West firms reveal sharp fall in exports post Brexit
MORE than half of West businesses polled in the biggest survey since the end of the Brexit transition period say exports have fallen sharply.
The British Chambers of Commerce South West today publishes a major study of more than 500 of its members.
And some 53% of exporters say they have been impacted negatively by the new UK-EU Trade and Cooperation Agreement, compared with 22% who saw no change.
Firms highlighted a number of significant ‘adjustment problems’ that created problems, including unclear government guidance and general business confusion, logistical difficulties, additional VAT obstacles, a breaking down of trust with customers and general worsening of trade conditions. Other common complaints included long delays at the border, a lack of capacity within logistics firms and unfamiliarity with new paperwork.
Alfred Van Pelt from Something Different, a Bridgwater firm that sells a range of clothing, gifts and greetings cards, said: “Since 2021 our sales to the EU have collapsed dramatically. Hauliers were unprepared, resulting in significant delays, misinterpretation of the rules and dispersed accountability.
“Furthermore, VAT, duties and increased freight cost made our goods unprofitable for our customers to buy. Likewise, our Business to Customer (B2C) customers in the EU had to take on extra charges, which they are unfamiliar with. European customers, whether individuals or businesses, are reluctant to buy from the UK.”
He added that he has had to cut the number of full-time staff from 19 to 11 with business to the European Union largely drying up.
Phil Ward, of Eskimo Design in Bristol, had a similar experience.
He said: “Where to start? Material imports delayed at customs, additional direct costs to freight forwarders for customs clearance and hugely increased internal administration.”
Businesses responding to the survey suggested that unless these issues were swiftly addressed, the reported 40% drop off in trade between the UK and EU in January would be a worrying sign of things to come for the region.
Accordingly, nearly half (47%) of exporters predict that trade with the EU will decrease, compared with only 3% who think it will increase and 32% predicting it will remain the same.
Stuart Elford, chair of British Chambers of Commerce South West, said: “Our survey demonstrates the very substantial impact of Brexit on local exporting businesses. This backs up the official national data that our exports to Europe have had a major short-term shock.
“Apart from the first impact of the global pandemic seen in Q2 2020, our latest survey results on manufacturing exports sales and orders are the worst in the South West since the global financial crisis of 2009.
“Some of it is hopefully short term – with firms being hit by both Covid and Brexit disruption. This has been exacerbated by the lack of any meaningful time to adapt to the new Brexit rules and the high level of disruption in export logistics and at Dover. However, many firms are reporting losing customers and trust among their European buyers, as extra costs and obstacles make it harder to compete in this market. A common exporter complaint is also excessive or incorrect application of the new rules by European customs agents alongside frustration at lack of clarity from the UK government. We hope the UK government can use diplomacy to reduce the level of current frictions being applied in Europe.”
The survey follows a report published this month by the Food and Drink Federation, showing exports of British cheese to Europe were only £7 million in January 2021 compared to £45 million in January 2020. While some of that can be attributed to stockpiling ahead of the end of the transition agreement and the closure of hospitality in much of the continent, it paints a worrying picture.
Dominic Goudie, head of International Trade at FDF, said: “It is extremely worrying that our exports to the EU have fallen by more than 75% in January. Businesses face significant challenges when trading with the EU and small businesses in particular have been shut out because groupage distribution is not working.”