One in five small UK firms suspend purchases from EU

12 April 2021

Almost one in five exporters have temporarily halted sales to the European Union (EU) after new post-Brexit trading rules took effect at the start of the year, according to the Federation of Small Businesses (FSB).

An FSB survey of more than 1,400 small firms found that a further 4% have decided to stop selling into the EU permanently.

The data comes after the first full quarter of post-transition trading, which now involves more paperwork. It showed one in 10 (11%) exporters were considering halting sales to Europe permanently. The same proportion have established, or are considering establishing, a presence within an EU country to ease exporting processes. A similar number (9%) are thinking about securing, or are already using, warehousing space in the EU or Northern Ireland (NI).

Just under one in five small importers have temporarily suspended purchases from the EU (17%), and a smaller proportion are using EU or NI warehousing space (6%).  

The research found the majority (70%) of importers and/or exporters have suffered shipment delays when moving goods around the EU in recent weeks.

One in three (32%) have lost goods in transit, while 34% have had goods held indefinitely at EU border crossings. Of those that have experienced delays, a third (36%) have suffered hold-ups that lasted more than two weeks.     

More than half (55%) of importers and/or exporters have sought professional advice to help them with new paperwork pertaining to EU business activity, often to assist management of customs declarations, rules of origin paperwork and altered value added tax (VAT) obligations.

As a result, the FSB is urging the government to implement measures to help businesses impacted by the extra administrative workload.

It is calling for an increase of the threshold at which tariffs and taxes for imports and exports kick-in, to £1,000.

The government should also ensure that small businesses are aware that they can apply for funding to access a range of trading advice, training and technology, as part of the SME Brexit Support Fund.

The FSB also wants ambitious new free trade agreements, which include dedicated small business chapters, with fast-growing economies around the world including the US.

FSB national chairman Mike Cherry said those that do business internationally were being hit with some incredibly demanding, unfamiliar paperwork and were re-evaluating the viability of exporting.

“Three months on from the end of the transition period, what we hoped would prove to be teething problems are in danger of becoming permanent, systemic ones,” said Cherry. “While larger firms have the resources and bandwidth to overcome them regardless, smaller traders are struggling, and considering whether exports are worth the effort anymore.”

He added: “Unless more is done to ease the admin burden on those that do business overseas, and increase access to markets outside the EU, it will weigh heavy on our efforts to recover from the most severe downturn on record.”

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