Two examples that justify agility when pursuing a retail turnaround

retail turnaround to prevent extinctionThis blog contrasts the fortunes of Majestic Wines with those of Debenhams as arguably examples that show how retail business can survive a rapidly changing environment.

There have been efforts by many struggling High Street retailers to improve their businesses by using an insolvency mechanism called the CVA (Company Voluntary Arrangement).

The most recent of these is Debenhams, which, having secured £200 million in new loans in March and followed with a pre-pack administration sale in early April, effectively wiping out its shareholders including the vociferous Mike Ashley who also owns Sports Direct and BHS.

It was acquired by new owners, a consortium of banks and hedge funds, who almost immediately launched a major store closure programme ultimately to involve 50 stores, in conjunction with a CVA aimed at persuading landlords to reduce the rent for remaining stores by up to 50%.

Debenhams’ sales had dropped by 7.4% in the previous six months but it has been argued that the store chain’s problems were more deeply rooted in its dinosaur-like lack of adaptation to the change in consumer buying habits.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “As an investment, Debenhams is a tale of woe from start to finish.

“The strategy since float was out of kilter with the changing habits of consumers. But even before the float [in 2006], its private equity owners had put the department store under financial pressure, by selling off a number of freeholds in favour of leasing them back.

“Hindsight is a wonderful thing, but the road to Debenhams’ ruin has been paved with poor decisions, as well as a dramatic shift towards digital shopping.”

Richard Lim, chief executive of Retail Economics said: “We should not understate the significance of this collapse. Debenhams has fallen victim to crippling levels of debt, which has paralysed its ability to pivot towards a more digital and experience-led retail model.

“Put simply, the business has been outmanoeuvred by more nimble competitors, failed to embrace change and was left with a tiring proposition. The industry is evolving fast and it paid the ultimate price.”

By contrast, a restructure announced by Majestic Wines demonstrates a fine example of retail turnaround agility, where the key word is “pivot”.

In 2015 Majestic bought Naked Wines, a subscription-based online business founded in Norwich by entrepreneur Rowan Gormley in 2008, and appointed Gormley as its CEO.

In March this year, he announced plans to close 200 Majestic stores and to rename the company as Naked Wines. According to Majestic almost 45% of its business came from online with a further 20% from international sales.

The Majestic business model had been to locate its outlets on cheaper out-of-town sites with parking and to sell wines sourced directly from producers in bulk only, in multiples of 12.

But with the change in consumer behaviour Gormley took the decision to restructure the business by pivoting it to online sales only – a potentially more lucrative option as it will release capital from the physical stores to invest in attracting more customers.

Mr Gormley believes that Naked Wines has the potential for strong sustainable growth and has said “We also believe that a transformed Majestic business does have the potential to be a long-term winner, but that we risk not maximising the potential of Naked if we try to do both.

His innovative restructuring may prove that his prediction of sales reaching £500m and of an increase in regular customer payments by 10-15% this financial year may well be correct.

There is no need for retail businesses to become dinosaurs but survival in a changing world requires vision and bold decisions.

May 2019 Key Indicator – is there still a direct link between rising Brent crude oil prices and inflation?

Brent crude oil refineryThe Bank of England (BoE) governor, Mark Carney, has recently warned of growing inflationary pressures and potential interest rate rises sooner than was previously expected.

At the moment the UK’s inflation rate is at 1.9%, unchanged from the previous month and well below the ceiling of 2% after which the BoE would have to take action.

However, although the core basket of prices that influence the inflation rate is not seen as the problem, the rising cost per barrel of crude oil may be behind Carney’s latest warning.

The current price of Brent crude oil as of April 29, 2019 is $71.22 per barrel, although the monthly average so far this year has been calculated as $64.98. (Figures courtesy of https://www.macrotrends.net )

The idea of a direct correlation between oil price rises and inflation was cemented in the 1970s when the UK economy was hit by an oil embargo by the 1973 by Arab oil producers in response to Western support for Israel in the Yom Kippur war.

