2021 was a difficult year for UK exports in terms of recovery out of the pandemic. Export performance was essentially flat in the latter part of 2021, with EU exports falling by 0.3% in the period from November 2021 to February 2022. The terrible events in Ukraine are also providing severe headwinds to global trade and economic recovery. The World Trade Organisation on 12 April downgraded forecasts for trade in both 2022 and 2023 as a result of the conflict and the reordering of supply chains.
For the UK, the conflict risks disruption to supply chains in key manufacturing sectors including automotive, food and drink, construction and advanced manufacturing as raw materials and other essential inputs become far more difficult to source. Steel, cement, wood/timber, copper, cobalt, titanium pigment, and palladium are all key UK supply chain materials which will have to be sourced from elsewhere in the globe. Five iterations of UK sanctions on Russia since mid-February have generated bans on iron and steel imports from Russia and Belarus, a ban on the export of dual-use, luxury and high-end technology products (including those in the oil and gas sectors) for those countries, and prohibition on new UK investment there. The EU, US and UK have withdrawn Russia’s preferential Most-Favoured Nation (MFN) treatment at the World Trade Organisation (WTO). All of these measures are designed to stop the flow of revenue and capital to Russia and Belarus and to detach those states from the benefits of being part of the global economic order.
In terms of freight, Rotterdam port is no longer taking goods destined for or coming from Russia, and key shipping lines such as Maersk have refused to handle such goods. The latest advice from the UK Government is that UK nationals should not travel to Russia and that UK nationals whose presence is non-essential in Russia should leave by the remaining commercial routes available. We have provided advice to companies seeking to wind down their operations in Russia and Belarus, and also to those firms working through the range of contractual, commercial and moral issues affecting prior trade with customers in those countries. As yet there is no sense that secondary sanctions – applicable to those countries still trading with Russia and Belarus – will be implemented.
Undoubtedly this altered trade landscape will have effects on growth in the UK and upon individual businesses. The BCC and Chambers Network has attempted to mitigate these effects by working with DIT on clearer guidance to advise businesses. We are in discussion with DIT and other UK Government departments about managing the growing supply chain constraints UK businesses are under, looking at near shoring or reshoring of certain sourcing chains. We are also speaking to government about what that means for export and economic strategies.
What has also emerged through this crisis is the generosity of the Chambers Network and their local business members in offering support to those in need in the war zone and surrounding states, in terms of donations, humanitarian aid and job offers to Ukrainian nationals coming to the UK under the family reunion or Homes for Ukraine schemes. Chamber Customs and the BCC asked for and secured easements from HMRC to ensure humanitarian goods are more easily able to reach those in need in the warzone with minimal or no customs red tape or delays.
As Ukrainian nationals begin to arrive in the UK, the Chambers Network will be at the heart of business support to the new arrivals. We are speaking to the UK Government about those sectors of the economy, such as medicine and architecture, where Ukrainian nationals with high level skills or professional qualifications will be able to use those skills for the benefit of local economies across the UK.
Amid the worst displacement of people in Europe since the end of the Second World War, the solidarity and practical help offered by the Chambers Network and its membership reflects the very best of humanity. We will strive to play our full part in the difficult months ahead.