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Brexit and COVID-19 combination hit UK firms' first quarter export sales

Suban Abdulla
·3-min read
A Freight lorry (L) prepares to leave the Port of Dover after disembarking from a cross-channel ferry, in Dover on the south coast of England on June 12, 2020. - Britain will apply
BCC's Trade Confidence Outlook for the first quarter of this year revealed that the percentage of firms reporting increased export sales fell to 20%, down from 22% in Q4 2020. Photo: Ben STANSALL / AFP via Getty Images

UK firms have blamed a double whammy hit from Brexit and the coronavirus pandemic for decreased export sales in the first three months of this year. 

Research by the British Chambers of Commerce (BCC) showed the percentage of businesses reporting decreased export sales, rose to 41%, up from 38% in the previous quarter.

BCC's Trade Confidence Outlook for the first quarter of this year also revealed that the percentage of firms reporting increased export sales fell to 20%, down from 22% in Q4 2020. 

40% of the 2,900 respondents reported no change in their export sales. 

While historical percentage balance data for this indicator shows the proportion of firms reporting increased export sales remains at a historically low level, it has worsened compared to the previous quarter. 

Companies said issues such as shipping delays, increased cost of transporting goods and extensive paperwork requirements contributed to the decrease. 

Many saw the problems they were facing as structural in nature rather than short term issues, that were likely to alleviate as firms adjusted to the changes in the UK-EU trading relationship.

Balance of companies reporting increased export sales. Graph: British Chamber of Commerce
Balance of companies reporting increased export sales. Graph: British Chamber of Commerce

Hannah Essex, co-executive director of BCC said: "Given that export sales are at some of the lowest levels ever recorded in the history of our data, the fact that situation is continuing to deteriorate is concerning.

She added that the figures reveal that "UK exporters are currently facing a range of issues that go beyond" those created by the COVID pandemic.

Further sectoral breakdown reveals that hotels and catering firms and retail and wholesale firms were the worst hit, with 81% and 60% of respondents respectively reporting a decrease in export sales this quarter. 

Just 4% of hotels and catering firms reported an increase in export sales, with 14% doing so in retail and wholesale. 

Among production, manufacturing, and construction firms, 36% reported decreased export sales, with 27% reporting an increase and 37% reporting no change. 

The findings were the same for advance orders from overseas customers, 81% of hotels and catering firms reported decreased advance exports sales, alongside 59% of retail and wholesale businesses. 

"The message is loud and clear that the difficulties exporters are facing are not just ‘teething problems’. They are structural issues that, if they continue to go unaddressed, could lead to long-term, potentially irreversible weakness in the UK export sector," Essex added.

The group urged both the UK and EU to work together to come up with solutions that "reduce trade barriers."

READ MORE: Majority of UK firms expect post-Brexit trading disruption to last long-term

The findings echo similar research and worries from leading business groups in the UK.

The Federation of Small Businesses (FSB) said 70% of UK importers and exporters surveyed revealed they suffered shipment delays when moving goods around the EU in recent weeks. 32% have lost goods in transit and 34% have had goods held indefinitely at EU border crossings.

According to the FSB one in five (23%) exporters have temporarily paused sales to EU customers and a further 4% have decided to stop selling into the bloc permanently amid Brexit red tape.

In February, a Confederation of British Industry (CBI) survey, revealed that 68% of manufacturers have experienced delays at borders with 60% also reporting additional customs costs and admin.

While analysis from the Institute of Directors (IoD) from March 2021 showed that since 31 December, almost 20% of directors whose organisations had previously traded with the EU, have stopped.

A Make UK survey from March 2021 showed that 74% of UK manufacturers have encountered delays at ports this year, with over half facing increased costs and a third losing revenue.

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