Results from the first major business survey for 2021 by the British Chambers of Commerce on Brexit found that nearly half (49%) of exporters are facing difficulties in adapting to the changes in the trade of goods following the ratification of UK-EU Trade and Cooperation Agreement (TCA) on 1 January 2021.
Fieldwork for the survey, which received over 1,000 responses, mainly from SMEs, was carried out in January. The survey sought to understand the extent to which businesses found it easy or difficult to adapt to changes 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 changes in trading goods, where the survey found that:
Overall, around a third of respondents reported challenges in adapting to changes in moving or trading goods in the first month of the year, while 10% said they had found adapting to the changes easy 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, as well as manufacturers, where the percentage facing difficulties was just over half (51%)
14% of firms said that they faced difficulties in adapting to changes in the trade of services. The percentage facing difficulties rose for exporters, where 21% reported issues.
When asked about the specific difficulties businesses were facing, commonly cited concerns included increased administration costs, delays and confusion about what rules to follow and tariff implications.
Need for action
The Chamber network continues to support UK businesses through its trade documentation services and Chamber Customs (find out more here: www.chamber-business.com/chamber-customs), a customs advisory and training service and by working closely with the government.
As a result of the survey, the Chamber network is calling on the UK Government and, where necessary, with EU partners, to:
Work with business and the Chamber network to identify the most significant blockages and immediately publish plans for resolving those problems; create tax credits allowing firms to offset their spending on adaptation to the new UK-EU requirements against their tax bill, helping businesses navigate new burdens and requirements better;
Look at key areas of the new relationship and work with EU partners on easements to minimise unhelpful burdens including on aspects of the Rules of Origin and VAT.
Commenting on the results, Director of Trade Facilitation, Liam Smyth, said: “Underneath the overall figures, firms’ concerns fit broadly into three areas. First, difficulties arising from the challenges of adjusting to the new arrangements, such as the sheer volume of paperwork and significant new costs of adjusting to those. Second, issues about how new rules have been implemented, such as new customs arrangements. And third, core provisions of the TCA which are currently of significant concern to businesses, such as on Rules of Origin and VAT.
“Taken together, and on top of decreased revenue and cash flow as a result of the pandemic, this is a difficult moment for exporters. Some tell 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 giving firms tax credits to help with their ongoing adjustment and leaving no stone unturned in educating businesses and removing every barrier they can.”
Commenting on what this means for businesses on the ground, Chief Executive of Bedfordshire Chamber of Commerce, Justin Richardson, said: “Bedfordshire businesses – and the UK’s chances at an accelerated economic recovery – are being hit hard by the changes at the border.
“The late agreement of a UK-EU trade deal left businesses in the dark on the detail right up until the last minute, so it unsurprising to see that so many companies are now experiencing operational difficulties as the new arrangements go live.
“For some businesses, these concerns are systemic and go well beyond just teething problems. It should not be the case that so many companies simply have to give up on selling their goods and services into the EU.
“Ministers must do everything in their power to fix the problems that are within the UK’s own control and increase their outreach to EU counterparts to remove the barriers to trade in both directions.”
If you are a local business experiencing these issues and looking for support, do not hesitate to get in touch on 01582 522448 or at email@example.com