The 1970s inflation rate of more than 24% that toppled the government of Edward Heath and forced the BoE under the subsequent government of Harold Wilson to prop up Burmah Oil was arguably determined by oil prices. The resulting “stagflation” also c9ntributed to global food shortages and escalating Trades Union demands for wage increases to cope with the rising prices.

The link between crude oil prices and inflation was fixed in the minds of economists and central banks although it seems to have been forgotten.

So, should the current rising Brent crude oil prices be reason for concern?

This chart (again courtesy of macrotrends) shows the oil price picture over the last decade:

Brent Crude price fluctuationsThe chart highlights the volatility of oil prices with a 10-year high of £128.14 in 2012 and low of £27.88 in 2016.

At today’s price the future trend would seem upwards although most economists now argue that the direct link between price and inflation is no longer relevant because the world has changed significantly.

Firstly, the economists cite the many other oil producing countries outside of the OPEC cartel and why OPEC is no longer dictating prices. These include Iran, Russia, Brazil, China and Canada, with the US being self-sufficient now it produces its own oil.

Secondly, consumer demand for petrol when the oil prices rise does not reduce and some industries do not pass on the rises to consumers via their products.

Thirdly, they argue that the crude oil pricing model is not simply one of supply and demand because the price of oil is actually set by the oil futures market, which is determined by traders and market sentiments.

So where is the BoE warning of inflationary pressures coming from?

According to the Observer’s business leader at the weekend, the BoE latest quarterly review of the economy sees a combination of a reviving global economy and the UK’s ever-increasing workforce –increasing demand and keep up the pressure on prices. This is contrary to other evidence of a global bubble that is growing.

However, the BoE says: “the only reason that economic activity has picked up in the US, the eurozone and China is because their respective central banks have promised to tear up plans for interest rate rises”.

Despite the positive forecast, supply concerns may prop up oil prices due to the USA’s continued embargo on Iranian oil and its re-imposition of sanctions on countries that buy from Iran. It also has an embargo on Venezuela.

Also, concerns about contaminated oil coming via a pipeline from Russia have prompted European customers Poland, Germany and Ukraine to halt imports via the Druzhba pipeline are all contributing to the currently high price of crude oil.

Whether this will feed into rising inflation and the knock on effect of rising interest rates remains to be seen.

Alas, each generation tends to forget history and the 1970s seem a long time ago!

UK business insolvencies and distress indicators continue to rise

UK business in stormy watersAn alarming number of businesses are in either significant or critical financial distress, according to the latest Begbies Traynor Red Flag Alert, issued just the day before the Insolvency Service revealed the figures for Q1 (January to March) 2019.

484,000 UK firms, or 14%, are in “significant financial distress” while the numbers of those in “critical financial distress” have risen by 17% in Q1.

Begbies Traynor partner Julie Palmer said: “Many UK businesses are currently in limbo and deferring major investment decisions. This combined with consumers holding back on big ticket purchases has resulted in increasing significant distress across many sectors.

“Capital intensive sectors – such as construction and property – are suffering as both business and consumers have taken a cautious approach and limited their exposure.”

These figures would seem to be borne out by the Q1 Insolvency statistics, which showed a continuing upward trend, primarily in CVLs (Company Voluntary Liquidations) and CVAs (Creditors Voluntary Arrangements). Administrations, too, had reached their highest quarterly level since the same quarter in 2014.

CVLs increased by 6.2% compared to Q4 2018, administrations were up 21.8%. and CVAs increased by 43.1%.

Top of the list, as they have been for some time, were the wholesale and retail trade’s repair of vehicles industry sector, which saw the largest increase in underlying insolvencies, with 67 extra cases compared to the 12 months ending in December 2018. This was closely followed by the administrative and support services sector. Next highest were Manufacturing and accommodation and food services.

