergence after Brexit could pose challenges for SA Builders and Contractors and other firms
Skender Perpepa, founder of Romford based business SA Builders and Contractors has been vocal about some of the industry challenges posed by Brexit. Now, with chancellor Sajid Javid’s revelation that the UK will seek to diverge from some EU rules after departing the bloc, it could throw up a whole host of new challenges for the firm to grapple with.
Speaking to The Parliamentary Review last year, Perpepa indicated that the impact of Brexit would likely have an impact on the firm's workforce, but this was likely to be overshadowed by a greater issue.
Perpepa said: “Brexit poses entirely new challenges for us as a business. Our workforce is mainly British, but we do have a small number of overseas operatives on our sites who are very good at what they do.
“It is too early to analyse how our current workforce will be affected. The bigger concern arises from potential material cost increases, due partly to manufacturing cost rises but, more importantly, to higher import costs.”
The UK-EU free-trade agreement favoured by prime minister Boris Johnson which will be negotiated over the course of 2020 is widely regarded as the key to frictionless trade with the bloc, yet chancellor Sajid Javid’s comments, as reported in the Financial Times this week, may put paid to those thoughts.
Javid dealt one of the highest indications yet that the UK will seek to diverge from EU regulations, a move which Tim Rycroft, chief operating officer of the Food and Drink Federation, called a "death knell" for frictionless trade with the EU.
Javid said: "There will not be alignment, we [the UK] will not be a ruletaker, we will not be in the single market and we will not be in the customs union - and we will do this by the end of the year."
Javid called on business to “adjust” to the impending changes, adding that the Treasury will not seek to support manufacturers who favour alignment with the EU, since businesses have known since 2016 that the UK will be leaving, even without being aware of “the exact terms”.
The chancellor stopped short on specifying which EU rules the cabinet would look to drop, but did admit that some businesses would benefit from Brexit while others would not.
With this in mind, it is likely to throw up concerns for businesses to be able to market their products in Europe, but equally so for the likes of SA Building & Contractors who favour tariff free trade due to import of materials and the knock-on effect from the manufacturing sector.
The extent of the challenges that will arise depends on which EU regulations the cabinet will seek to diverge from, but also on the nature of the free-trade agreement.
Perpepa told The Review last year that recent years for the business “have been the most successful yet”, expressing a hope that this will be allowed to continue.
For this to be the case, the next 11 months in the political sphere, most notably at the negotiating table, will be vital. However, what the government must also take into account and consider with every move, as Rycroft said, is the impact that the "changing of trading terms" will have on British businesses and British industry as a whole.