Business

Six months in, British companies are still struggling to get Britain out of the European Union


Nearly a third of British companies trading with the European Union have suffered a downturn or loss of business since post-Brexit rules came into effect on January 1, according to a survey by the Financial Times.

The survey, conducted by the Institute of Directors, also found that 17 per cent of British companies that previously traded with the EU have stopped – either temporarily or permanently – since the start of the year.

The findings paint a bleak picture of trade arrangements with Europe, particularly for small businesses that do not have the resources to overcome the trade barriers that resulted from the UK’s exit from the EU single market and customs union.

Six months after Brexit, companies report that they continue to struggle with it new routine الروتين Heralded the Trade and Cooperation Agreement between the United Kingdom and the European Union. Despite the UK’s exit from the European Union Christmas EveUnderlining no tariffs, and no trade quota between Britain and the European Union, the new arrangements require companies to comply with costly checks, customs controls and bureaucracy that have increased friction in trade.

Relations between the United Kingdom and the European Union have also been strained by the new trade border between Great Britain and Northern Ireland, which requires examination of many goods crossing the Irish Sea, sparking violence in the pro-British union communities in the region.

“Six months later, many companies are still arguing with the challenges of our new relationship with the European Union,” said Jonathan Gildart, director general of the Institute of Directors.

“Small and medium-sized businesses in particular are struggling to navigate new measures around export and import with the bloc, while business leaders more broadly are reporting difficulties in hiring after ending freedom of movement.”

The IoD survey asked 651 companies to provide their assessment of the impact of Brexit so far.

Among those companies that trade with the European Union, 31 percent said the new barriers since January 1 had a negative impact on trade with the bloc. Only 6 percent said trade had increased, while 58 percent said there was no change.

According to a separate survey conducted by the Chartered Institute of Management for the Financial Times, just over a quarter of private sector managers said changes to trade at the end of the Brexit transition period negatively affected their firms’ turnover in January. About six months later, the same percentage — 26 percent — was still saying there was a negative impact, and it’s pretty much the same organizations.

“Private sector managers have reported that post-Brexit trade challenges continue to have a negative impact on the turnover of their institutions,” said Anne Frank, chief executive of CMI, which asked for the opinions of 1,354 managers in its survey.

Bar chart of private sector managers in institutions trading with the EU - Impact of Brexit changes on sales volume (%) showing that many companies are still reporting turnover six months after Brexit

However, more than half of the managers who participated in the CMI survey said that initial challenges around trade with the EU had arisen by the end of Brixi The transition period has been resolved at least to a small extent – indicating that many companies are beginning to overcome initial hurdles.

Some companies responding to the IoD survey sought to focus on the positive aspects of the UK leaving the EU: 17 per cent of businesses said Brexit made them more likely to invest in their business, compared to 15 per cent who said it made them less likely to. . investment.

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An anonymous poll contributor said: “I have generally become more optimistic about the economy as a result of Brexit, so I am more likely to invest in the future.”

But some British companies have responded to Brexit by initiating deep changes to their companies, such as moving operations across the English Channel.

Many companies believe the impact of the UK leaving the EU will worsen when some of the mitigating measures put in place to facilitate the Brexit transition end this year, including the introduction of import controls at Britain’s border with the bloc.

According to an IoD survey, about two-thirds of businesses said the UK’s new customs controls would have a negative impact on trade when they were implemented in January next year – six months after they are supposed to be introduced.

Bar chart showing how negatively do you expect the new UK customs controls to affect trade?  (% of responses) show that businesses expect problems from new customs controls on EU imports into the UK

For many companies, the hassles of the new bureaucracy already introduced were enough to persuade them to abandon the EU business.

Last week, the Cheshire Cheese Company decided to stop selling to the European Union on a wholesale basis. The cost of shipping a shipment to the European Union rose from around £300 to more than £1,300, marking the end of its once successful European trade.

If shipping directly to 446 million consumers in the European Union is no longer viable, Simon Spurell, who runs the specialist cheese maker in Macclesfield, said, “and we can’t now ship to Northern Ireland anymore.”

