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John Simpson: Brexit will be done so let's now use it to our advantage

Prime Minister Boris Johnso
Prime Minister Boris Johnso
John Simpson

John Simpson

For too long, we were guilty of hoping that Brexit could be avoided. Now it is happening, the transition will start and the full rigour of leaving the EU will soon become a living experience. The amended UK-EU withdrawal agreement, negotiated by Boris Johnson, is nearly in place.

The academic discussions about new borders in the Irish Sea as well as the consequences of special NI trading arrangements affecting Northern Ireland-Great Britain and affecting GB-Northern Ireland-Republic of Ireland will become the reality.

They will only be unwelcome if implementation creates new obstacles, extra costs and legal hazards.

The real test is the converse: can the withdrawal agreement, and its operational administration and governance, be implemented to avoid obstacles, costs and legal traps?

Whilst there may be some unavoidable snags, can implementation be managed to create a net positive outcome?

The Northern Ireland protocol of the withdrawal agreement tries to facilitate a workable trading, contracts and payments regime to reassure people and businesses from Northern Ireland.

The spirit of the protocol is to maintain unfettered open market arrangements between NI and GB as well as steps to maintain north-south business across the whole island of Ireland and further to access the EU [27] market.

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For the administration of customs duties Northern Ireland will remain in regulatory alignment with the Republic and therefore, linked to the EU internal market trading arrangements.

Northern Ireland goods (and most services) crossing the north-south border in the Republic will trade with no import duties (or charges). Separately, Northern Ireland goods would trade into GB without customs formality.

Goods coming from GB into NI en route to the Republic need to be monitored and pay EU duty when in transit through Northern Ireland.

That requirement means that arrangements must be made to document the process.

When working efficiently, that can facilitate GB goods exported to the EU. Likewise, goods coming from RoI, routed through NI to GB will need to be documented somewhere, possibly on leaving a port in NI.

The administrative arrangements to minimise any trading costs (and avoid liability to customs duty) are the critical element in maintaining the competitiveness of Northern Ireland businesses.

Northern Ireland can gain the best of both worlds - continued frictionless trade with GB and continued frictionless access to the EU - provided that any necessary cross-border or cross-Irish Sea administration is minimised.

That outcome is not yet assured, as the Northern Ireland business interest groups have emphasised. Regulatory alignment issues will need to be tackled if, or when, they emerge.

Efforts to amend the withdrawal agreement in Westminster, whilst sympathetically heard, did not succeed.

What is now awaited is a working arrangement, through the new EU-UK consultative committee (where a NI voice may be allowed) to simplify and minimise the necessary paperwork and any associated costs, including de Minimis provisions.

The withdrawal agreement is now in place. The challenge is to use it constructively. It has implications for many industrial and agricultural policies. In particular the threats to the dairy, beef and lamb trades can now more easily be dealt with.

The withdrawal agreement, instead of being an unwelcome arrangement, must be developed as a means to deliver a best of both worlds answer.

Northern Ireland can offer a business base which combines the advantages of continuing commercial networks within the UK setting and, additionally, a business base with continued duty-free access to the EU.

Provided the consultative and regulatory machinery created by the withdrawal agreement is developed, quietly and constructively, taking account of local interests, then the opportunity is there for Northern Ireland to have its own unique selling advantage across the UK and the EU.

Showing the politicians that there is an acceptable answer to this comes as a credit to the informal group of Northern Ireland business organisations which has firmly grasped this conclusion.

Policy makers and politicians must now adjust their thinking to the new challenging opportunities.

Company report: Norbrook Holdings

Norbrook Holdings is the English registered parent company, in Corby, for the Norbrook Laboratories group which has manufacturing facilities in Newry.

The holding company consolidates the performance of about 20 other companies trading across the world. Norbrook is one of the largest Northern Ireland-based private companies.

The directors have elected chief executive, Liam Nagle, as chair of the group. The board of Norbrook now includes Lady Ballyedmond as deputy chair and her two sons. The group is controlled by the Lord Ballyedmond Family Trust.

In the year 2015-16 the group (re-)purchased a number of its own shares from shareholders at a cost of £74m. Then in 2016-17, it issued new preference shares raising new capital of £10m. Since then, after the addition of post-tax profits and the deduction of dividend payments, the value of shareholders’ funds increased to over £145m in mid-2018 and decreased to just under £140m in August 2019.

Trading results in the most recent financial year were seriously affected by a number of adverse factors. The company report describes these as manufacturing and supply chain issues which affected the ability to supply products to the market for a proportion of the year. The board reports that, after corrective action, there are clear plans to return to normalised output levels by the second half of 2020.

Pre-tax profits fell sharply, at over £8m, and dividends to shareholders, which cost nearly £16m in the year to end July 2018, were reduced in the more recent year to just under £12m. Employment in the group has been held nearly steady at 1,974 people.

Capital expenditure to enhance the assets and equipment continued at a high level, £11.9m, but was slightly lower than a year earlier.

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