Exports from UK businesses into the EU trading bloc are starting to recover following Brexit and the impact of Covid-19, but almost half of firms say total trading volume is still less than it was.
In a webinar hosted by Pail McComb of the Department for International Trade, data shared indicated that exports to the continent have increased 11% in four quarters to 2022, noting that ‘in overall trade we’re definitely seeing an increase, and the trend is in the right direction, but maybe the pace of recovery isn’t quite as quick as we would have wanted’.
Data from delegates on the webinar pointed to 45% saying that their exports to the EU had been negatively impacted, with a quarter saying things were about the same as before Brexit. Just 3% said export volumes have increased over the period.
Watch the webinar in full below:
Issues with new compliance and regulations was cited as the main reason why UK exporters were meeting challenges, with 47% saying that compliance with the new rules was their primary problem, whilst one in three said new additional costs were hampering export efforts.
If your business has faced challenges exporting into the EU following the UK’s departure from the Single Market, then Go Exporting can help.
We have three free resources you can access right now to help check where you are right now, and to plan for the procedural and strategic changes you should be making to ensure your business can look to capitalise on the potential benefits of Brexit, as well as advice for EU firms looking to export into the British Isles.
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New data has shown how the value of UK exports globally have risen since Brexit.
Figures from The Office for National Statistics detailed how exports to the EU rose 7.9% in July this year, worth £1.3 billion. Exports to non-EU countries also grew by 5.4% and £800 million.
Despite difficulties for UK exporters trading with the EU following Brexit, growth was seen this summer thanks to higher demand and increased exports of fuel, machinery and transport equipment.
The UK’s GDP also saw a small uplift of 0.2% during that time, despite an increasingly difficult economic situation for both the UK and EU nations as the recovery from Covid was halted by Russia’s invasion of Ukraine.
Business Brexit wounds still evident
Despite strong trade growth this summer, the picture for UK businesses has been difficult since the UK’s departure from the European Union and, in particular, the Single Market.
Read more: One in three UK exporters have stopped international trade activity
Since the departure, 33% of UK exporters have ceased export activity with the EU bloc with most blaming a new raft of red tape and increased costs of doing business.
If your business is struggling in the post-Brexit trading environment, then here at Go Exporting, we can help.
Download our free guide on 7 Key Changes to UK-EU Trade Post-Brexit right here.
New HMRC data has shone a light on the difficulties exporting UK businesses have faced over the last three years.
The number of UK businesses exporting goods and products into the EU trading bloc fell by 33% between 2020 and 2021, from 27,000 to 18,000.
Additional red tape as a result of Brexit has been blamed as the primary cause.
Michelle Dale of UHY Hacker Young told City A.M. that: “Businesses are not getting enough support from the Government to navigate the post-Brexit trading minefield.
“A lot of SMEs can’t afford professional advice to cope with Brexit-related red tape. Many are likely to have decided trading with the EU is not worth the cost.
“Fewer UK companies exporting to the EU will result in lost opportunities for growth and expansion in Europe.”
Despite the negative data trend, HMRC has urged caution when comparing data from before January 2021 as the way in which the government collects data has changed.
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Exports of steel heading from Great Britain into Northern Ireland could soon face huge tariffs after the EU changed steel quota rules.
Enacted due to the war in Ukraine and relating to the Northern Ireland protocol, new tariffs on certain steel products could hit 25%.
Industry group, UK Steel, has already appealed to the government to suspend tariffs immediately, saying it’s ‘farcical that UK producers are now prevented by these tariffs from selling goods to customers in their own country’.
Steel exports from GB into Northern Ireland had been tariff-free thanks to the tariff rate quota covering UK exports into the EU.
The TRQ rules mean that certain products can be moved from country to country without tariffs being paid, so long as they don’t breach a quota mark.
But the EU updated these rules in light of Russia’s invasion of Ukraine, intended to give EU steel importers more flexibility in the absence of trading with Russia – resulting in quotas of GB supplies into NI hitting the limit faster than usual.
Read more: Import taxes to be cut on goods from developing nations
Steel industry specialist Sam Lowe told the BBC that: “Whereas before the UK had access to its own country-specific quota, which it could rely on to accommodate steel moving from Great Britain to Northern Ireland, now these movements would be covered by the ‘other countries’ quota which could fill up much more quickly, given the entire world has access to it.
