Brexit deal impact ‘worsening’, economists say

Brexit red tape on British businesses has caused goods trade between the UK and EU to slump and the problem is getting worse, a study has warned.

Many smaller UK producers have given up exporting small amounts to the EU after facing more rules and regulations, a report by Aston University Business School has found.

Between 2021 and 2023, the study calculated that UK goods exports to the EU were down 27% and imported goods were 32% lower than where they would have been had Brexit not happened.

The report does not include the service sector, which has performed better than many experts had expected since Brexit.

The variety of trade export goods has also dropped, the study found, with 1,645 fewer types of British products exported to every EU country.

The authors said this is due to smaller British producers giving up on exporting consignments to some EU nations after facing increased red tape.

Mary Quicke of Quicke’s Cheeses in Devon told the BBC’s Today programme that she had found it “really, really difficult to deal with all the regulatory burdens”.

She said she used to supply four customers directly in the EU but “we had to give them away to somebody else”.

“We just don’t have the people to do the paperwork.”

Adam Sopher, the co-founder and chief executive of Joe & Seph’s popcorn, has also found post-Brexit regulations a burden.

He set up the company 13 years ago and it now has an £8m turnover with 70 employees.

He said Brexit was “initially very challenging. We were being asked for vet certificates for caramel popcorn because it contains butter”.

Pre-Brexit, individuals, cinemas and retail stores in the EU could order popcorn online and they could send it by Royal Mail or a courier service, but then “all of it came to a grinding halt”.

Brexit has led to “huge amount of extra costs because of the added administration”, he said.

Bulk deliveries to the EU have recovered, but where it used to cost about £130 per pallet previously, it now costs £230-£250 predominately due to red tape and administrative fees.

“There’s a huge amount of opportunity for growth if these rules can be improved,” he said.

The report said that the “negative impacts of the [trade agreement] have intensified over time, with 2023 showing more pronounced trade declines than previous years”.

Jun Du, one of the authors of the research, told the BBC there had been an increase in regulations such as “product standards, safety checks and labeling requirements”.

“While these measures do protect consumers, competition and the environment, they also increasingly bring difficulties and costs for the traders,” she said.

Agrifood, textiles and materials manufacturing (wood and paper) have been hardest hit, according to the study.

Trade with more distant countries in the EU has also been impacted the most, including Commonwealth allies such as Cyprus and Malta.

However, the report’s authors say a small number of sectors have proven resilient, especially in terms of exports to bigger EU economies such as Germany and France.

The tobacco, railway and aircraft sectors saw increases in the variety of exports to EU nations.

A government spokesperson said it will “work to improve our trade and investment relationship with the EU and tear down unnecessary trade barriers, while recognising that there will be no return to the single market, customs union or freedom of movement”.

The BBC understands that in recent meetings with government, business representatives were invited to contribute early ideas on “resetting” the trade relationship with the EU, with a focus on “economic security”.

Progress is unlikely until next year, when the new European Commission is firmly established, and the UK has itself completed new industrial and trade strategies.