Half of firms expect long-term disruption from new EU trading arrangements - London First/EY survey
The majority of UK businesses have experienced some form of disruption in trade to the European Union since Brexit, with signs that this won’t be short-lived. That’s according to a survey of more than 1,000 business leaders by Survation on behalf of business campaign group London First and global professional services firm EY.
The survey, which took place between 16 – 22 February, shows that 75% have experienced some disruption and almost half expect that to continue in the long-term. That’s despite 71% having previously said they felt they were prepared for the end of the transition period.
The three most common areas where firms have seen disruption are to customs and supply chains (72%), tax and VAT (70%), and regulation (68%). Looking deeper, some of the challenges highlighted include delays getting goods to destinations (43%), having to re-register with regulatory bodies in the UK and EU (37%) and dealing with changes in contracts (38%) and data (34%). Nearly a third (29%) say they have stopped trading with the EU and countries not covered by rollover agreements because of the changes.
Many of these changes have led to an increase in the cost base for some (29%), with half (49%) of those reporting cost rises expecting to pass these on to consumers.
Commenting on the survey, John Dickie, Acting Chief Executive of London First, said:
“It’s clear that the disruptions to UK trade with the EU go beyond teething problems with the new regime. If the Government is to champion Global Britain successfully, it must redouble its efforts to fix our trading relationship with the EU. That includes tackling border delays, ensuring the free flow of data and providing adequate guidance for businesses navigating changes.”
London, with its high proportion of regulated industries including telecoms, finance, accounting, legal, and IT, has been most affected, with 85% of businesses based in the capital reporting some form of disruption. Over half (53%) expect that to continue for the long-term. Firms in the capital are also feeling the impact on people, with 69% affected by the new business visitor rules.
There are, though, bright spots in the survey, with just over a quarter (26%) reporting that they have a better understanding of how to access new markets, and 24% viewing the new trading arrangements as an opportunity to diversify their activities.
Firms across the UK are also looking to the Government to provide more support to help them adapt to the changes. 26% say that the government should negotiate more ambitious trade agreements to take advantage of the post-Brexit landscape, 24% want more detailed guidance, and 19% believe that export tax credits would help them export.
“Leaving the EU’s Single Market and Customs Union on 31 December 2020 marked the largest change to the UK’s international trading environment for a generation and has been further complicated by another exceptional event: the COVID-19 pandemic.
“For businesses operating in, and across, the UK this has created significant disruption and challenges to how they operate and trade. By outlining these challenges, we hope to help inform policymakers so that when engaging with businesses they highlight where more focus is needed as the trading environment evolves and additional trade agreements are agreed.
“UK businesses are resilient and innovative and it’s clear that they are working hard to adapt and overcome these challenges, while at the same time seizing new opportunities.”
Key findings in the survey:
75% of businesses have experienced some form of disruption following the new trade agreement.
This comes despite 71% saying they felt prepared for the new changes.
The three most common areas where firms have seen disruption are to customs and supply chains (72%), tax and VAT (70%), and regulation (68%).
29% of firms report that their cost base has increased, while 23% say it has decreased. 38% report no change, while 10% do not know.
One fifth (20%) of businesses say they now face challenges getting professional qualifications recognised. 18% say recruiting foreign workers is too time consuming, and 20% now say they exclusively hire UK workers.
Nearly half – 49% say that they expect some form of disruption to continue in the long-term. This comprises 16% who say long-term, and 33% say short- and long-term. 28% expect short-term challenges only.
Over a quarter of firms surveyed say they now have a better understanding of how to access new markets (26%), while 24% view the post-Brexit landscape as an opportunity to diversify.