EU reset must drive growth

It was recently the fifth anniversary of Brexit and two-fifths (41 per cent) of exporters disagree that the Brexit deal is helping them grow sales, according to new research.

Almost half (46 per cent) of businesses surveyed want the Government to make it easier for UK staff to work in the EU.

The British Chambers of Commerce’s Insight Unit, which carried out the research, found that SME exporters have faced an uphill struggle to sell goods and services in Europe as paperwork and costs have ballooned –and only 14 per cent think the deal is helping them to grow.

Trade with the EU is covered by the Trade and Co-operation Agreement (TCA) which was agreed on Christmas Eve in 2020, almost 11 months after the UK left. It allows tariff-free trade with the EU but requires British and EU firms to produce documentation and paperwork for all shipments. Services access is also limited by rules on business mobility.

Companies say the biggest barriers to exporting to the EU are customs procedures and documentation (45 per cent), export documentation (39 per cent), regulations and standards (35 per cent) and tariffs (33 per cent).

Awareness of upcoming changes in trade rules and regulations being made by either the UK or the EU are also very low, with more than three quarters of firms knowing no details of much of the legislation. This includes knowledge of the Carbon Border Adjustment Mechanism (CBAM), Border Target Operating Model (BTOM), Safety and Security Declaration Requirements and new rules on business-tobusiness movements of parcels to Northern Ireland.

Scan the QR code to see the full report

The BCC’s TCA Four Years On report sets out 26 recommendations to improve UK-EU trade.

Among its top proposals for discussions in 2025 are:

Negotiate a deal with the EU which either eliminates or reduces the complexity of exporting food for SMEs.

Produce a balanced Youth Mobility scheme between the UK and EU, covering school visits and exchanges, and a timelimited ability to work for young people.

Rejoin the Pan-EuroMediterranean (PEM) convention to align rules on raw material and components that can be used in exports without incurring tariffs.

Establish a supplementary deal, like Norway’s, that exempts smaller firms from the requirement to have a fiscal representative for VAT in the EU.

Make a deal to allow UK firms to travel and work for longer in Europe and vice versa, and provide mutual recognition of professional qualifications.

Link the Emissions Trading Schemes of the UK and EU to avoid charges on carbon embedded in exports in both directions.

William Bain, Head of Trade Policy at the BCC, said: “Over the past five years, UK businesses have shown resilience, agility and creativity in responding to the biggest change in our international trading relationships in 50 years. But the fact remains that we are the only G7 nation yet to regain its pre-pandemic level of trade intensity.

“Two issues where there appears to be some promise of a meeting halfway are around linking Emissions Trading Schemes and rejoining the Pan-Euro-Mediterranean (PEM) Convention on rules of origin.

“Linking the emission schemes, which cover the amount of greenhouse gases embedded in products, is possible within the current framework of the TCA. It would reduce the risk of UK exports of steel, aluminium, hydrogen and fertilisers facing additional charges.”

The BCC has also been calling for the UK to rejoin the PEM Convention for over two years.

“This would allow UK manufacturers to integrate their supply chains more easily, while still avoiding tariffs, by sourcing inputs from across a wide zone of more than 50 countries,” he added.

“Many firms were unaware of this convention, when we were previously a member inside the EU, but the BCC’s Chamber Network has been advising on how to make use of it for years.

“Business is ambitious for change, and we believe 2025 is a key moment to improve and deepen our most important trading relationship in the world.

“There is no time to lose. Firms are being held back by a complex web of red tape and regulatory burdens. This is ramping up costs, so improving our trading relationship with the EU could provide the impetus to growth needed to transform the dour outlook many are facing.”

Alan Rides, Chief Executive of West London Chambers added:

“As tariffs loom, the UK’s old alliances and Free Trade Agreement that have been signed recently will become more important than ever. The UK economy is built on trade, it drives growth, nurtures jobs and can lift people out of poverty. As we commemorate this year, 80 years since VE day, we should learn the lessons that history has taught us. The UK needs a better trading agreement that works with the EU. We have signed agreements all over the world, especially with Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and our links with the Commonwealth will stand us in good stead, but we are not at the core of a large trading block, or is our future to become the 51st state?” is no time to lose. Firms are being held back by a complex web of red tape and regulatory burdens. This is ramping up costs, so improving our trading relationship with the EU could provide the impetus to growth needed to transform the dour outlook many are facing.”

For help with your exports and imports, please be in touch with your government award-winning Chamber delivering the best support for export in the UK.

William Bain, Head of Trade Policy at the BCC