Around half of British exporters are still facing challenges in 2021
The last year or so has been a challenging time for UK’s importing and exporting businesses. First, COVID-19 caused supply chains to be disrupted, then came Brexit, some bad weather, and the Suez canal delays.
Most commentators, including myself, expected that there would be some short-term adjustments due to the UK’s new trading relationship with the EU, but that operators would soon get used to the new rules and requirements. So far, however, that prediction seems to have been optimistic. [Many people were also optimistic about COVID-19: my colleagues working with epidemiologists now put the most likely time the UK and US will reach vaccine-based herd immunity between Q3 and Q4 2021.]
At the end of April, around half of UK exporters still said that they were facing challenges. Around half of them attributed the challenges to Brexit, and around 30% to the combination of Brexit and COVID-19. By far the most cited issue, mentioned by 40% of those facing challenges, was around additional paperwork (first column in chart below).
While the EU-UK Trade and Cooperation Agreement means tariff-free trade for goods, there are additional customs declarations, rules of origin, VAT implications and other complications that exporters now need to addapt to. These changes also include restrictions on the movement of people (last column of the chart below). However, only the arts and entertainment sector is highlighting this as a major issue at the moment.
Manufacturing, transport, wholesale and retail companies are among those most impacted, as you would expect: they deal with a lot goods being shipped across borders. A reduction in demand for exports — see middle column in the chart— is particularly hurting the arts and entertainment and education sectors.
And admin and support services, too, report significant challenges. This data doesn’t allow us to dig deeper into the sector, but one its largest exports is recruitment services. It’s possible that the end to the free movement of people between the UK and the EU is causing some of these difficulties.