Wondering how Britain’s vote to leave the EU will affect your ecommerce business? You’re not alone. All business owners need to know what to expect so they can plan for the future. In the first part of this guide, we looked at the changing value of the pound and loss of regulations. But in part two, we’ll be looking at what’s in store with regards to that all important trade deal.
Trading outside of Europe
Access to the single market has been at the very heart of the Brexit debate since day one. Losing it was long considered the main risk of the whole process. But in fact, Theresa May’s Brexit White Paper says the UK will be leaving the single market and fighting for an “ambitious and comprehensive free trade agreement”.
What this means is still a bit unclear. She might seek to access the market through the European Economic Area (EEA). This gives countries like Norway, Iceland and Switzerland access to the single market without being EU members. But what if the UK fails completely to secure a deal with the EU and its member states?
Free movement of goods
The main goal of the single market is to enable the free movement of goods. So without a deal, there would be extra charges for EU consumers buying from the UK and vice-versa. This would clearly make it more difficult to trade with EU countries because of the premium it puts on UK products. How likely is this? Not very. The UK government knows the importance of the EU market to its businesses and will likely put a trade deal at the top of the agenda.
But even if it does happen, there would be a positive counter-effect. While EU consumers would be less likely to buy UK products, UK consumers would be more likely to do so. This brings a huge amount of business back to Britain’s ecommerce industry, with British consumers previously the biggest users of cross-border ecommerce according to Payvision.
New opportunities
In terms of trade, leaving the EU could also open up new opportunities for UK ecommerce companies. Under the Common Commercial Policy, member states are prohibited from pursuing trade agreements outside the EU. Instead, the EU negotiates these trade agreements on their behalf. Currently the EU has free trade agreements (FTAs) with over 30 non-EU countries.
One area where the EU has struggled, however, is the US. Their work-in-progress trade deal – the Transatlantic Trade and Investment Partnership (TTIP) – has been cancelled by anti-EU President Donald Trump. Without the restriction of the Common Commercial Policy, the UK will eventually be free to negotiate with the US following the termination of TTIP. A successful FTA would open up a huge market for UK ecommerce businesses.
Is the UK being held back?
An interesting point raised by IDM’s Aiden Carroll is how little the EU has done in the way of ecommerce. All other major markets, for instance, have big name ecommerce platforms amongst other things: Alibaba in China, Amazon in the US and Rakuten in Japan. But also, Carroll explains, the UK has excelled in ecommerce far more than the EU. Britain has three times the ecommerce trade of the next best EU member state Germany. Leaving the EU could actually see Britain flourish as a key ecommerce player.
The future of ecommerce
Is Brexit going to change things? Yes. Is it going to ruin British ecommerce? Definitely not. Our ecommerce industry has thrived for years, and with expert help from the Magento ecommerce specialists at Fluid Digital, you can safeguard your business can too. Our award-winning web design services can give your business the platform you need to thrive. Take the first step towards ecommerce success – call us today on 0161 452 1350.