A new FSB survey of more than 1,400 small firms finds that one in five (23%) exporters have temporarily halted sales to European Union (EU) customers and a further 4% have already decided to stop selling into the bloc permanently after new trading rules took affect at the start of this year.
The first full quarter of post-transition trading comes to a close on Wednesday. The day also marks two years since the original Brexit date that firms were told to prepare for in 2019.
One in ten (11%) exporters are considering halting sales to Europe permanently, according to the fresh analysis. The same proportion have established, or are considering establishing, a presence within an EU country to ease their exporting processes. A similar number (9%) are thinking about securing, or are already using, warehousing space in the EU or Northern Ireland (NI) for the same purpose.
Small importers are also hard hit by new paperwork, though fewer than one in five have temporarily suspended purchases from the EU (17%), and a smaller proportion are using EU or NI warehousing space (6%).
The majority (70%) of importers and/or exporters have suffered shipment delays when moving goods around the EU in recent weeks. One in three (32%) have lost goods in transit, and an even greater proportion (34%) have had goods held indefinitely at EU border crossings. Of those that have experienced delays, a third (36%) have suffered hold-ups that lasted more than two weeks.
More than half (55%) of importers and/or exporters have sought professional advice to help them with new paperwork pertaining to EU business activity, often to assist management of customs declarations, rules of origin paperwork and altered value added tax (VAT) obligations.
Following the findings, FSB is urging the Government to:
- Increase the threshold at which tariffs and taxes for imports and exports kick-in to £1,000.
- Closely monitor the roll-out of the SME Brexit Support Fund, ensuring small businesses are aware that they can apply for funding to access a range of trading advice, training and technology, and not exclusively that relating to customs and intermediaries.
- Strike ambitious new free trade agreements (FTA), which include dedicated small business chapters, with fast-growing economies around the world, including the US.
FSB National Chairman Mike Cherry said: “At a moment when small firms are doing all we can to return to growth and get our economy firing on all cylinders again, those that do business internationally are being hit with some incredibly demanding, unfamiliar paperwork.
“Three months on from the end of the transition period, what we hoped would prove to be teething problems are in danger of becoming permanent, systemic ones. While larger firms have the resources and bandwidth to overcome them regardless, smaller traders are struggling, and considering whether exports are worth the effort anymore.
“Our exporters tend to be among our most innovative and profitable small businesses, so it’s troubling to see them bearing the brunt of changes. The SME Brexit Support Fund marks a much-needed intervention, and we’d encourage all those struggling to manage new requirements to apply, and for the Government to dedicate further resources if the fund is exhausted, rather than turning down applications.
“Unless more is done to ease the admin burden on those that do business overseas, and increase access to markets outside the EU, it will weigh heavy on our efforts to recover from the most severe downturn on record.”