However, it is possible that the pressure to meet rent and rates, and the continued struggles of High Street retailing account for some of the significant rise in CVAS in the first quarter of 2019 when compared to the last three months of 2018.

No end in sight to the pressures facing UK business

While it would be easy to blame the continued uncertainty over Brexit, Begbies Traynor executive chairman, Ric Traynor, said although this was “the main driver” there were other factors involved, including the combination of faltering European economies and a potential trade war between the US and Europe.

To this list I would add the decline in trade with China which is down to these same factors combined with last year’s slowing growth there.

With the economy being predicted to flatline for the rest of the year and investment sluggish, it seems that UK businesses are facing a perfect storm in their struggle to survive and grow.

Why the current model of free market capitalism is failing SMEs

synbol of capitalism for the richIn the late 1970s the then UK Prime Minister Margaret Thatcher and US President Ronald Reagan both espoused the idea of minimal state regulation and of allowing free market capitalism to reign relatively unchecked in line with the theories of the Nobel prize-winning US economist Milton Friedman and The Chicago School, as it was called.

The assumption was that the weakest businesses should be allowed to fail and only the strongest would survive, which would benefit businesses, consumers and result in strong economies. It also assumed that the private sector would provide everything from energy to transport infrastructure to education at a lower cost than if they were state-funded.

Since then we have seen the 2008 global financial crisis, the introduction of a programme of austerity in the UK, central banks reducing and keeping interest rates artificially low, productivity in decline and a widening of the income inequality gap with increasing wealth concentrated in the hands of approximately 1% of the population while wages have barely risen for the majority.

In March the former governor of the Indian Central Bank warned, in an interview on the Radio 4 Today programme, that capitalism is “under serious threat” as it has stopped providing for the masses.

“It’s not providing equal opportunity and in fact the people who are falling off are in a much worse situation,” he said.

It should be no surprise, therefore, that so-called populist and nationalist movements, largely seen as extreme right or extreme left, have been on the rise across Europe as much reported in Italy, France, Germany and UK and also in the “Make America Great Again” USA.

Indeed, as the columnist Bagehot had reported in the Economist the previous June, that something is wrong with the current model has begun to be recognised in Conservative circles, notably by Michael Gove, who, he said, was lamenting: “the failure of our current model of capitalism to deliver the progress we all aspire to”.

The implication is that there is both “good” and “bad” capitalism and that the current situation is far from good.

What are the implications of “bad capitalism” for SMEs?

Top investor, influencer and author of Principles, Ray Dalio, Co-Chief Investment Officer & Co-Chairman of Bridgewater Associates, L.P. in New York, has produced a detailed analysis of the effects of what has gone wrong and how capitalism should be reformed.

He says: “Over these many years I have .. seen capitalism evolve in a way that it is not working well for the majority of Americans because it’s producing self-reinforcing spirals up for the haves and down for the have-nots.”

Dalio also argues that while necessary in 2008 the results of the Central banks’ actions have been to drive up the prices of financial assets focusing investors on financial returns in the short term at the expense of investing for the longer term.

While his focus is on the USA, much of his argument applies to the UK also, in the outcomes being a rise in rent-seeking investment, which puts nothing back into businesses, the economy and society, a race for higher and higher CEO pay, short-termism and a marked lack of highly-educated and skilled young people coming into the workforce.

All of these make it increasingly difficult for SMEs to thrive and grow.

What is needed, he says, is a re-engineering of the capitalist system, to better and more fairly divide the economic pie and to have a system of accountability that makes clear whether individuals are net contributors or net detractors to society. It also needs income redistribution by taxing the richest and using the money to invest in the middle and the bottom primarily in ways that also improve the economy’s overall level of productivity.

Does the Government understand UK SMEs’ problems?

UK SMEs are many and variedA recent fiery opinion piece in the London Evening Standard by Rohan Silva accused the Government of failing to help and therefore destroying UK SMEs.

