Brexit Blues

On Wednesday March 29th, our Prime Minister triggered ‘Article 50’, marking the beginning of Britain’s negotiations to leave the EU. Now ten months on from that fateful vote and with our pathway a little bit clearer, Jack Ridsdale takes a closer a look at the effects Britain’s new status is having on the toys industry.
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It’s an image that will be burned into the minds of people all over the country that made headlines on Wednesday 29th March, UK Prime Minister Theresa May signing the letter signalling the UK’s intent to withdraw from the European Union. During the referendum, the supposed benefits were hazy at best and now that the £350 billion boon to our NHS has been firmly proven false, do any benefits remain for UK businesses?

For starters, back in January the Prime Minister confirmed that the UK would leave the single market, discarding the benefits of reduced tariffs, costs and administrative burdens, so what does this mean for traders on UK soil?

Well no matter which way you spin it, for those that deal with imported goods, it’s bad news.

Paul Martin, head of retail at KPMG explains that additional tariffs are likely to create headaches for suppliers moving goods between multiple markets.

“When shipping products into other European markets you would have to pay another set of customs and tariffs on top of tariffs you may have already paid and then there is the beaurocratic hassle,” explained Martin. “As far as the value of the pound, we won’t know where we stand until the EU present their offer.”

Outside of purely financial concerns, there are also EU regulations to consider. It is taken for granted that the EU’s board of regulations has long kept a watchful eye on the toy industry, safeguarding it from unsafe products. The Toy Safety Directive, established in 2009 not only outlined rules regarding the general safety of toys (choking hazards etc) but also harmful chemical elements. While one of the bullet points in the Leave campaign’s manifesto was the casting off of unnecessary regulations, Jeremy Morton, partner with law firm Harbottle & Lewis LLP, explains that the regulations are unlikely to go anywhere soon.

“Anyone wanting to access the EU market for toys will need to comply with the EU’s regulations. In that sense, nothing will change. What may change, depending on the negotiations between the UK and EU, is how much bureaucracy exists at the border,” explained Morton, “New checks and controls may be introduced that slow down the process of importation.

Also, roles and responsibilities will change under things like toy safety regulations, with EU- based importers responsible for compliance and they will now be empowered to demand product information from manufacturers.”

“It will be a long time before the UK’s laws diverge significantly,” added Morton, “even where we have the option to diverge, it will, in many cases, suit the UK to keep the EU laws.“

With so many details still up in the air, some retailers believe that the majority of problems facing retailers are more localised as Dave Carter of the Arcade Toy Shop in Dudley continued.

“We’ve seen price increases from suppliers, which has been the immediate effect, but we haven’t seen much difference in customer’s buying habits,” said Carter, “For us, the much bigger problems lie with our local council and, of course, decreased footfall in the High Street.”

However, industry analysts like Paul Martin warn retailers not to ignore the fallout of Brexit.

“It’s time to start thinking about cost optimisation and negotiating better with their suppliers.”

As the Brexit negotiations roll on, Rebecca Deeming of the BTHA will be giving ToyNews updates in her BTHA column every three months. Remember to pick up the next issue of ToyNews in June for your first Brexit update. 


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