“Once it is full: 25% tariff on steel moving from Great Britain to Northern Ireland.”
The UK government has so far commented to say this is an example of the Northern Ireland Protocol ‘needlessly damaging trade within the UK’.
HMRC has warned UK firms yet to begin using the new Customs Declaration System that they may soon be unable to import products into the country.
Over 3,500 firms risk significant delays if they don’t move to the new service within the next two months and are being warned that registration and adoption aren’t instantaneous either.
HMRC’s director of programme and operational delivery for borders and trade, Julie Etheridge, noted, “There are now only two months left until businesses must use CDS for imports. Businesses need to move now or risk being unable to bring their goods into the UK.
“Registering takes time so businesses should start moving to the Customs Declaration Service to ensure a smooth transition and avoid disruption to their business.”
The new Customs Declaration System, brought in following the UK’s departure from the EU, includes a number of significant changes for importing businesses, including;
- New data element fields with specific formats
- New dashboards to monitor and manage declarations
- A two-part customs procedure code, with a four-digit code combined with one of up to 99 three-digit additional procedure codes (APCs)
- Requirement for more detailed customs information
Vicky Payne of the IOT&IT additionally commented that: “With the new changes coming into place, I would highly recommend that firms properly understand all the elements of a customs declaration in addition to having access to the relevant platforms and other preparations for CDS.
“It is evident that traders will need to make several changes to adjust to the new system and the IOE&IT has products to support your learning.”
Businesses requiring more information can do so on the government’s website here.
If your firm lacks the time or internal expertise and resources to manage the shift, then Go Exporting can help. Our Customs & Compliance Reports cover all aspects of your trade with a specific country or trade bloc, including the EU.
Read more: Exports to EU fall to lowest level in 11 years as imports continue to rise
The result will provide you with a complete picture of the rules as they apply to your business and recommend the best processes and procedures for you to follow to meet both legal requirements and the goal of ‘least hassle’ for you and your customers.
The government has promised a ‘bonfire’ of the current barriers to international trade for exporting business in the UK.
International trade secretary, Anne-Marie Trevelyan made the announcement as part of a new drive to reduce red tape and barriers to exports around the world – estimated to be worth £20bn in economic benefit for British firms.
There are 100 priority issues that have been identified by the Department for International Trade, including regulations on meat exports to Asia, rules delaying British medical devices entering South Africa, and restrictions on UK lawyers operating in Japan.
The move is part of ongoing post-Brexit work to strengthen or create new trading routes for UK businesses outside of the EU.
Trevelyan said in a statement that: “Every week we remove trade barriers somewhere around the world, helping more and more businesses all over the country.
“We know that businesses who export pay higher wages and are more productive than businesses who do not, but too often, complex trade rules and practical obstacles prevent them selling overseas.
“This bonfire of the barriers will grow our economy by allowing our brilliant businesses to satisfy the enormous global appetite for their goods and services.”
Whilst Brexit has caused major upheaval for the majority of import/export businesses in the UK, leaving the European Union has allowed the UK government to pursue independent trade agreements around the world, as well as addressing specific blockers on British trade.
These include opening the Chinese market for UK lamb for the first time, worth £1.5bn a year, as well as beef in South Korea which within the next five years is hoped will open a market worth £2.5bn to British producers.
So far, the DiT has identified and resolved around 400 trade barriers in the last two years, including barriers for individual businesses, including VetPlus where overcoming bureaucratic issues enabled the Lancashire-based firm to export pet supplements to India in a move worth £1.4m.
VetPlus EMEA regional manager, Anthony Stewart, commented that: “Being able to meet the different compliance requirements across the markets we operate in is extremely important to ensure the availability of our products for vets and pet owners.
“Recently, we ran into a challenge in exporting our products to India and the support from the DIT was fantastic. They were able to put us in touch with the right people to help us liaise with the Indian authorities and facilitate the appropriate documentation to enable us to re-start the export of our products to India.”
Trade woes for UK businesses in the face of Brexit are continuing into 2022 as exports to the EU fall to their lowest level since 2011.
Data newly released from Eurostat shows how EU imports from the UK fell by 16.4% over a two-year period. In start contrast, imports by the EU from non-EU countries rose by 30% over the same period.
