It's always tempting to view trade as a zero-sum game, focusing exclusively on exports and seeing imports as either unimportant or a drain on the economy. Many people argue that because we have a trade deficit with the EU (particularly inmanufactured goods) the EU needs the UK as a trading partner more than the UK needs the EU, or even that a no deal scenario might actually boost British industry.
One person who knows this only too well is John Hood, who is business development director at STL Heating and Energy. STL is agrowing firm that supplies heating systems, including boiler installation, servicing, repair and maintenance to households across the United Kingdom. It employs 120 people, and had a turnoverlast yearof more than £8m, and has helped an estimated 30,000 customers during its timein business.
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Boilers are at the core of STL's business it installs just under 300 each month. To keep costs as low as possible, STL needs to pay as little as possible for each one. At the moment, most of the boilers used in the UK are imported from the EU, with evendomestic manufacturers looking to the European market to determine prices. And while Brexit "hasn't had a huge immediate impact", many of the local merchants that STL buys from have started to raise their prices, to reflect both the post-referendum fall insterling and the greater uncertainty about Britain's future trade relationship with the EU.
A "no deal" scenario where both Britain and the EU impose tariffs on each other's exports, is a "big worry", since this would increase prices (and STL's costs) significantly. The uncertainty caused by Brexit has already ledto the collapse of a putative deal between STL and amajor European manufacturer. This deal would have benefitted both firms. It could alsodelay its strategic partnership with Intergas Heating, the secondlargest boilermaker in Europe which wouldhelp Intergas increase its market share in the UK.
The prospect of tariffs, and higher prices, isn't the only thing that Hood is concerned about. Regulatory harmonisation in the single market makes it easier for manufacturers to export boilers, but also means that consumers can besafe in the knowledge that a boiler manufactured in one part of Europe meets pan-European safety standards. American and Chinese boilers are manufactured "to completely different regulations", which makes them "as different to the ones thatwe use as oil is from water" he explains. As a result, even a "super-dooper" trade deal with those countries would do little to lower prices.
For Hood, the ideal outcome of the Brexit negotiations is either a deal that "lets us keep our current trading arrangements with the EU" or a relationship "between Britain and the EU as close to the current one as possible". If neither option isachievable, he would at least appreciate "some clear lines" that "set out what our future relationship with the largest trading bloc in the world is going to be".
After all, when it comes to industries like heating, which rely on cheapbutreliable imports ofmanufactured goods, "people don't like uncertainty".
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