‘We’ve been sold a dud’: small firms suffer decline in post-Brexit exports

‘We’ve been sold a dud’: small firms suffer decline in post-Brexit exports

Small businesses have reported a marked drop in exports to the EU as another company bemoaned the post-Brexit “nightmare” of delivery delays and increased costs.

The Federation of Small Businesses (FSB), a lobby group, said 35 of the 132 exporters it surveyed had temporarily suspended trade with the EU or stopped it permanently. One in 10 of the exporters surveyed said they were also considering giving up trade with EU customers.

Some smaller business have been badly affected by the overnight change in trade rules on 31 December, with new paperwork and a rush to secure delivery space causing widespread delays and extra costs. UK exports to the EU fell by 41% in January, according to government figures.

“It’s a nightmare,” said Sharon da Costa, the managing director of Fighting Films, a Bristol-based producer of judo movies – including highlights of tournaments held by the International Judo Federation – which also supplies martial arts kit. Half of the company’s business was in Europe before the pandemic and Brexit, but orders for suits for a Belgian customer that previously took two days have taken as long as a month to arrive.

One option available to larger companies is setting up a warehouse in the EU in order to fulfil orders from customers in the bloc. However, this would represent a major cost for smaller companies and could mean they have to hold more inventory to be able to offer the same range of products.

“It’s not viable for us to sell to our agents, our distributors in Europe,” said Da Costa. “We’re too small a company for that to be viable.”

While trade between the UK and the EU is dominated by larger companies, exports are an important source of business for smaller and mid-sized enterprises. About one-fifth of smaller British businesses exported in 2019, according to government figures, although that represented a decline from the roughly 24% that exported before the financial crisis of 2008.

The government-backed British Business Bank calculated last year that smaller businesses accounted for about one-third of UK exports in 2018, or £200bn of goods and services.

Fighting Films, which has eight permanent employees, has been forced to consider rerouting shipments of judo suits from a factory in Pakistan directly to retailers in Europe, which would harm profits. “It will all be trade that won’t go through us,” said Da Costa.

Import costs have also risen from the EU, with the end result likely to be price rises of about 5% for British buyers on some products such as judo mats.

“We’ve been sold a dud,” she said. “If it weren’t for Covid, people would be shouting from the rooftops.”

Matt Griffith, a spokesperson for the British Chambers of Commerce in the south-west, said members had experienced short-term costs plus “what looks like permanent deterioration in their competitive position due to higher admin, paperwork and shipping costs”.

Smaller online retailers and food and drink companies had been particularly badly affected, he added.

Some businesses face an existential threat. For instance, the export of live molluscs such as cockles and clams has become near impossible, while tough standards for food and animal exports have meant trade has fallen dramatically.

Mike Cherry, the FSB’s national chairman, said smaller businesses faced “incredibly demanding, unfamiliar paperwork”.

He added: “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 any more.”

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