The EU trade deal Boris Johnson has agreed with the EU on Christmas Eve 2020 promised not only to keep trade with the EU viable after Brexit, but also to enable UK businesses to grow their trade with the EU. But 71% of businesses are now saying that the deal does not deliver on its promise.
According to a recent survey undertaken by the British Chambers of Commerce (BCC), the majority of UK businesses asked, believe the EU trade deal has made their lives more difficult. For the survey, the BCC surveyed over 1,000 UK businesses, the majority of which were Small and Medium Enterprises (SMEs).
What UK Businesses Think About The EU Trade Deal
When the UK Government announced the Trade and Co-operation Agreement (TCA) that had been agreed with the EU, many businesses breathed a sigh of relief. However, the BCC research has shown, that there are a host of issues, that prevent UK businesses from increasing their sales to the EU, which is one of the UK Government’s ambition.
Only 8% of the surveyed UK businesses think that the TCA helped them to grow or increase their sales, with 54% saying it didn’t. Amongst UK exporting businesses, the figures are similar, with 71% saying the EU Trade Deal did not help them to grow their sales and only 12% agreeing it did.
The majority of the businesses surveyed have also indicated that the TCA has increased costs, paperwork and delays for them. The survey also asked if businesses could identify specific advantages or disadvantages of the EU Trade Deal. Of the 320 comments about disadvantages, the majority named the following
- Higher costs for businesses and customers
- Lack of time and money to deal with additional bureaucracy for smaller businesses
- EU customers were put off by UK goods and services, because they are seen as costing more and the order process as being more complicated
Only 59 comments were made in terms of advantages of the TCA, most of which mentioned:
- Ability to continue to trade with EU countries without major changes
- It encouraged the businesses to seek markets outside the EU
- It gave stability to businesses in order to plan ahead
The results of the BCC research seem to contradict the UK’s new minister for Brexit Opportunities, Jacob Rees-Mogg, who recently branded Brexit as a success in an interview with the BBC.
I think Brexit has been extremely beneficial for the country. I think evidence that Brexit has caused trade drops is few and far between.Jacob Rees-Mogg, Minister For Brexit Opportunities
The Issues The BCC Wants To See Addressed
The EU Trade Deal promised frictionless trade between the UK and the EU, but it now seems that particular small businesses suffer since its introduction.
Nearly all of the businesses in this research have fewer than 250 employees and these smaller firms are feeling most of the pain of the new burdens in the TCA. Many of these companies have neither the time, staff or money to deal with the additional paperwork and rising costs involved with EU trade, nor can they afford to set up a new base in Europe or pay for intermediaries to represent them.William Bain, Head of Trade Policy at BCC
The BCC identified five major issues that need to be addressed if the EU Trade Deal is to deliver on its promises, especially for small UK businesses.
Food exporters need export health certificates to export their food products into the EU. But these certificates are expensive and can take a while to get. Therefore, the BCC wants a supplementary deal with the EU that removes the need for these certificates or makes it easier to export food for smaller businesses.
In order to sell their goods to customers in multiple EU countries online, some companies need to register for VAT in all of these countries, which is not only time consuming but also adds yet more costs. The BCC wants the UK Government to negotiate a supplementary deal to the existing EU Trade Deal, like the one Norway has, that exempts small businesses from this additional burden.
In January 2023, a ban on the sale of CE marked industrial and electrical products will come into force in Great Britain. This will also include components and spare parts. The BCC wants the UK Government to provide businesses with concrete help with these timelines.
Under the EU Trade Deal, UK businesses are faced with restrictions on business travel and work activities in the EU. Again, the BCC wants supplementary deals with the EU and member states to make business travel and work activities easier. This should be addressed as a matter of urgency in 2022.
After import customs declarations were deferred last year to minimise the impact on businesses, these are now due and businesses are being pursued. The BCC wants the UK Government to ensure that businesses who are still recovering from the impact of the pandemic are not hit with demands for payments or paperwork too soon.
As the dust settles on the initial chaos the EU Trade Deal has caused, it is clear that there are still many challenges, especially for small UK businesses, that the UK Government needs to address.