Research by the Federation of Small Businesses (FSB) has found that small businesses in the UK have suffered a decline in exports to the European Union (EU) following Brexit.
In a survey of more than 1,400 small firms, the FSB found that 23% of exporters have temporarily halted sales to EU customers, while a further 4% have already decided to stop selling into the EU permanently after new trading rules took effect at the start of 2021.
One in ten (11%) exporters surveyed said they were considering halting sales to Europe permanently, while another 11% have established, or are considering establishing, a presence within an EU country to ease their exporting processes. Additionally, 9% are thinking about securing, or are already using, warehousing space in the EU or Northern Ireland (NI) for the same purpose.
Similarly, one in five small importers have temporarily suspended purchases from the EU (17%) and 6% using EU or NI warehousing space.
Small businesses have highlighted the combined impact on mounting paperwork and delivery delays for the decline in imports and/or exports — the majority (70%) have suffered shipment delays when moving goods around the EU in recent weeks.
One in three (32%) have lost goods in transit, and 34% have had goods held indefinitely at EU border crossings. Of those that have experienced delays, a 36% have suffered hold-ups that lasted more than two weeks.
More than half (55%) of importers and/or exporters have sought professional advice to help them with new paperwork applied to EU business activity, often to assist management of customs declarations, rules of origin paperwork and altered value added tax obligations.
Following its survey, the FSB said it is urging the UK government to increase the threshold at which tariffs and taxes for imports/exports kick-in to £1,000, as well as for them to strike new free trade agreements, which include dedicated small business chapters, with fast-growing economies around the world, including the US.
The FSB also said the UK government should be closely monitoring the roll-out of its SME Brexit Support Fund to ensure that small businesses are aware they can apply for funding to access a range of trading advice, training and technology, and not exclusively that relating to customs and intermediaries. Find out more at imagesmag.uk/SMEBrexit-SupportFund.
“At a moment when small firms are doing all we can to return to growth and get our economy firing on all cylinders again, those that do business internationally are being hit with some incredibly demanding, unfamiliar paperwork,” commented Mike Cherry, national chairman of the FSB.
“Three months on from the end of the transition period, what we hoped would prove to be teething problems are in danger of becoming permanent, systemic ones. While larger firms have the resources and bandwidth to overcome them regardless, smaller traders are struggling, and considering whether exports are worth the effort anymore.
“Our exporters tend to be among our most innovative and profitable small businesses, so it’s troubling to see them bearing the brunt of changes.
“The SME Brexit Support Fund marks a much-needed intervention, and we’d encourage all those struggling to manage new requirements to apply, and for the government to dedicate further resources if the fund is exhausted, rather than turning down applications.
“Unless more is done to ease the admin burden on those that do business overseas, and increase access to markets outside the EU, it will weigh heavy on our efforts to recover from the most severe downturn on record.”