On the fifth anniversary of Brexit, the British Chambers of Commerce is calling on the Government to use its planned EU reset to achieve concrete change and help drive UK economic growth.
Research by the BCC’s Insight Unit has shown that SME exporters have faced an uphill struggle to sell goods and services in Europe as paperwork and costs have ballooned:
- Two fifths (41%) of exporters disagree the Brexit deal is helping them grow sales.
- Only 14% of exporters think the deal is helping them to grow.
- Almost half (46%) of businesses want the Government to make it easier for UK staff to work in the EU.
- More than a third (37%) want a reduction in VAT requirements to export to the EU.
- And a quarter (25%) want the UK to align with rules and regulations with the EU in key goods sectors.
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%), export
documentation (39%), regulations and standards (35%) and tariffs (33%).
Awareness of upcoming changes in
trade rules and regulations being made by either the UK or the EU are also
alarmingly 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-to-business movements of parcels to Northern Ireland.
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:
1. Negotiate a deal with the EU
which either eliminates or reduces the complexity of exporting food for SMEs.
2. Produce a balanced Youth
Mobility scheme between the UK and EU, covering school visits and exchanges,
and a time-limited ability to work for young people.
3. Rejoin the
Pan-Euro-Mediterranean (PEM) convention to align rules on raw material and
components that can be used in exports without incurring tariffs.
4. Establish a supplementary deal,
like Norway’s, that exempts smaller firms from the requirement to have a fiscal
representative for VAT in the EU.
5. 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.
6. 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.
“Meanwhile, comments from senior
figures in Brussels in the last week suggest they are open to finding common
solutions to some of the barriers to trade which are affecting the flow of
goods and services in both directions.
“Business welcomes this improving
relationship and wants both sides to expand this quickly through scoping a
pragmatic, growth-driven package of improvements.
“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.
“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.”