Results from the first major business survey for 2021 by the British Chambers of Commerce on Brexit discovered that half (49%) of exporters are facing difficulties in adapting to the changes in the trade of products following the ratification of the UK-EU Trade and Cooperation Agreement (TCA) on 1 January 2021.
Fieldwork for the survey, which received 1,000 responses, mainly from SMEs, was carried out between 18 and 31 January 2021. Up to 50 % (47%) of respondents exported goods or services.
The survey sought to understand the extent to which businesses thought it was easy or difficult to adapt to alterations in trading goods and/or services and moving people in the month since the ratification of the TCA. Businesses reported the highest proportion of difficulties in adapting to alterations in trading goods.
The survey discovered that:
– overall, around a third of respondents (30%) reported difficulties adjusting to changes to moving or trading goods in the first month of the year, while 10% said they'd found adapting to the changes easy. 45% said exchange goods was not applicable to their business, and 16% said it was too early to say;
– however, the percentage facing difficulties in adapting to changes in trading goods rose for exporters, where half (49%) reported issues, too as manufacturers, where the percentage facing difficulties was over fifty percent (51%);
– overall, 14% of firms asserted they faced difficulties in adapting to changes in the trade of services. 10% said they'd found adapting to the changes easy. The proportion facing difficulties rose for exporters, where 21% reported issues.
When inquired about the specific difficulties businesses were facing, commonly cited concerns included increased administration, costs, delays, and confusion by what rules to follow.
Commenting on the results, BCC Director General Adam Marshall said: “Trading businesses – and also the UK’s chances at a strong economic recovery – are now being hit hard by changes in the border.
“The late agreement of a UK-EU trade deal left businesses at nighttime on the detail right until the final minute, so it’s unsurprising to determine 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 in to 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 exchange both directions.
“This situation could get worse if the UK sticks to its guns and introduces additional SPS 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.”
Commenting on what this means for businesses on the ground, BCC Director of Trade Facilitation and ChamberCustoms, Liam Smyth said: “Beneath the overall figures, firms’ concerns fit broadly into three areas.
“First, difficulties arising from the challenges adjusting to the new arrangements, such as the sheer volume of paperwork and significant new costs of adapting to those.
“Second, issues about how exactly new rules have been implemented, such as new customs arrangements.
“Third, core provisions of the TCA which are currently of significant concern to businesses, for example on Rules of Origin and VAT.
“Taken together, as well as on top of decreased revenue and cash flow as a result of the pandemic, this is a difficult moment for exporters. Some inform 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 providing firms tax credits to assist with their ongoing adjustment and leaving no stone unturned in educating businesses and removing every barrier they can.”
Chris Black, Managing Director of Sound Leisure, a UK manufacturing firm, highlighted a few of the difficulties that businesses across the UK are facing trading across borders post-Brexit: “Like a business that exports 65 – 75% of everything that we manufacture and the EU as being a big part of that, we're concerned about tariffs, additional paperwork, and delays in the borders.
“Only last week we attempted to ship some machines to Spain and were advised by the freight forwarder to store the machine here for a few more weeks whilst everything calmed down. There is a long way to go before we fully understand what the new normal is.
“We are in the perfect storm following the pandemic, where supply chains were hit hard, container ships are all out of position – in general shipping worldwide is really a nightmare.”
Jonathan Kemp, Managing Director of manufacturing company AEV Group Limited, said: “We export to every continent in the world and have done for some time, therefore we have employees who are familiar with dealing with exports. The issue with the EU-UK situation may be the lack of clarity and preparedness in all areas.
“There is no support from government to fund delays or extra stock-holding required to deal with the delays in order to assist in extra charges incurred by us or our customers. We've another manufacturing site in Hungary (inside the EU) and we are being asked by European people 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 united kingdom and invest in EU facilities.”
The increase in paperwork to fill in was a problem for kitchenware company, Netherton Foundry: “Increased documentation [means that we] need to use higher paid staff to accomplish shipping details. Loss of orders due to new duty/customs arrangements; time (and therefore money) spent resolving European customers enquiries; cost of implementing new shipping arrangements and delivery charges on our website. A small company like ours does not have the resources to deal with all the extra work.”