JD Sports: “Brexit is considerably worse than expected.”

Yet more downbeat news as the promised sunlit uplands of Brexit recede ever further. The latest UK company to struggle with the new reality of exporting into the EU is JD Sports.

Executive chairman Peter Cowgill did not mince his words when he spoke to Radio 4’s World at One on Tuesday. The company is reeling from the effects of increased costs and administration. Cowgill believes that none of this was adequately explained to businesses prior to our departure seven weeks ago.

“They said we have a free-trade arrangement but that’s really not the case,” he said. “Brexit is considerably worse than expected.”

JD Sports imports stock from Asia which it then exports into the EU. Since the stock is not made in the UK, it falls foul of the rules of origin conditions stipulated in our Brexit agreement and thus attracts a tariff. There are also considerable non-tariff barriers (paper work and red tape) which rack up delays and costs still further.

The cost is staggering. It is only forty two days since we left the EU yet Mr Cowgill estimates that the company has already lost “double digits” of millions of pounds in that short space of time.

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This is clearly not a sustainable situation. The easiest solution for the company is to cut out the middleman and to import from Asia straight into the EU. It is unfortunate that the middleman in this case is JD Sports’ main distribution centre in Rochdale. A similar centre somewhere in the EU would employ about a thousand local people.

Mr Cowgill states that the Rochdale centre is unlikely to close. It is understood that no jobs at JD Sports UK distribution sites will be affected.

We’ll get back to you on that.

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