A quarter of SME exporters halted EU sales following transition end: FSB

The survey of more than 1,400 small firms finds that one in five (23 per cent) exporters have temporarily halted sales to European Union (EU) customers and a further 4 per cent have already decided to stop selling into the bloc permanently after new trading rules took affect at the start of this year.

One in 10 (11 per cent) 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 per cent) 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 per cent), and a smaller proportion are using EU or NI warehousing space (6 per cent).  

The majority (70 per cent) of importers and/or exporters have suffered shipment delays when moving goods around the EU in recent weeks.

One in three (32 per cent) have lost goods in transit, and an even greater proportion (34 per cent) have had goods held indefinitely at EU border crossings. Of those that have experienced delays, a third (36 per cent) have suffered hold-ups that lasted more than two weeks.     

More than half (55 per cent) 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.

As a result of the findings, the FSB urged 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; and
• Strike ambitious new free trade agreements (FTA), which include dedicated small business chapters, with fast-growing economies around the world, including the US.

“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,” said FSB national chairman Mike Cherry.

“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.  

“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."