Half of UK exporters say they are having difficulties adapting to the new rules for trade with European Union countries
One thousand members of The British Chambers of Commerce (BCC) responded to a survey asking how their business had found the changes to trade in goods and services and to free movement of staff as a result of the new UK-EU Trade and Cooperation Agreement, which came into force on January 1. The survey ran between January 18 and 31.
Nearly half of respondents (47%) exported goods or services, and overall 30% said they had had difficulties adapting to the changes in moving or trading goods during the first month. One in 10 said it was easy, while 45% said exporting goods was not relevant to their business, and 16% said it was too early to say.
Among exporters alone, 49% said they had difficulties in trading goods, rising to 51% among manufacturers. On the other hand, 16% of exporters and 19% of manufacturers said it was straightforward. Those that experienced difficulties said they included increased levels of administration, costs, delays and confusion bout what rules to follow.
In its response to the survey, kitchenware company Netherton Foundry, a member of the Shopshire Chamber of Commerce, cited increased export documentation – and the staff resources needed to complete shipping details as well as time spent adding new shipping arrangements and delivery charges to its website, and responding to queries from European customers. It said it was also losing orders because of the new duty and customs arrangements.
“A small business like ours does not have the resources to deal with all the extra work,” it says.
And Jonathan Kemp, managing director of manufacturing company AEV Group Ltd, says it is an experienced exporter, having sent goods to every continent in the world for some time, but that there is a lack of clarity and preparedness specifically in relation to the EU-UK situation. It says it is likely to move some of its business to the EU as a result.
“There is no support from government to fund delays or extra stock-holding required to deal with the delays or to assist in extra charges incurred by us or our customers,” says Kemp. “We have another manufacturing site in Hungary (within the EU) and we are being asked by European customers to move production to this site because they don’t want any extra paperwork or costs (even if just cashflow from paying VAT). Our current view is that we will reduce our operation in the UK and invest in EU facilities.”
BCC director general Adam Marshall says: “Trading businesses – and the UK’s chances of a strong economic recovery – are being hit hard by changes at the border. The latest agreement of the UK-EU trade deal left businesses in the dark on the detail right until the last minute, so it’s surprising to see that so many businesses are now experiencing practical difficulties on the ground as the new arrangements go live.
“For some firms, these concerns are existential and go well beyond mere ‘teething problems’. It should not be the case that companies simply have to give up on selling their goods and services into the EU. Ministers must do everything they can to fix the problems that are within the UK’s own control and increase their outreach to EU counterparts to solve the knotty issues that are stifling trade in both directions.”
Calling for change
The BCC is now calling for the UK government to work to tackle specific blockages and to work with the EU to minimise the rules of origin and VAT arrangements. It suggests introducing new tax credits to allow firms to offset spending on adapting to the new arrangements against their tax bills, and for the introduction of further checks to be delayed.
Marshall says that the situation could get worse still if the UK goes ahead with planned extra SPS (sanitary and phytosanitary) checks in April and full customs checks on imports in July. “These timescales need to change – and the support available for businesses who are battling to adapt to new trading conditions significantly increased.”
BCC director of trade facilitation and of its customs advice, training and brokerage service Chamber Customs Liam Smyth says concerns fall into three broad areas: difficulties from the challenge of adapting to the new arrangements, such as high levels of paperwork and related costs; issues about how new rules have been implemented, such as new customs arrangements; and specific measures such as rules of origin and VAT.
“Taken together, and on top of decreased revenue and cash flow as a result of the pandemic, this is a difficult moment for exporters,” says Smyth. “Some tell us they will respond to the challenges by switching away from international trade or by moving their operations overseas. The government needs to respond to this risk by giving firms tax credits to help with their ongoing adjustment and leaving no stone unturned in educating businesses and removing every barrier they can.”
Customers reluctant to buy from EU companies
UK shoppers have started to avoid buying from EU retailers since the Brexit transition period ended, a new poll suggests. More than a third (34%) of UK shoppers questioned in a poll said they had had stopped buying goods and services from the EU following the end of the post-Brexit transition period.
Specialist technology PR and marketing agency Eskenzi PR & Marketing questioned 1,000 UK adults in early February 2021 via Censuswide. It found that since December 31, when the post-Brexit transition period came to an end and the UK started to trade under the new terms of new UK/EU deal, shoppers were less likely to want to buy from an EU-based retailer.
Almost a quarter (24%) of respondents aged between 16 and 24 said they were put off buying cross-border by increased costs, while 26% said their decision was as a result of increased delays.
“Following all the bad publicity around buying products from the EU post-Brexit, it is clearly having an impact on consumer buying habits”, says Yvonne Eskenzi, co-founder, and director at Eskenzi PR. “It is evident to see that UK consumers are being put off buying goods from the EU due to the various complications Brexit has created. We can only hope that this is a temporary measure. Post-Brexit Britain is still in its embryonic stage, and the true nature of our new relationship will have to be measured across the course of the following months – and indeed, years.”