While most of his ire was directed at the Chancellor, Philip Hammond, due to the 2017 increase in business rates, Silva also alleges: “Poorly implemented plans to make tax digital are costing companies thousands of pounds to become compliant. Big increases in the amount firms have to pay towards pension contributions are making it more expensive to employ people.”

According to the Federation of Small Business (FSB), the business rate increase means the average small company in London now has to find £33,000 a year simply to cover its rates bill. That’s on top of paying rent, NI contributions, corporation tax and running costs. Significant increases in the minimum wage haven’t helped many SMEs either although unlike the other burdens it has benefited employees.

It has become increasingly and depressingly clear that there is a lack of subtlety and nuance in many Government policies that affect UK SMEs.

What are the UK SMEs’ other main problems?

SMEs are said to be “the backbone” of the UK economy but a big problem is that there is no “one size fits all” solution to the pressures they face.

The start-up SME is very different from the established small business, a retail SME with a physical premises is very different from an online retailer yet there is very little recognition of this.

A newly-published British Chambers of Commerce (BCC) survey of 1,000 firms, many of them SMEs, found that almost 60% believe the tax regime is unfair on businesses like their own. The poll saw 67% of respondents say the taxman does not apply rules fairly across all sizes of business.

It quotes Suren Thiru, head of economics at the BCC, who argues that HMRC (HM Revenue and Customs) sees “smaller businesses as low hanging fruit and as a consequence they feel under the constant threat of being called out for getting things wrong in a tax system that has grown ever more complex.”

According to R3, the trade body of the insolvency profession, the Chancellor’s recent proposal to make HMRC a preferential creditor in insolvency is only likely to make the situation worse, by adding to the risk that banks and finance providers won’t lend without personal security and suppliers will be less willing to provide credit terms in the future.

Other issues raised by UK SMEs

One issue is that there is insufficient weight given to those businesses outside of London, with an uneven spread of investment that favours the capitol.

Bibby Financial Services’ confidence tracker found that there was patchy awareness among SMEs about local initiatives with just 54% local firms aware of the Midlands Engine and 36% of Northern SMEs believing that there is too much focus on the Northern Powerhouse at the expense of other Northern cities.

Then there is the difficulty SMEs have in accessing and negotiating Public sector contracts, not to mention the hurdles and perceived lack of help they face when accessing export markets. A 2019 survey by techUK of 101 SMEs across the technology sector, found that just 15% of respondents think that the government has an adequate understanding of the role SMEs could play in public sector provision.

To end on a more positive note I should mention one initiative which is beginning to show some success in supporting SMEs and that is the Prompt Payment Code. This follows the recent change that now allows the Small Business Commissioner, Paul Uppal, to investigate cases and to name and shame those large business offenders who continue the practice of late payment.

 

UK economy macroeconomic update at the end of March 2019

UK economy crystal ball gazingAmidst the tedious ongoing, protracted and now further extended Brexit process, predicting where next for the UK economy is akin to crystal ball gazing.

So, a macroeconomic update on the UK economy can only be a short term snapshot, from which it may be possible to tease some potential signs for the future although the impact on UK of some global trends make some predictions more certain.

The state of the UK economy after the first quarter of 2019

As ever, we have seen a mixture of positive and negative economic data but it should also be remembered that Brexit is a distraction since the UK economy is heavily dependent on the EU and global economies which have been slowing markedly.

In defiance of most economists, unemployment continues to decline and is at its lowest level for 45 years, and employees are finally seeing modest, albeit recent, above inflation wages growth after many years of minimal wage increases. This has no doubt contributed to the higher levels of income tax and helped narrow the gap between government spending and revenue. Consumer spending has also held up rather better than predicted to help the UK economy.

