wirral chamber of commerce 2017/in... · • the number of eu citizens coming to the uk will be...

Our members and patrons

Wirral Chamber of Commerce

In Business: Brexit – The

Opportunities and Challenges

for Business

Tuesday 24th January 2017

Our patrons:

24 January 2017

Mike Spicer

Director of Research and

Economics

Marcus Mason

Brexit Coordinator

BCC Brexit Presentation

Wirral Chamber

Today

1. Economic context

2. Feedback for each key policy area

3. Shaping ‘Brexit Negotiating Principles’ for the UK Chamber Network

52Accredited Chambers

National, regional, local

BENEFITS

of UK businesses

with 50-250

employees are

Chamber members

20%

Local and nationalPR opportunities

Local thought leadership platforms

Our Members employ

5 MILLION PEOPLE

27%of UK businesses

with 250+

employees are

Chamber members

59%of members

employ less than

10 employees<10

The British Chambers of Commerce

Representing Chamber member views

1. Gathering and synthesising member views

2. Parliamentary and government engagement

3. Media interventions

Key points from our engagement with government

• UK will not seek continued single market membership

• Will seek a new customs agreement with the EU

• UK Parliament will vote on the final EU deal before it comes into force

• Government wants “phased process of implementation” after Brexit, but not “unlimited transitional status”

• Cannot conclude Free Trade Agreements with Third Countries yet (until UK leaves EU), but can begin to scope them out

• The number of EU citizens coming to the UK will be controlled

• UK-wide solution, with Devolved Administrations playing key role

• Bring in as much EU law as possible into UK law in the first instance

Timeline (subject to change)

• Q1 2017 – UK triggers article 50

• Q2/Q3 2017 – negotiations begin between European Council and UK; UK begins to pursue bilateral trade deals with non-EU nations (‘Third Countries’)

• Q1 2019 – UK Parliament vote on Brexit Deal; UK exits the EU

• 2019 onwards – likely continued negotiations with EU re future relations; FTAs with Third Countries

• Key dates: France Presidential Election (Q2 2017); Germany Parliamentary election (Q4 2017); European Elections (May 2019); UK General Election (Q2 2020)

Poll: do you see Brexit as an opportunity or threat for your business?

ECONOMIC CONTEXT

BCC Quarterly Economic Survey…

...achieves over 8,000 responses from

business per quarter, by far the largest business survey in the UK...

Established in 1989......covers every region and nation in the UK...

...monitored closely by the Bank of England, HMT, and European Commission...

“It is a welcome report from BCC – but remains a lot of work to do , to get deficit down, get more people into work etc. Report did find manufacturing balances at all times high, exports are up – we are seeing our country on the rise.” Rt Hon David Cameron

...QES paints a weakening picture...

11

BCC Economic Forecast: Q4 2016

Source: BCC

BCC Economic Forecast Summary (Annual % change)

2015 2016 2017 2018

GDP 2.2% 2.1% 1.1% 1.4%

Household Consumption 2.5% 2.7% 0.6% 0.6%

General government 1.5% 1.3% 1.1% 0.8%

Investment 3.4% 1.1% -2.4% 0.6%

of which: Business Investment 5.1% -0.8% -2.1% -0.3%

Exports 4.5% 2.6% 2.3% 2.9%

Imports 5.4% 2.3% 0.6% 0.7%

CPI Inflation* 0.1% 0.6% 2.1% 2.4%

Interest rates* 0.50 0.40 0.25 0.25

1. TRADE

2. CUSTOMS AND TAXATION

3. EU FUNDING

4. EMPLOYMENT & SKILLS

5. REGULATION

6. NORTHERN IRELAND / REPUBLIC OF IRELAND BORDER

TRADE WITH EU-27,

THIRD COUNTRIES

Capacity to do trade deals – what / who do we need? UK – a large and diverse economy

Regulated monopolies

Points to consider…

Domicile requirements

Poll: Which of the following is more important for your business?

