Confused about Brexit? Yes, we all are! Learn about Brexit and learn key business English.
1. Watch the video on Brexit and business English.
2. Read the script below to check any words.
Video Script (or go straight to the quiz on the Courses page)
In the past week, one student has asked me to cover Brexit in our business English lesson and another has mentioned work his company is doing to deal with the changes Brexit will bring. So, I decided to produce this video to help you understand Brexit AND teach you business English at the same time.
First let’s talk about the European Union. The European Union is a union of 28 states – or countries. The United Kingdom – the UK – joined in 1973 but in 2016 the UK voted to leave – that’s Brexit: Britain leaving or exiting the European Union.
In a few minutes, I will give a short talk about Brexit but first 10 useful business English words and phrases.
Capital is usually money but it could be another form of wealth
For example, it could be shares
If you own shares then you own part of a company.
To trade is simply to buy and sell goods or services
Trade is also a noun
So, we can talk about a trade agreement
Another word for a trade agreement is a trade deal
A deal is simply a kind of agreement
To import is to bring goods or services into a country and then sell them.
This can also be a noun: An import
This means goods or services brought into a country in order to be sold.
To export is to send goods or services to a foreign country to sell them
And ‘export’ can also be a noun: An export
Exports are goods or services sent to a foreign country and sold there.
Now, if you want to sell your goods or services in a foreign country, you will usually need to pay the government first.
Customs is the department you pay when you want to export goods or services.
Customs duties are the money you need to pay. Customs duties are like a tax which exporters need to pay.
Customs tariff is very similar to customs duties – it’s the amount of money you need to pay when you export goods or services.
A customs union is an agreement between countries about the customs duties which will be paid. I will talk about the EU Customs Union later.
Manufacturing means to make things – like cars – in large numbers or small numbers of very big things – like a ship, for example.
Just-in-time production does not keep a large number of parts at the factory. For example, one of Toyota factories in England only keeps enough parts for 4 hours.
In manufacturing, the inventory is all the things like the parts which are put together to make the finished product.
Labour is the work which is done or the workers who do it. So, labour costs are the costs of employing people to do the work.
OK, so now let me
give a short talk about Brexit and I will be using these words and phrases so
listen out for them.
Brexit through the eyes of business.
The European Union – or EU – has a system of justice, security arrangements, a political structure, an economic framework and a single currency.
But in this video, we are going to focus on trade and there are two important features of the EU which I need to explain.
Nations which are part of the European Single Market accept the four freedoms. What are the four freedoms: the free movement of goods, capital, services and people. What does this mean? Well, it means that I can sell goods or services to any other country in the Single Market as if I were selling them in the UK. How about capital? Free movement of capital means I can buy or sell currency, shares or other investments completely freely within the Single Market. Finally, freedom of movement means that, as a European, I can live and work in any other country in the Single Market. So, I’ve simplified the agreement but these are the four freedoms.
Now, the second feature of the European Union: the Customs Union
We said that there is free movement of goods within the EU – well, the Customs Union helps to deliver this free movement of goods. Countries in the Customs Union can trade without any tariffs – that’s the first main benefit. Secondly, the countries within the Customs Union agree to apply the same customs duties on imports from outside the Customs Union. This means that after those goods have been imported, they can be traded freely within the Customs Union.
As Britain plans to leave the EU, there are a number of options: staying in a customs union, a Norway-style arrangement, a Canada-style deal. It’s all very complicated. What most businesses are worried about is a no-deal Brexit. Under a no-deal Brexit, the UK would leave the EU without a deal. So how would the UK trade? Well, the UK could trade under World Trade Organisation rules and try to negotiate new free trade agreements.
Let’s look at some examples.
First, let’s take a manager in a vehicle manufacturing company in England. She oversees the “just in time” importing of millions of parts from the EU every day. Just in time is a crucial part of her business for a number of reasons. For example, just in time allows her company to keep its inventory as low as possible, reducing storage and labour costs. Just in time imports from the EU are possible because there are no tariffs or delays at customs.
If the UK leaves the EU without a deal, managers at British car companies will have a big headache. They would need to trade under World Trade Organization rules and would pay 4.5% tariffs on car parts and 10% on finished cars. The carmaker Nissan has said that WTO tariffs would cost the company up to £500m a year on exports.
So, a no-deal Brexit would have a huge impact on the import of vehicle parts and the export of finished vehicles.
We’ve talked about cars. Now something completely different: strawberries.
Who picks the strawberries in your country? Well, in the UK, 99% of seasonal workers on British farms come from Eastern Europe.
But Brexit is already having an effect. According to the National Farmers Union, in 2017, there was a 12.5% shortfall – or lack – of seasonal workers to pick fruit and vegetables.
Strawberry farmers are used to working within the European Single Market and so it has been easy for them to get strawberry pickers from Romania and Bulgaria. This is because, under the Single Market, there is freedom of movement so any EU citizen can go and work in any other EU country without needing a work visa. Seasonal workers are now more reluctant to come and work in the UK. Farmers are concerned that they will not be able to find enough workers to pick their fruit and vegetables.
Let’s take another example: perhaps you are a manufacturer of consumer electronics in Russia or South Korea. Now you can trade with the UK under trade deals negotiated by the European Union. If the UK leaves the Customs Union, trade will only be possible under World Trade Organisation rules or if separate trade deals are made. The UK can currently trade under the EUs agreements with 60 or 70 other nations. It would take the UK a long time to negotiate new trade deals with 60 or 70 nations – as well as the 27 remaining members of the EU.
But, to be fair, not all business people are worried about a no-deal Brexit. Sir James Dyson is a British billionaire who is well-known for his vacuum cleaners and other home appliances. Dyson has said that it will be beneficial for the UK to leave the Customs Union and negotiate its own trade deals, making the country more competitive.
So, as I record this in November 2018, there is a lot of uncertainty about Brexit. And uncertainty makes it very difficult for business people to plan. How do they invest for the future? Where are the opportunities? We hope to find out soon!
OCTOBER 9, 2018 Financial Times
The UK is included in trade deals the EU has negotiated with 52 countries https://www.bbc.co.uk/news/uk-politics-eu-referendum-36639261
WTO tariffs David Conn, Nissan becomes latest manufacturer to warn against hard Brexit, 4.10.18, the Guardian, https://www.theguardian.com/business/2018/oct/04/nissan-becomes-latest-manufacturer-to-warn-against-hard-brexit