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Brexit: Quarter of small exporters give up on EU due to red tape

Suban Abdulla
·4-min read
The analysis of over 1,400 small firms also showed 11% of exporters are considering halting sales to Europe permanently. Photo: Paul Faith/AFP via Getty Images
The analysis of over 1,400 small firms also showed 11% of exporters are considering halting sales to Europe permanently. Photo: Paul Faith/AFP via Getty Images

A survey examining the state of trade between the UK and European Union has laid bare Brexit reality as the first full quarter of post-transition trading comes to a close this week.

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

The analysis of over 1,400 small firms also showed 11% of exporters are considering halting sales to Europe permanently. The same proportion have established, or are considering establishing, a presence within a country in the EU to ease their exporting processes.

Additionally, 9% of respondents said they were thinking about securing, or are already using, warehousing space in the EU or Northern Ireland (NI) for the same purpose.

Watch: More than half of UK firms have faced disruption due to Brexit, poll finds

Exporters are not the only ones facing a harsh reality, the study shows that small UK importers have also been impacted by the paperwork since new trading rules took affect at the start of 2021. Less than than one in five have temporarily suspended purchases from the EU (17%), and a smaller proportion are using EU or NI warehousing space (6%), the FSB said.

The majority (70%) of importers and exporters surveyed said they have 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.

READ MORE: UK delays Brexit checks as one in five business give up on EU

Of those that have experienced delays, 36% have suffered hold-ups that lasted more than two weeks. Over half (55%) of respondents have sought professional advice to help them with new paperwork pertaining to EU business activity.

To combat the burden, the FSB has called on the UK government to increase the threshold at which tariffs and taxes for imports and exports kick-in to £1,000 ($1,380). It also wants to secure new free trade agreements (FTA), which include dedicated small business chapters, with fast-growing economies around the world, such as the US.

FSB national chairman Mike Cherry, said: "Our exporters tend to be among our most innovative and profitable small businesses, so it’s troubling to see them bearing the brunt of changes. The SME Brexit Support Fund marks a much-needed intervention, and we’d encourage all those struggling to manage new requirements to apply, and for the government to dedicate further resources if the fund is exhausted, rather than turning down applications.

"Unless more is done to ease the admin burden on those that do business overseas, and increase access to markets outside the EU, it will weigh heavy on our efforts to recover from the most severe downturn on record," Cherry added.

READ MORE: Brexit: Three quarters of UK manufacturers face delays

The study follows similar research from other leading business groups in the UK. A British Chambers of Commerce (BCC) trade research from January 2021 showed that 49% of UK exporters report difficulties in adapting to changes in the trade or movement of goods.

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.

Similarly, 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.

From 1 July, all firms exporting to the UK will be required to fill out full customs declarations and goods could be subjected to physical checks at new UK customs centres. Great Britain officially left the EU's single market and customs union on 1 January.

Watch: 10 ways to Brexit proof your finances