What we are hearing from members

Government progress so far

• Priority sequencing for future trade deals: EU – Grandfathering – Large Markets – New Markets

• 36% of businesses surveyed in ITS will put more resource into Europe; 25% into North America

• Looking at bespoke trade deal with the EU rather than an existing model

• Ability to sign our own trade deals is a priority

• WTO negotiation ongoing – importance of own tariff schedule

CUSTOMS AND TAXATION



• Lack of awareness of potential customs issues among exporters – concern that they will be unprepared for changes.

• Businesses are concerned of the uncertainty over what amends to the tax regime might occur as a result of Brexit.

• Concerns over capacity of HMRC to deal with any changes.

• Confirmation that the UK will not be a full member of the customs union, following Brexit.

• Alternative options being considered e.g. a completely new agreement, an associate member of the customs union.

• No major updates on tax.

EU FUNDING



1. Welcome guarantees for EU-funded projects2. Concern about gap in public funding left by the eventual drying-up of EU3. Opportunity to reform regional development funding policy to achieve better

outcomes4. Avoid ‘copy and paste approach’ that leaves the complexity, rigidity, and

inefficiency of the current system intact

1. Government guarantees for EU-funded projects signed before 2016 Autumn Statement

2. Further funding guarantees announced at 2016 AS for drawing on EU monies up to the point the UK leaves the EU

3. European funding teams at DCLG / BEIS considering options for future system to replace EU structural funds. Early feedback through ESIF Programme Board and SME sub committee is that thinking focused on tweaking current system

EMPLOYMENT & SKILLS

Poll: Should we grant preferential access to EU workers, compared to

non-EU workers?



• Govt wants to protect status of EU nationals in the UK, provided the rights of UK citizens living in the EU are also protected

• PM has made efforts to secure an early reciprocal deal but this was refused by other EU members states

• PM aims to control number of EU migrants

• Businesses experiencing acute skills and labour shortages

• Firms need access to low and high skilled migrants

• Firms want certainty about existing EU workers and status during A50 and Brexit

• The issue of immigration goes hand in hand with skills and training

REGULATION



• Overall, volume of regulation is too high, often poorly drafted and that changes are sometimes not well communicated by Government, often leading to confusion and over-compliance.

• Strong agreement that we should retain many common regulations if they help ease trade flows.

• Great Repeal Bill – Queen’s Speech 2017. Parliament will debate contents of the Bill.

• PM’s Brexit Speech (17 Jan 2017) - The UK is not seeking membership of the single market and wants a “phased implementation process.”

BORDER BETWEEN NORTHERN IRELAND AND

REPUBLIC OF IRELAND


Government progress so far• Govt says Devolved Admins will play key role in negotiations. David Davis chairs EU

Negotiations Joint Ministerial Committee

• Broad consultations taking place, e.g. All-Island Civic Dialogue on Brexit

• PM said govt wants to maintain the common travel area between the UK and ROI

• UK exiting Customs Union could have impact on UK/ROI border

• Importance of cross border trade activity without added bureaucracy

• Importance of flow of people across the border

• In response to uncertainty some firms shifting investment/production to EU, incl. Ireland

Questions

Contact

Marcus Mason

Brexit Coordinator

E: [email protected]

Mike Spicer

Director of Research and Economics


British Chambers of Commerce

65 Petty France

London SW1V 3NE

T: +44 (0) 20 7654 5800

www.britishchambers.org.uk

Foreign Exchange Risk and Volatility - Pre & Post BrexitGeorgina Cope

http://www.govopps.co.uk/wp-content/uploads/2012/03/British-Chamber-of-Commerce.jpg

Agenda

Introduction to the FX Market

Market movement and examples

Different ways of buying currency / hedging risk

Moneycorp benefits

Chamber FX case study

About Moneycorp

1962Company incorporated

1979Started dealing in foreign exchange

5A 1 Strongest credit rating in the industry with D&B

FCA Authorised and RegulatedTTT Moneycorp Limited is authorised and regulated by the Financial Conduct Authority for the provision of payment services.

8.1mCustomers served last year

£22.7bnTraded in currencies last year

One stop shopCorporate, Private, Wholesale, Retail

Preferred partnerTelegraph, The Guardian, Virgin Atlantic,

BCC, CNN, The Post Office, The City AM, UKTI, The FT, The FD Centre.

The FX Market

The Foreign Exchange market is the largest financial market globally - $5.3 trillion

traded per day

Approximately 150 currencies in the world, but not all of them are actively traded.

