Boris Johnson’s Brexit trade deal ‘puts UK businesses at risk’ as 41% report fall in exports to EU

Boris Johnson’s Brexit trade deal with the EU has put the future of many exporting businesses at risk, with 41 per cent reporting decreased overseas sales in the first three months of the new arrangements, according to a new survey by one of the UK’s leading business organisations.

The British Chambers of Commerce called on the UK government to get back round the table with the EU for fresh negotiations to lower some of the barriers to trade created by Mr Johnson’s Christmas Eve Trade and Cooperation Agreement (TCA).

While some of the collapse in trade with continental Europe was due to the Covid pandemic, the BCC said many firms were blaming Brexit for shipping delays, increased cost of transporting goods and extensive new paperwork requirements.

And the group dismissed ministers’ claims that the difficulties experienced by exporters were down to “teething problems” following the transition out of the EU’s single market and customs union on 1 January.

Instead, co-executive director Hannah Essex warned: “They are structural issues that, if they continue to go unaddressed, could lead to long-term, potentially irreversible weakness in the UK export sector.”

The report comes ahead of the hotly-anticipated release on Tuesday by the Office for National Statistics of trade figures for February, which will be keenly studied for evidence of the long-term impact of Brexit on exports to the EU, after the government blamed teething troubles for a staggering 41 per cent (£5.6bn) fall in sales to the bloc in January.

One exporter, Alfred van Pelt from Somerset-based clothing and accessories wholesaler Something Different, said sales to the 27 EU member states had “collapsed dramatically” since the transition.

“European customers, whether individuals or businesses, are reluctant to buy from the UK,” said Mr Van Pelt.

“Not only did this cause an immediate drop in turnover and the need for redundancies, but also killed a massive growth opportunity of our business. Our foreign investor had plans for the UK entity to become a European distribution hub.

“This is now no longer on the cards as the only distribution that can be done from within the UK cost effectively is to UK postcode addresses.”

The BCC’s quarterly Trade Confidence Outlook report surveyed more than 2,900 UK exporting firms and found that 41 per cent reported decreased overseas sales during the first three months of 2021 – up from 38 per cent in the last three months of 2020. The percentage reporting increased export sales fell from 22 to 20 per cent in the same period.

Hotels, caterers, retailers and wholesalers were most likely to report falls in export sales.

And there was little sign of the situation improving in the short term, with 81 per cent of hotels and catering firms and 59 per cent of retail and wholesale businesses reporting decreased advance export sales.

Ms Essex said: “Given that export sales are at some of the lowest levels ever recorded in the history of our data, the fact that situation is continuing to deteriorate is concerning. These new figures show that UK exporters are currently facing a range of issues that go beyond just those that have been created by the pandemic.”

While the BCC’s Quarterly Economic Survey earlier this month showed domestic sales reviving towards pre-pandemic levels, the new report found exports “not only failing to recover, but falling back”, she said.

And she warned: “Many businesses are telling us that their ability to continue trading is at risk due to issues arising from the UK-EU TCA (Trade and Cooperation Agreement).”

Ms Essex described the government’s new £20m Brexit Support Fund for small and medium-sized enterprises (SMEs) as “a step in the right direction”.

But she said ministers must do more to help ailing exporters.

“We believe the scale of ambition needs to be much greater,” she said.

“The message is loud and clear that the difficulties exporters are facing are not just ‘teething problems’. They are structural issues that, if they continue to go unaddressed, could lead to long-term, potentially irreversible weakness in the UK export sector.

“We are calling on both the UK and EU to get back around the table and produce solutions that reduce trade barriers and give exporters a fighting chance.”

Responding to the survey, a government spokesperson said: “The Trade and Cooperation Agreement is the first free trade agreement the EU has ever reached based on zero tariffs and zero quotas. It protects high-quality jobs and investment right across the UK and ensures that businesses continue to trade effectively and sell to their customers in the EU. “Overall freight volumes between the UK and the EU are back to their normal levels, and there is no general disruption at UK ports.

“We want to ensure that businesses get the support they need to trade effectively with Europe and to seize new opportunities as we strike trade deals with the world’s fastest growing markets. That’s why – in addition to the £20m SME Brexit Support Fund – we are operating export helplines, running webinars with experts and offering businesses support via our network of 300 international trade advisers.”

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