The Evolving Impact of Brexit on British Businesses

The aftermath of 2020’s Brexit deal with the European Union continues to affect British businesses, with experts warning that the impact is worsening.

A new study from Aston University Business School reveals a sharp decline in UK-EU trade since Brexit, with the former's goods exports down by 27% between 2021 and 2023. Imports from the EU also dropped by 32%, reflecting the difficulties surrounding new regulations and red tape.

Impact on Exporters

Aston University’s report highlights how small British producers struggle in the new trade environment. Many have ceased exporting to EU countries, finding the administrative burden too cumbersome. The variety of exported British goods has shrunk, with 1,645 fewer types reaching European markets.

Jun Du, co-author of the study, noted that post-Brexit regulations have brought an array of new requirements for product standards, safety checks and labelling. While the intention is for these measures to protect consumers, they have also added significant cost and logistical difficulties for British businesses.

Time and Money an Issue for SMEs

For smaller firms in Britain, Brexit has been particularly problematic. Mary Quicke of Quicke's Cheeses in Devon told the BBC: "We just don’t have the people to do the paperwork.” Mary claimed her company had to stop selling directly to EU customers to avoid an unmanageable mountain of documentation.

Similarly, Adam Sopher, co-founder of Joe & Seph’s Popcorn, discussed the cost increase and other barriers his company has faced. Bulk deliveries to the EU are now far more expensive, costing nearly double what they did before the Brexit deal.

Smaller Businesses Taking the Brunt

The Brexit fallout has been particularly tough on SMEs. Unlike larger enterprises with the resources to navigate the changes, many smaller companies have found it unfeasible to maintain trading with the EU. This is especially true for agriculture, food, textiles, and manufacturing companies, for which increased compliance requirements have been the hardest hit.

The drawbacks of dealing with new regulations often outweigh the benefits for small businesses that rely on exporting small quantities of goods. Many have had to make the difficult decision to scrap EU trade altogether, limiting their growth opportunities.

Considerations for Business Owners

In light of these challenges, UK-based business owners must adapt to the post-Brexit economy. Here are some key strategies that SMEs can adopt:

• Reach New Markets: While EU trade is now more challenging, exploring other international markets could offer new opportunities. Emerging markets or Commonwealth countries might provide viable alternatives.

• Streamline Operations: Reducing administrative inefficiencies can help businesses handle the increased paperwork. Investing in tech that simplifies customs processes and compliance could prove invaluable.

• Seek Support: Guidance from trade bodies and Government programmes is available to small businesses. Owners should seek advice and other Brexit-related support.

• Collaborate with Others: Partnering with larger companies with the infrastructure to manage EU exports efficiently could help smaller firms retain access to the EU market. This approach could involve resource-sharing or using a third party to handle the regulatory burden.

• Monitor Developments: The Government has signalled a willingness to reset trade relations with the EU. Business owners should stay informed of any changes that may cut through red tape.

In Summary

The post-Brexit trade environment remains complex for British business, but companies can thrive despite the current hurdles by accepting the new realities and taking proactive steps.

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