More than 85% of FX deals involve US dollar.

More is traded on the FX market in a day than the stock market in a year

Speculators vs transactional foreign exchange

The FX Market

Perception, fear and greed.

Markets fluctuate constantly,

making it difficult for companies

to plan.

Fluctuations can significantly add

to costs, or erode profitability on

projects and deals.

Speculators –97%

Transactional buyers: 3%

Current FX situation in UK

Approximately 75% of UK companies still use their bank for FX transactions

The remaining 25% use a foreign exchange specialist to achieve more competitive rates

of exchange and expert market guidance

Many companies have not credit checked their current provider

Typically banks are offering exchange rates up to which are significantly higher than

many specialist foreign exchange specialists

International transfer fees typically between £20-£40

Market Movements GBP/EUR

• High 1.1944; low 1.1054

• 7.73% volatility

• When buying euros with £500,000 this translated to a difference of €44,500 between the six month high and low.

Market Movements GBP/USD

• High 1.3385; low 1.2049

• 10.5% volatility


Market Movements GBP/USD

• High 1.2414; low 1.1990

• 3.5% volatility


GBP/USD Multi-Bank Forecasts

Currently: 1.23 In Q1: High – RBS at 1.36 Low – HSBC at 1.10 Average – 1.2490

GBP/EUR Multi-Bank Forecasts

Currently: 1.16 In Q1:

High – Barclays 1.32

Low – HSBC at 1.00

Average – 1.1860

Uncertainty – Just Brexit?

Continued uncertainty = market volatility

6 months before Brexit, sterling moved 11% against the Euro and 10% against the dollar.

Dutch, French and German elections looming.

Potential Fed and BOE interest rate hikes.

Parliament vote on the Brexit deal.

Different Ways To Buy Currency

Spot Forward Market orders Options

Immediate delivery

Lock in to favourable rates

longer term

Target a rate and minimise risk

Fixed rate with potential upside

Online

Over the phone

Forward Contracts

Fix a rate up to two years ahead

Fully flexible to use (drawdown) when wanted

Complete protection from volatility

Purchase obligatory

Credit implication

Market Orders

A limit order allows you to set a target exchange rate

Conversely, a stop loss order allows you to set a ‘worst case’ exchange rate

Ranges Last week USD - 1.1990 – 1.2414 & EUR 1.13055 - 1.1589

47

Options

A vanilla option gives the holder the right but not the obligation to exchange one currency for another at a specified rate on a specified date in the future.

Hedging Strategy

The markets are unpredictable – not necessarily a right or wrong answer to which hedging tools to use

Match your hedging strategy to your risk appetite / profile

Can you afford the loss? What is the worst case scenario?

Many companies will use a mixture of products to ensure they are best protected – this way there will be no big wins nor any big losses: e.g. booking 33% forward, 33% spot, 33% market orders / options etc.

Buy / Sell Currency

Make a Payment

Add a Beneficiary

Virtual Currency Balance

Moneycorp Benefits

Expert market

guidance at the

end of the

phoneFree currency

heath check –

how competitive

are your

payments?

Safeguarded

client funds

Free account

opening and

access to

moneycorp’s

currency holding

accounts

Capped £5

transfer fees

Bank beating

exchange rates

We take advantage of forward contracts on a daily basis to manage not only ourprofit margins but the margins of our customers when purchasing slate fromSpain, and the rates we receive through moneycorp are highly competitive.Previously we were using Western Union but we found moneycorp’s online systemmuch easier to use and more convenient for our day to day accounting.

Their system also allows us to pay via direct debit, which is ideal. We are verypleased with the service levels provided by moneycorp and it is very reassuringthat our personal expert dealer is available at the end of the phone, should weneed any guidance.

Client Testimonial

“

”

JRC Roofing began using moneycorp for their foreign exchange requirements in 2014…

For Any Further Information…

If you have any questions regarding Brexit and the policy surrounding it, please contact Policy, Trade &Communications Manager, Ben Lavell


T: 44 (0)151 650 6940

mailto:[email protected]

wirral chamber of commerce 2017/in... · • the number of eu citizens coming to the uk will be...

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