While the FTSE 100 dropped to 6,584 in December it has since recovered to 7,490 but not yet to its historical peak of 7,877 in May last year. Much of the recovery would appear to be a reversal in economic forecasts for interest rates, which were expected to rise in US and UK but now are projected to remain the same for some time and even may be reduced as some are predicting. As a benchmark the yields on UK 10-year Gilts (bonds) are currently 1.23% up from 0.52% in July 2016, and US 10-year Treasury bonds are 2.58% which is down from their 5-year high of 3.23% in November last year.

The rate of house price growth has been at its lowest for almost eight years and the UK economy expanded by just 0.2% in the latest three months with the Treasury, the Bank of England and the City predicting the weakest growth for eight years for 2019.

Export orders, too, have gone down, with UK export growth falling by 0.8 points to 95.6 in the first three months of the year.

Worrying signs ahead for the UK economy

The UK’s service sector accounts for 80% of its economy and the most recent purchasing managers’ index for February from IHS Markit/CIPS fell to 48.9 in March from 51.3 in February, where any figure below 50 shows a contraction in the sector. Construction, too, remained below 50.

IHS Markit/CIPS is predicting that the UK economy will grow by just 0.8% this year. PwC has also downgraded its GDP growth forecast for this year to 1.1% from 1.6%.

At the end of March, there was some evidence from the REC (Recruitment and Employment Confederation) that employers were scaling back hiring and investment plans.

More concerning is the flight of capital out of the UK with Santander moving spare capital away from its British operations and EY (Ernst & Young) analysis suggesting that banks, asset managers and insurers are opening or expanding their European centres, with 23 companies announcing the transfer of £1trn in assets.

Despite what some might regard as a gloomy outlook, it would appear that prospects for the UK economy are better than those for Europe and possibly than for US.

It will be interesting to see what happens over the next quarter now that extra time has been agreed to sort out the Brexit situation.

Normal business life cannot remain on hold forever, but whatever the outlook we should get on with doing business and not wallow is apathy or self-pity.

Failing to recognise the equal value of women to the economy is short-sighted

equal value of women CEOsIt is dispiriting in the 21st Century that investors and businesses are still not recognising the equal value of women and their contribution to achieving success.

Two recent reports have – yet again – highlighted this discrepancy.

Not only did many businesses fail to meet the Government’s recent deadline for reporting on their gender pay gap but, according to BBC research, fewer than half of the UK’s biggest employers have succeeded in narrowing their gender pay gap. In fact, in 45% of firms the discrepancy had increased.

The Fawcett Society, which campaigns for gender equality, described the figures as “disappointing, but not surprising”.

More alarmingly, various reports have revealed that women entrepreneurs face an uphill struggle in getting investment finance.

Government analysis has found that less than 1% of venture capital investment in the UK goes to female-led start-ups. Its research was carried out by the British Business Bank, Diversity VC and the British Private Equity and Venture Capital Association.

Recently, the Daily Telegraph reported an example where a women posed as a man in order to apply for funding from investors:

After receiving patronising responses to her requests for financial backing for her technology consultancy business from male investors, entrepreneur Brittney Bean, the Telegraph reports: “She wrote to investors under the persona of “Nigel” – her male head of finance. “I’d reply as a man, saying, ‘I’m now taking this company’s finances over, is it possible that we can extend the credit line?’ And the reply was like, ‘It’s great to start working with you. Of course, we can help with that,”.

SMEs and investors miss out by Ignoring the equal value of women to the economy

Of course, if the culture is to change then schools, colleges, apprenticeship schemes and employers all need to play their part.

Research by a team under Robert M. Sauer, chair of economics at Royal Holloway University, has found that having a bank loan increases average business value by €96,500 for men and €174,545 for women.

While Samantha Smith, chief executive of FinnCap Group, suggests that improving female entrepreneurs’ access to venture capital funds could help boost UK GDP.

Yet the bias towards investing in male-dominated ventures persists. Where is the evidence that men, rather than women are likely to develop the “next big thing”?

