‘Brexit deal has pushed up costs for exporters and hurt trade’

Managers are optimistic about their companies despite being hit by supply chain disruption caused by Brexit, a survey of top executives at mid-sized British businesses has found.

A year after Britain struck a Brexit trade deal with the European Union, most UK exporters say the agreement has pushed up costs, increased paperwork and delays, and put the country at a competitive disadvantage.

A survey of more than 1,000 businesses by the British Chambers of Commerce found that more than two-thirds of exporters said the deal was not enabling them to increase sales. Only one in eight exporters said the deal was helping them to increase revenues.

The BCC survey was conducted between mid-January and early February this year, a little over a year since an agreement was struck on Christmas Eve in 2020. The agreement ran to about 2,000 pages and included hundreds of annexes and future arrangements for trade, security, fishing and regulatory alignment. On key issues businesses had just days, and in some cases hours, to implement new rules in the agreement, which were the biggest set of changes in cross-border trade regulations in half a century.

Repercussions have included rising costs for companies and their clients. Smaller businesses have complained that they did not have the time and money to deal with the bureaucracy caused by the deal. Others businesses said the deal had put off EU customers from considering British goods and services, due to the perceived increase in costs and complexities.

The BCC received 320 comments on disadvantages of the deal and 59 on advantages. Positive outlooks reported included some companies continued to trade without significant changes, had been encouraged to look at other global markets and that the deal provided stability to allow firms to plan.

The BCC is urging the government to reach a new understanding with Brussels on certain rules so it can fulfil its ambition to massively increase the number of British companies exporting. “If we can free up the flow of goods and services into the EU, our largest overseas market, it will go a long way to realising that goal,” William Bain, head of trade policy at the group said.

The organisation is calling for a new deal on export health certificates which “cost too much and take up too much time for smaller food exporters”. It wants the smallest businesses to be exempted from requirements to register in multiple EU states for VAT in order to sell online to customers there. The government has also been urged to make “side deals” with the EU and members states to boost access for British business travel and work activities.

Ministers also want businesses to look to Asia for export growth. Within three decades, 47 per cent of all import demand will be in China, Hong Kong, Asia and south Asia, according to analysis by the Department for International Trade.

Most of the companies in the survey have fewer than 250 employees. They include companies in manufacturing, retail, hospitality, accountancy and marketing sectors. Half of the 1,154 businesses said they exported.

A government spokesman said: “We’ve always been clear that being outside the single market and the customs union would mean changes and that businesses would need to adapt to new processes. That is why we are ensuring that businesses get the support they need, including through the free-to-use export support service.”

He said that “given the Covid-19 pandemic, global recession and supply chain disruption, it is still too early to draw any firm conclusions on the long-term impacts of our new trading relationship with the EU.”