New studies show that the exit from the EU is particularly affecting medium-sized British companies – many of which have stopped exporting to the European Union altogether.
London. The Scottish company Bradfords Bakers specializes in gift baskets with all kinds of delicacies: chocolate tarts, honey and butter biscuits, whiskey. The baskets can also be delivered abroad, for example to Ireland, Australia, India or Kuwait – but not to Germany or Austria. The company stopped exporting to the European Union more than a year ago: it has become too complicated. With the additional fees that have had to be paid since Brexit and the certificates that are now required for various products, it was no longer profitable, the company boss told the specialist magazine Specialty Food. “We are a small operation and it is difficult to find the time and staff to cope with the new requirements.”
Countless British firms have had the same experience as Bradfords Bakers. Since the Brexit trade regime came into force in January 2021, SME industry groups have been warning that smaller businesses are struggling to cope with the red tape and higher costs. This is now confirmed by a new academic study from the London School of Economics: the number of business relationships between British traders and European buyers has fallen by almost a third since the beginning of 2021.
Exports to smaller EU countries in particular have plummeted, the authors write. The reason is obvious: the provisions of the trade agreement between Great Britain and the EU have made it so expensive for many smaller companies to export products that they have withdrawn from smaller EU markets. The slump in trade was “remarkable”. He also gives a foreshadowing of the longer-term effects of Brexit: the growth in trade will be determined to a large extent by smaller companies.
food prices go up
Another consequence of leaving the EU is already being felt: Brexit has fueled inflation. This is the result of a study by the British think tank EU in a Changing Europe, which was also published in the past few days. Accordingly, the Brexit trade barriers meant that food prices rose by six percent between December 2019 and September 2021. Although there are no customs duties on imports from the EU, the inspections and additional paperwork have repeatedly led to delays at the border.
The study shows that those products that are largely imported from the EU have become more expensive than those that come from other countries; these include fresh pork, tomatoes and jam. According to the authors, this price increase cannot be blamed on the pandemic.
“Our study shows that the trade barriers caused by Brexit are having a clear and robust effect on rising food prices for British consumers,” says one of the academics involved, Nikhil Datta. Inflation in the UK climbed to 7% in March – the highest level in 30 years.