And when there are skills shortages in many sectors, why narrow the recruitment pool to such an extent? Surely the most crucial thing for a business is to find the best available talent regardless of gender – or ethnicity.

It is time these chauvinistic attitudes were consigned to history, where they belong.

 

What kinds of jobs will be taken over by automation?

automation of unskilled jobsIn late March, the ONS (Office for National Statistics) published its latest findings on the effects of automation on the jobs market.

It found that some 1.5 million jobs were at high risk from automation, but, tellingly, 70% of these roles were currently held by women. The next most at risk groups were part timers and young people.

The ONS calculates that around 710,000 jobs in the City may be taken over by automated technology, with around 39% of jobs in the accounting, legal and financial services sectors most likely to be automated and that 34% of roles in tax advice could be affected..

Waiters and waitresses, shelf fillers and elementary sales occupations, are most likely to go, all roles defined as low-skilled or routine. Increasing numbers of factory workers are also at risk of being replaced by machines.

Least endangered are medical practitioners, higher education teaching professionals, and senior professionals in education although many of their support functions such as data capture and preliminary assessments are already being done by computers.

Deeper analysis suggests that automation has already dispensed with some lower-skilled work because although the overall number of available jobs has increased, according to the ONS, these are in low or medium risk occupations.

According to Maja Korica, associate professor of organisation at Warwick Business School, 20% of the Amazon workforce, for example, may already be made up of robots.

Are the economy, employers and businesses prepared for the risk from automation?

While it seems that manufacturing is already moving ahead with automation, the question is whether there will be enough higher-skilled people available for the future.

The take-up of apprenticeships by business has repeatedly failed to hit targets set by the Government.

While the future for the economy is still so uncertain, many employers will continue to delay investment in the long term productivity benefits that automation offers.

In the short term, therefore, there continues to be a need for lower-skilled workers with demographic groups being overlooked by employers, according to Pawel Adrjan, a former Goldman Sachs economist who now works at the jobs group, Indeed.

He argues that employers will need to search across underemployed demographic groups (young people, single parents, ethnic minorities, people with disabilities) at least in the short term as more and more EU workers either leave the UK or decide not to come and work here.

Clearly, the economy and various sectors are still in a state of transition, so it may be that relatively low-skilled work will be around for a while yet. But when automation ramps up there will be a need for more skilled workers as operators. Despite the loss of some jobs, automation offers scope for everyone involved to benefit.

First two companies named and shamed over late payment

late payment penalty?In March the first company to be named and shamed by the Small Business Commissioner Paul Uppal over late payment to a SME was announced.

The Office of the Small Business Commissioner launched an official investigation into the payment practices of the Jordans & Ryvita Company.

Using his new powers for naming offenders the Commissioner investigated Jordans & Ryvita on behalf of small business Magellan Design Ltd, which was owed approximately £5,000. As a result, the money was paid together with a further £1,400 in late payment interest.

This week the results of a second investigation, this time into health food retailer Holland & Barrett, were revealed. It was launched after a complaint from an IT company, which had asked not to be named, over an unpaid invoice of £15,000. The invoice took 67 days to be paid, well outside the company’s contractual agreement of 30 days.

Mr Uppal found that Holland & Barrett had “a purposeful culture of poor payment practices”, in which 60% of invoices were not paid within agreed terms and payment took an average of 68 days. He also condemned the retailer for not cooperating with his investigation, saying: “Holland & Barrett’s refusal to co-operate with my investigation, as well as their published poor payment practices says to me that this is a company that doesn’t care about its suppliers or take prompt payment seriously”.

Since the inception of the Prompt Payment Code and Mr Uppal’s appointment in December 2017 his office has released £3.5 million in late payments for small businesses and attracted 50,000 visitors to its website.

