- Britain’s exit from the European Union has led to a breakdown in the UK’s trade with its European neighbors.
- The Brexit deal led to the largest recorded drop in UK exports to Europe.
- Many UK companies may soon become unsustainable due to new trade friction.
- See more stories on the Insider business page.
The UK government promised that Brexit would free Britain from European trade regulations and herald a bright new era for Britain on the world stage.
However, after spending years campaigning for the UK’s exit from the European Union, Prime Minister Boris Johnson and his colleagues have been strangely quiet about Britain’s fortunes since it left.
The reason for their silence is becoming increasingly clear. Since Britain left European trade and customs rules at the start of this year, there has been a significant decline in UK trade.
According to the UK Office for National Statistics, Trade between the European Union and the United Kingdom was hit hard in JanuaryExports decreased by 40.7% compared to December and imports from the European Union decreased by 28% in the same period.
This is the The biggest overall decline in exports since records beganHowever, the downturn in some sectors was worse.
Analysis by The Food and Drink Association published last week It showed that exports in January fell to 7 million pounds – or about $ 9.6 million – from 45 million pounds on an annual basis, while whiskey exports fell to 40 million pounds from 105 million pounds.
This is a colossal degradation. For some sectors, including parts of the UK’s world-renowned marine fishing industry, the decline could be permanent due to the European Union. It effectively isolates Britain from its market altogether.
Britain’s exit from the European Union is hitting hard at British companies
Far from liberalizing trade, Brexit has significantly increased the bureaucracy of many UK companies due to the additional checks now required.
For some small businesses, the piles of paperwork, bureaucracy and healthy export certificates now required to trade with Britain’s closest trading partners make it extremely difficult to export anything at all.
“What I’m hearing a lot is that a lot of small businesses are shutting down completely,” Dominic Judy, head of international trade at the Food and Beverage Association, told Insider.
Judy and a Briton said Brexit is not the only reason for the drop in trade with the European Union in January: Part of the downturn was a result of stockpiling ahead of Brexit and the COVID-19 pandemic, which has shut down businesses across the continent. Government official To Reuters That trade rebounded partially in February, although official numbers have not yet been published.
However, many prominent business figures believe that the impact of Brexit will be permanent, with Adam Marshall, the former Director General of the British Chambers of Commerce, He told Bloomberg He said last week that the effect appeared to be dangerous and “structural”.
Lots of small businesses have shut down altogether.
For an island nation that relies heavily on imports, a small delay in trade can have a big impact.
“If you have an issue with one item in that entire truck, it is delaying everything else,” Judy told Insider.
These are the things that really worry me, Judy said. “ Larger firms are adapting – the volume has to start to go up.
“But small businesses, especially, will be hit hard. That’s what really worries me about all of this.”
Sales of many low-value items became, in many cases, unworkable. Simon Spurrell, co-founder of the Cheshire Cheese Company, has stopped exporting his cheese packages, each of which were around £ 30, to the European Union because each package must be accompanied by a health certificate of £ 180. He told the Guardian.
He said one of the ministers advised him to simply focus on exporting to other markets instead.
All this is far from the bright new commercial future promised by Johnson and the UK government.
And while the coronavirus pandemic has dominated political debate in Britain in recent months, the long-term impact of the UK cutting ties with its closest trading partners could soon become a huge political issue again.