Brexit’s effect on UK export orders
When it comes to the effects of Brexit on United Kingdom export orders to date, the view taken by many is that the country’s exporting capabilities have been significantly hit by the departure from the single market. Indeed, the most obvious and direct impact of Brexit has been to introduce new barriers to trade between the UK and its largest trading partner, the European Union bloc.
But what effect has Brexit actually had on UK-EU trade, and how reliably can the statistical data and academic analysis be disentangled from other factors, like the coronavirus pandemic?
Brexit’s impact on UK trade so far
Following a year-long transition period, the UK left the EU customs union at the end of 2020, and since the beginning of 2021, UK trade with the EU has been governed by the EU-UK Trade and Cooperation Agreement (TCA). Although the TCA allows for tariff and quota-free trade in goods, together with preferential arrangements for trade in services, trade barriers between the UK and EU are undeniably higher than before because of Brexit.
Needless to say, the net effect of these new trade barriers is that the UK’s trade performance has suffered, but perhaps not as considerably as some might think. A careful look at the actual trade data suggests that, far from UK goods exports facing disastrous declines due to Brexit, a more likely conclusion is that the “Brexit effect” has only been a few percent, with the pandemic taking much of the blame, albeit with a slow return to pre-pandemic figures.
And as for UK services exports, these appear to be booming. Arguably enjoying one of the best performances when recently compared with other G7 economies, Britain’s services trade is far less dependent on the EU bloc than its goods trade. The strength in services exports possibly reflects the UK’s strong position in high-value sectors, such as consultancy, where there are few barriers to trade. The pandemic has also normalised the remote delivery of services, having a positive rather than a negative impact on this type of export.
How Brexit has impacted UK goods exports
While the impact of the coronavirus pandemic and its associated global supply-chain disruptions may be largely accountable for any decline in goods trade in recent years, Brexit has undoubtedly had its own impact on UK exports, especially to EU member states.
UK to EU trade flow fell sharply following the introduction of the TCA, as many exporters struggled to get to grips with the new regulatory regime. While the TCA kept goods traded between the UK and EU tariff- and quota-free, rule of origin requirements must be met to qualify for tariff-free access. Due to customs and compliance checks, this means that UK exporters face additional administrative burdens and delays at both UK and EU borders.
For many businesses, these post-Brexit export challenges have persisted well beyond the initial teething period, with a large proportion of British firms continuing to report difficulties in adapting to the new rules for exporting goods. Some are finding it no longer viable to trade with the EU at all, given the often prohibitively high costs of now doing so. Although this decline is likely to be disproportionally large among smaller, resource-constrained businesses who previously exported single products or a limited range of products, the reality faced by all UK exporters is that it is now harder to trade with the EU.
For UK businesses, the effect of Brexit also means more costly trade with the rest of the world when the EU is part of any global value chain (GVC). A GVC refers to the full range of activities that economic participants engage in to bring a product to market.
Still, it remains hard to disentangle the impact of Brexit and the introduction of the TCA from other contributing factors, both on a domestic and global basis. It is also far too early to be able to accurately assess the long-term consequences of Brexit, with only two years worth of data that must be isolated from various other geo-economic disruptions.
As such, all we really have so far is an estimate of the Brexit effect, which continues to present its own challenges. However, securing support from a specialist documentation service provider can at least help to lessen any adverse administrative impact.
How Blair can help Brexit-challenged businesses
There will undoubtedly continue to be hurdles to overcome when it comes to UK export orders, including the barriers introduced to trading with the EU as a result of Brexit.
However, here at Blair, we can provide the necessary guidance and support to become TCA-compliant. As the European market leader in providing specialist export documentation services, we have already helped hundreds of UK firms continue to trade internationally, rather than turning inwards, despite the administrative challenges for both small and large businesses alike.
With increased streamlining in the processes adopted, we are also helping UK firms retain their EU customer-base, who may otherwise switch to more local sourcing to avoid the customs formalities and possible delays when buying from the UK.
For tailored advice and assistance on becoming TCA regulatory-compliant when exporting goods to the EU, contact us by telephone on +44 (0)1784 254123 or complete our online contact form.
Legal disclaimer
The matters contained within this article are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, either express or implied, is given as to the accuracy of the blog contents, and no liability is accepted for any errors or omissions. Before acting on any of the information contained herein, expert advice should be sought.