The effects of late payment to SMEs by large businesses can be catastrophic

The FSB (Federation of Small Businesses) has estimated that 50,000 SMEs each year close because of late payments and in July last year published research showing that 17 per cent of smaller suppliers were paid more than 60 days after providing an invoice, while close to one in five smaller suppliers are paid late more than half the time by the public sector.

While the latest results are a welcome development I would argue that until Mr Uppal is given powers to fine offenders they are unlikely to take this initiative seriously despite his efforts, for which some credit is due.

The Government’s Business, Energy and Industrial Strategy Committee has also repeated its call for Small Business Commissioner to be given the power to fine companies that pay late and for there to be a legal requirement to force them to pay invoices within 30 days.

I urge all SMEs to report late payment by large clients and especially well-known names so that more are named and shamed as a way of humiliating them into paying on time.

 

April 2019 sector focus on the UK road haulage industry

road haulage industry Indian styleAs negotiations for the UK to leave the EU hopefully draw nearer to some kind of resolution it seems an opportune moment to focus our monthly sector blog on the UK road haulage industry.

First, some facts, published by the RHA (Road Haulage Association).

The sector is the UK’s fifth largest employer, employing 2.54 million people in haulage and logistics, with road haulage being one of several UK sectors facing a skills shortage.

It is an industry worth £124bn GVA to UK economy, with 600,000 Goods Vehicle driving licence holders and 493,600 commercial vehicles over 3.5 tonnes registered in the UK.

89% of all goods transported by land in Great Britain are moved directly by road (the balance not moved by road often needing road haulage to complete journeys to/from ports, airports or rail terminals). This includes 98% of all food and agricultural products, and 98% of all consumer products and machinery transported by road freight.

However, it is a tightly-regulated industry with very narrow margins and many of its customers depend on prompt delivery of consignments based on just-in-time supply chains for both food and manufacturing.

The road haulage industry will face massive changes after Brexit

The key questions facing the industry are what additional paperwork will be needed for drivers, vehicles and goods in transit, whether they are simply picking up containers from ports or needing to travel across borders. What border controls will there be and what regulatory requirements?

For example, currently AEO (also referred to as “trusted trader”) status permits a haulier whose credentials have been officially checked and verified to transport goods across frontiers without physical customs checks of consignments, where they are trusted to simply provide the documentation. What will happen to these after Brexit?

So far, the RHA has provided at least seven checklist updates for UK drivers and haulage companies in just a few months, but the situation is still fluid and the only thing it has been able to say with any certainty is that “ECMT permits will be the only certain access to and from the EU for UK operators after Brexit. These are quota limited permits issued under an old system never designed to deal with the sort of volume of haulage movements that exist between the UK and the EU. For UK operators only about 10% of the market demand can be met by ECMT permits.” Wow, only 10%!

Trailers weighing more than 750Kg will have to be registered for international commercial use, drivers will need an international green card from their insurers and they will also need an international driving permit (IDP).

Then there is the question of what will happen to those qualified non-UK HGV drivers working in the UK and employed by UK hauliers to fill the current skills gap.

The capacity of the ports and their ability to cope if they need to introduce customs and paperwork inspections is also under question. The UK has major import terminals at Dover, Southampton, Felixstowe, Tilbury and Hull, to name the main ones servicing trade with Europe, for which at the moment there is very little information from Government as to what additional facilities they will need to allow for.

Who can forget the fiasco of transport minister Christ Grayling’s failed effort to open up Ramsgate to provide more capacity, not to mention the now-cancelled £13.8m contract to the Seaborne Freight to run a service to Ostend, in Belgium, to alleviate any delays at Dover in case of a no-deal Brexit despite the company having never run a ferry service and having no suitable ships?

It is all very well for the Government to exhort businesses to be prepared for all Brexit eventualities, including a no-deal scenario, but, as the RHA chief executive Richard Burnett warned in early March, “The whole situation has turned into a farce …and, through no fault of its own the industry on which the economies on both sides of the Channel rely so heavily is being set up for a fall of catastrophic proportions.”