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Majority of UK firms expect post-Brexit trading disruption to last long-term

·4-min read
Drivers wait with their parked-up freight trucks at the Motis freight clearance centre at the port of Dover on the south coast of England on January 15, 2021, as hauliers get used to life under the post-Brexit trade deal. - British companies are struggling with a large amount of red tape as a result of Brexit, with senior government minister Michael Gove recently admitting that there would be
Customs and supply chains (72%), tax and VAT (70%) and regulation (68%), are the three most common areas where companies have seen disruption. Photo: Ben Stansall / AFP via Getty Images

The majority of British companies have experienced some form of trade disruption with the European Union (EU) following Brexit, and many firms expect these issues to have long-term consequences. 

Research from EY and London First, found 75% of businesses have experienced some Brexit trade disruption, while 49% say they expect some sort of disruption to continue in the long-term. 

Despite that, 71% said they had felt prepared for the changes. Nearly a third (29%) said they had stopped trading with the EU and nations not covered by rollover deals.

Customs and supply chains (72%), tax and VAT (70%) and regulation (68%), are the three most common areas where companies have seen disruption.

Businesses highlighted delays to 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%), as some of the key challenges. 

London has been particularly hard hit by Brexit. The capital — which has a high proportion of regulated sectors such as telecoms, finance, accounting, legal, and IT — saw 85% of businesses report some form of disruption. 

Meanwhile, 53% of London businesses expect the disruption to continue for the long-term. 

READ MORE: Brexit: Quarter of small exporters give up on EU due to red tape

Previously, prime minister Boris Johnson had said that Brexit disruptions were mainly due to "teething problems" which would decline as companies grew more confident with the new system. 

But, John Dickie, acting chief executive of London First, said that "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," Dickie added. 

Great Britain officially left the EU's single market and customs union on 1 January and this has meant that companies from both sides have had to cope with a lot of red tape and bureaucracy due to new paperwork. 

From 1 July, all firms exporting to the UK will be required to fill out full customs declarations and goods could be subjected to physical checks at new UK customs centres. 

WATCH: More than half of UK firms have faced disruption due to Brexit

The findings echo similar research and worries from leading business groups in the UK.

The majority (70%) of UK importers and exporters surveyed said they have suffered shipment delays when moving goods around the EU in recent weeks. 32% have lost goods in transit and 34% have had goods held indefinitely at EU border crossings, the Federation of Small Businesses (FSB) said.

According to the FSB one in five (23%) exporters have temporarily paused sales to European Union (EU) customers and a further 4% have decided to stop selling into the bloc permanently amid Brexit red tape.

The analysis of over 1,400 small firms also showed 11% of exporters are considering halting sales to Europe permanently. The same proportion have established, or are considering establishing, a presence within a country in the EU to ease their exporting processes.

Additionally, 9% of respondents said they were thinking about securing, or are already using, warehousing space in the EU or Northern Ireland (NI) for the same purpose.

Similarly, trade research by the British Chambers of Commerce (BCC) from January 2021 showed that 49% of UK exporters reported difficulties in adapting to changes in the trade or movement of goods.

In February, a Confederation of British Industry (CBI) survey, revealed that 68% of manufacturers have experienced delays at borders with 60% also reporting additional customs costs and admin.

While analysis from the Institute of Directors (IoD) from March 2021 showed that since 31 December, almost 20% of directors whose organisations had previously traded with the EU, have stopped.

A Make UK survey from March 2021 showed that 74% of UK manufacturers have encountered delays at ports this year, with over half facing increased costs and a third losing revenue.

WATCH: 10 ways to Brexit proof your finances

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