London, 29 January 2024: New research from Bibby Foreign Exchange (BFX), reveals that UK SMEs trading abroad remain hamstrung by circumstances borne out of Brexit, as the UK’s withdrawal from the European Union approaches its four-year anniversary.
Data from BFX’s 2024 Trading Places report finds that more than half (55%) see the ongoing impact of Brexit as a significant challenge, ranking second only to inflation as the key issue hampering their growth.
Michael McGowan, Managing Director of Bibby Foreign Exchange said: “Four years on, the Brexit burden is growing, not shrinking, and this is stifling the growth of thousands of UK exporters and importers who also face a myriad of supply-chain Issues as a result conflicts in Europe and the Middle East. Combined, such geopolitical events are placing further pressure on those trading overseas.”
BFX’s inaugural Trading Places report was published in 2017 during the aftermath of the EU Referendum. At that time, 41 percent of importers and 29 percent of exporters said Brexit was having a negative impact on their business. Today, this perspective is true for a third of importers (62%) and exporters (63%).
Half (49%) of SMEs report that the cost of trading with customers and suppliers in the EU today is more expensive and less profitable today. Meanwhile, 40 percent cite tariffs, customs and trade barriers as key issues facing them, leading more than a fifth (20%) to say they would be in favour of a new government taking steps to re-join the EU.
Findings come as new post-Brexit border checks for UK exporters are set to come into force this month.
Michael McGowan commented:“Despite the resilience of the UK’s SME population, many of those who trade abroad are clearly struggling to operate as effectively as they did before Brexit. Held back by increasingly complex customs and clearance processes, this research sheds light on the ongoing impact of Brexit on SMEs. With new post-Brexit border checks on goods set to be in place this month – starting with the Border Target Operating Model, and physical checks beginning in April – this problem only stands to intensify.”
Despite a challenging environment, Europe remains the primary trading bloc for UK businesses, with six in ten (61%) trading with EU member countries, rising to 69 percent for those with turnover of between £500,000 and £1 million.
However, for a growing number, there has been a discernible shift away from trade with the EU. Since Brexit, 40 percent trade less with companies in the EU and 21 percent trade more with customers and suppliers outside of the EU.
Looking ahead to the 2024 general election, two-fifths (44%) say they’d like a new government to revise the current Trade and Cooperation Agreement between the UK and the EU to improve trading conditions with the bloc. Conversely, more than a third (36%) would like a new government to establish more trading agreements with countries outside the EU.
Michael McGowan said: “The growing desire to trade with non-European partners suggests a ‘needs must’ pragmatism adopted by UK businesses dealing with the ongoing impact of Brexit. Yet SMEs’ appetite for closer ties with the EU couldn’t be clearer. If policy makers and government fail to listen to and prioritise the views of small and medium size businesses trading overseas, the subsequent losses could be dramatic both for individual businesses, and national economic growth.”