Brexit is not working, say small businesses

Nearly 80% of firms that trade with the EU say that the current Brexit deal is not helping them increase sales or grow their business

Nine of out ten small businesses say the current Brexit deal is not working for them, according to the British Chambers of Commerce.

Nearly 80 per cent of firms (77 per cent) that trade under the Trade and Cooperation Agreement (TCA) say it is not helping them increase sales or grow their business.

More than half (56 per cent) of firms face difficulties adapting to the new rules for trading goods with the EU.

>See also: One year on, Brexit deal gets massive thumbs-down

Almost half (45 per cent) are having difficulty adapting to the new rules for trading services, and a similar number (44 per cent) report difficulties obtaining visas for staff.

The BCC surveyed 1,168 businesses for its Brexit report, 92 per cent were small and medium-sized businesses.

Shevaun Haviland, director general of the BCC, said: “With a recession looming we must remove the shackles holding back our exporters so they can play their part in the UK’s economic recovery.

“Businesses feel they are banging their heads against a brick wall as nothing has been done to help them, almost two years after the TCA was first agreed. The longer the current problems go unchecked, the more EU traders go elsewhere, and the more damage is done.”

Analysis by Aston Business School suggests that exports to the EU are 26 per cent lower than they would have been without the non-tariff barriers imposed by the TCA. There has been a sharp fall in the varieties of goods traded, which have dropped from 70,000 to 42,000 since the new rules came into effect.

>See also: Top five tips for SME exporters in a post-Brexit world

The BCC has submitted 24 recommendations to the Government about how the current TCA could be improved right now before its five-yearly review in 2026.

These include:

  • Create a supplementary deal with the EU which either eliminates or reduces the complexity of exporting food for SMEs
  • Establish a supplementary deal, like Norway’s, which exempts smaller firms from the requirement to have a fiscal representative for VAT in the EU
  • Allow CE marked goods and components to continue to be used in Great Britain after 2024
  • Make side deals with the EU and member states to allow UK firms to travel for longer and work in Europe
  • Reach an agreement on the future of the Protocol on Ireland/Northern Ireland with the European Commission in the early months of 2023, to stabilise our trading relationship

Small Business Opinion

What is frustrating is the absence of any political engagement from either of the main parties on how to make trading with the EU easier post-Brexit. Brexit has reduced trade flows in both directions between the UK and the EU by one-fifth. Labour because they know they must regain seats in the North of England that pushed hardest for Brexit; the Conservatives because they do not want to reopen the healing wound that nearly split the party.
Partly this is a historic problem. Prime Minister Theresa May did not have enough political power to push through immediately joining Efta, the looser European trading bloc led by Norway on the periphery of the EU, when she became Conservative Party leader. This would have kept the UK in the Single Market in exchange for paying two-thirds less into the central EU kitty, albeit with little say over EU trading rules.
What is especially frustrating is that prior to the Brexit vote in 2016, even Vote Leave campaigners had said quitting the Single Market was not going to happen. “Absolutely nobody is taking about threatening our place in the Single Market,” MP Daniel Hannan said at the time.
Politically re-joining the Single Market is too much of a political hot potato to countenance until at least the general election after the next one, around 2030.
It will take a politician of guts and imagination to explain to the public that re-joining the Single Market – which was the whole point of the UK joining the Common Market in 1973 to remove trade barriers – is a good thing, and not the same as signing up for the EU’s grand projet of eventually becoming a single political bloc.

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Tim Adler

Tim Adler is group editor of Small Business, Growth Business and Information Age. He is a former commissioning editor at the Daily Telegraph, who has written for the Financial Times, The Times and the...