Professional cheese maker

© John Super / Ft

“The government has succeeded in removing us from the EU as a business, and it is no longer commercially viable”
Simon Spurell, Cheshire Cheese Company

He added, “The government has succeeded in getting us out of the EU as a trading company, and it is no longer commercially viable, and our distributors in France, Spain and Germany are not interested in doing business with us because of the extra cost and difficulties related to paperwork.”

Meanwhile, Totnes-based motorcycle broker – which has been buying all of his bikes from the EU – has stopped servicing the entire region. About 15 percent of the company’s sales were to the European Union, according to Paul Jason, who runs the vintage motorcycle dealer.

While Jayson now brings in bikes from countries outside the European Union, such as Australia and the United States, this could take months instead of days. “We have always been global and will survive but we are in a ‘no deal’ situation. There is nothing but friction.”

vintage motorcycle dealer

© Cameron Smith / Ft

We have always been global and will survive but we are in a ‘no deal’ situation. There is nothing but friction
Paul Jason, motorcycle broker

In a meeting with ministers, Spurell was asked to abandon the European Union in favor of markets such as Canada.

But Spurrell said, “We shipped the first packages to consumers and within a week had to stop sending to Canada after 14 packages were subject to a 245 percent surcharge.”

Leaving the EU single market and ending freedom of movement further exacerbated growth shortage of workers in the UK. According to the IoD survey, more than a quarter of businesses said Brexit has caused difficulties in hiring – 17 per cent complained of a loss of high-skilled employees, and 10 per cent of a shortage of low-skilled workers.

A bar chart of Did your organization have difficulties recruiting due to a shortage of EU applicants (% of responses) showing that one in four UK companies had difficulty recruiting EU staff

British companies had to set up operations in the European Union to serve the European market, but this led to higher costs and the transfer of jobs from Britain to the European Union. Nearly a quarter of companies that trade with the European Union have had to move some operations or employees, according to an IoD survey.

Laura Rudeau, who runs Evolve Beauty, an eco-friendly beauty company in Hertfordshire, said it has set up a warehouse in Ireland to export to the European Union and reliably serve its customers in the bloc. This has introduced “an additional cost, time and paperwork,” she said.

“Since Brexit, we have found that some major markets are closed to us,” Rodoy added.

Eco-friendly cosmetic brand

© Charlie Baby / Ft

“Since Brexit, we have found that some key markets are closed to us”
Laura Rudeau, Evolve Beauty

clothing retailer rivet and hide Plans to route goods through Holland to reduce costs.

Danny Hodgson, founder of the London-based company, said: “The effort in terms of time and mental bandwidth to try and keep our EU business is exhausting – I have almost given up on several occasions but I will not let this government defeat me.”

Hodgson said surcharges, value-added tax and shipping costs had caused the prices of his company’s goods destined for the European Union to rise 30-40 percent. As a result – after 20 per cent annual growth in the EU before Brexit – trade with European countries has more than halved.

CMI found that managers at SMEs were more likely to report that the end of the Brexit transition period had a negative impact on their business turnover – at 35 per cent – compared to large organizations at 23 per cent. cent.

clothing retailer

© Anna Gordon / Ft

“The effort in terms of time and mental bandwidth to try to keep our EU business is exhausting – I have almost given up on several occasions”
Danny Hodgson, Rivet & Hyde

Many have been forced to cut jobs. Alfred van Pelt, managing director of Something Different, which distributes clothing, gifts and other goods to small retailers and visitor centers across Europe, cut its workforce in half after Brexit.

Last year, the 30-year-old distributor based in Somerset was sending 2,500 parcels to EU customers each day in peak trading in November and December. Now, the company is sending out about 100 to 150 — “if we’re lucky,” Van Pelt said.

The problem is the cost and border procedures that EU customers are reluctant to bear. Packages can be valued as low – as little as £30 each – but costs up to £8 for shipping and £17.50 for import declaration coverage.

“This has thrown our business off the edge of a cliff,” said Van Pelt, who had to lay off nine of his 20 crew. The company tried to expand into the UK but with three-quarters of its sales last year to the EU, it was a daunting task.

He said that without Brexit, the company would have hired more full-time employees in the UK, given that its EU owner planned to invest in its operations. “Most of our customers in the European Union have just given up,” he added.

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