All UK businesses expected some kind of disruption once we officially left the EU, but many exporters have been surprised by just how difficult they are finding things.
Businesses that serve customers within the UK are less likely to have problems, but there are a lot of companies that rely heavily on their European customers and the problems with exports are putting serious strain on them. When this is coupled with the impact of the Covid-19 pandemic, that means a lot of businesses are in danger.
In the lead up to Brexit, much of the discussion was about the Irish border question and how that might impact businesses that want to ship products to Ireland and the EU. The Irish border and the new regulations in place for shipping outside of the UK are increasing delivery times and making exports more expensive for businesses.
On the surface, things look fairly straightforward and there are no tariffs to be paid on goods moving between the UK and EU. However, businesses need to ensure that goods meet the Rules of Origin requirements to prove that they qualify as ‘local’. Understanding the different classifications using a freight class shipping calculator can be difficult for many business owners if this is new territory. There is a lot of paperwork that needs to be filled out and this all comes at an added cost.
Confusion over new regulations leads to big delays too, and those delays are passed on to the customers. This lack of service can have a serious impact on the bottom line of UK companies and it means that a lot of businesses are simply stopping their exports to the EU.
In the weeks after Brexit, the British Chambers of Commerce reported that 49 per cent of businesses out of 470 surveyed were having issues with the post-Brexit agreements and it was impacting their business. In January, trade levels between the UK and EU dropped below normal levels.
When asked for comment, Boris Johnson said that there were ‘teething problems’ with the new system that would soon iron themselves out, but many UK businesses disagree. A lot of businesses that considered themselves prepared are now having issues and many people see the issues as an indication of an endemic problem that will not go away. The Rules of Origin requirements, in particular, are likely to have a permanent effect on trade between the UK and the EU.
Currently, the response from the government has been lacking and businesses are being asked to fend for themselves when trying to navigate new regulations. This puts a lot of UK businesses under threat during a period when they are trying to recover from the economic impact of the pandemic crisis. In the future, it is hoped that businesses will begin to get used to the new regulations and things will become easier. However, the impact of lost sales is difficult to come back from and without intervention from the EU and the UK government, many businesses are at risk.