The heightening trade imbalance is due to a number of factors, including the UK’s departure from the EU. But Covid-19 also had and continues to play a big factor. Eurostat’s report notes that ‘the COVID-19 crisis caused both exports and imports between the EU and the United Kingdom to fall in 2020. Imports reached a minimum of € 7.5 billion in January 2021. By December 2021 they had recovered to € 13.5 billion. Exports reached a minimum of € 14.8 billion in April 2020. By December 2021 they had recovered to € 24.8 billion’.
Despite the fall in UK exports into the EU, last year the United Kingdom was still the second-largest partner for EU exports of goods, and the fourth largest partner for UK imports of goods.
The UK’s trade deficit has been growing weaker across the board, with data from the Office of National Statistics showing the difference between goods and services imported rose to its highest level since 1997, rising to £51.7bn in Q1 this year.
Read more: ‘Same nightmare week after week’ for UK exporters
However, economists from both Eurostat and the ONS have noted that the latest data should be treated with some caution due to a change in methodology.
UK businesses are continuing to struggle with post-Brexit trading rules as export bosses warn that life outside the EU is becoming a ‘nightmare’ as fears grow that the Northern Ireland protocol could lead to a trade war with Brussels.
Exporting firms have warned that costs and red tape have seen doing business with the EU become more difficult, cut into margins and take too long.
One such exporter, Mark Brearley of kitchen equipment firm Kaymet, said to The Guardian that: “There’s a sense of, ‘Oh God, here we go again.
“There are loads of things I could’ve been doing if it wasn’t for these problems. We could do things that take us forward, rather than back.”
Owner of men’s fashion brand Rivet & Hide shared his own thoughts, adding that: “It’s really frustrating. I hear Johnson boasting about free trade and all the rest of it.
“I don’t know how he’s got the brass neck to talk about us doing free trade when basically he’s the one who’s imposed sanctions on our business.
“We were freely trading with the EU and now we’ve had tariffs imposed on us through our Brexit deals.”
Since 2019, key export categories including clothing, fruit and veg, cars, livestock and fish have all seen large decrease, with total exports down 8.3%.
However, there are signs that UK firms are beginning to look further afield to grow their international sales.
Data from the Food and Drink Federation found that exports to non-EU countries rose 16.2% in the first three months of the year, almost 11% higher than in Q1 2019.
Read more: Rise in non-EU food and drink exports for UK firms
Total non-EU exports of food and drink are now worth a record £2.3bn, with sales to Australia, Canada, India, Japan and the US showing the most growth. Beef exports rose 80%, with whiskey, chocolate and gin also seeing sustained growth.
Whilst food and drink exports to the EU still remain higher at £3bn, the rise in sales further afield may be a sign that UK firms are starting to broaden their horizons in the wake of Brexit.
The UK’s small and medium-sized businesses are seeing their EU markets disappear as they struggle to combat increased post-Brexit red tape and trading costs.
At the same time, EU businesses exporting into the UK market are benefiting from a lack of controls.
In an interview given to The Loadstar, one small business owner said that: “EU warehousing is the only way to get around costs and bureaucracy – it also means jobs and money go abroad – but if you’re small it’s not viable.
“Before Brexit, a third of our direct mail orders were in the EU. That went to nothing and we are slowly having to build it back up, but this means charging our direct mail orders from the EU half the price, with us covering the VAT.”
And those increased costs, or indeed reducing prices and swallowing taxes to remain competitive, have seen many businesses fail. In fact, between 2020 and 2021, 6.5% of UK businesses closed – the largest decline in 20 years. The pandemic had a hand to play in that of course, but many SMEs have directly blamed the departure from the EU as shutting off a core market.
Read more: 5 ways the crisis in Ukraine is impacting international trade
As the interviewee to Loadstar pointed out: “The increased cost of transport means that for our product, the cost has increased three to four times. Then there are the cultural differences; we are simply not going to sell many jazz records in Indonesia or Thailand, and you have to take into account the poverty gap with these new global markets – Europe is rich, while Asia, Africa, South America are poor.
“SMEs can’t wait 30 years for a vague ‘levelling-up’ promise. That’s OK for the likes of Shell, ICI, Unilever, GM, but not for us.”
What are the challenges for exporters to the EU post-Brexit?
In this webinar, we will look at the implications for your business, what it means for your exports, imports and future opportunities.
We will identify the challenges you need to address to successfully export to the EU post-Brexit, including the new rule changes that came into force at the beginning of 2022.
Watch free below!
Free resources noted in this video include:
