MArk Brearley is still frustrated with Brexit. More than a year after Britain officially withdrew from the EU, under terms agreed by Boris Johnson’s government, exporting goods produced by his company hasn’t been easier for the London-based manufacturer .
Describing it as “the same nightmare week after week,” he said: “You spend a lot more time with things going wrong. The EU really feels like the hardest place in the world to ship things to sometimes.
For the past seven decades Brearley-run company Kaymet has manufactured and sold tea trolleys, trays and hotplates from its factory just off Old Kent Road to customers including the British Royal Family . The Kaymet merchandise is believed to have been used by the Queen – celebrating her Platinum Jubilee this week – during her coronation world tour. The company sells products in 40 countries around the world.
But leaving the EU has increased Brearley’s costs and made it more difficult to sell items overseas. “There are plenty of things I could have done without these problems. We could do things that move us forward rather than backward,” he says.
Official figures show UK exports to the EU remain significantly below pre-Brexit levels, despite some recovery after an initial plunge in January 2021 at the end of the transition period. Exports had fallen 40% in the month as traders adjusted to new red tape and border delays, but came back to end last year down 11% from 2018 – the year used by the Office for National Statistics as the most reliable comparison, before Brexit. storage and the Covid pandemic have influenced trade flows.
However, concern is growing that more Brexit roadblocks are looming as the government threatens to tear up the Northern Ireland Protocol, which covers trade between Britain, Northern Ireland and Ireland. Despite Boris Johnson claiming to have “done Brexit”, his government now considers this core element of his deal broken.
“There’s a feeling of ‘Oh my God, here we go again,'” says Brearley, who fears Kaymet could suffer if the EU reacts with new trade barriers.
Raoul Ruparel, who was Theresa May’s special adviser for Europe during the first round of Brexit talks, said companies could start dusting off their old no-deal Brexit plans if the situation worsens.
“Any company will tell you it’s useless,” he says. “In this case, a lot of them are just starting out and they just have to make the most of it. But what they don’t want is constantly changing trading rules with the UK and the EU.
Despite business concerns over retaliation from Brussels, the government has insisted moving forward is the right thing to do. “The UK’s solution to solving problems with protocol and protecting Belfast [Good Friday] The deal will cut costs for businesses, remove unnecessary red tape and protect UK and European markets,” a spokesperson said.
However, there could be economic costs. Steffan Ball, the former chairman of Philip Hammond’s council of advisers when he was chancellor, and now chief UK economist at Goldman Sachs, says the most likely outcome is a “compromise deal”. Still, risks of “significant economic impacts” loom if one is not achieved, he warns.
“In 2020, the Office for Budget Responsibility [OBR] estimated that a “no deal” Brexit would reduce the level of real GDP by an additional 2% in the long run. Additionally, escalating tensions raise the prospect of a trade war, with potential tariffs imposed on exports to the EU,” he says. “But that outcome is very unlikely in our view.”
Even with the current deal, the OBR – the Treasury’s economic forecaster – expects Brexit to cost the economy 4% of GDP over 15 years, double the long-term impact of the scars of the Covid pandemic.
Trade figures suggest UK exporters are already feeling the pinch. According to the Netherlands Bureau for Economic Policy Analysis, which tracks global trade trends, exports of goods in March from advanced economies – including the UK, US, Japan and the eurozone – were 2% higher than the monthly average for 2018, after adjusting for inflation. . In the UK, however, real exports fell nearly 22% in the same month.
Some sectors have been hit harder than others. Clothing and footwear exports to the EU are both down almost 60% compared to 2018. Meat exports have fallen by almost 25%, vegetables and fruit by 40%, while car exports fell by more than a quarter.
Paul Alger, director of international affairs at the UK Fashion and Textile Association, said the blow to his industry is likely because many items sold by UK companies are not eligible for the post-Brexit trade deal . According to its terms, goods must meet the requirements of the “rule of origin”, which requires that a certain proportion of an item be produced domestically to qualify for duty-free access. However, much of the clothing sold by UK retailers is made in Asia or the US, making them ineligible.
“They also find that customs are very difficult in some countries. Especially around labeling,” Alger said. “A lot of companies will say we didn’t realize what a great deal we had for moving goods from the UK to the EU until we left.”
In an example of changing business models, Marks & Spencer is setting up a warehouse to manage deliveries of clothing and household goods to the EU to reduce the impact of customs duties and export costs. The British high street stalwart said last week that Brexit had cost him £29.6m in profits and £15m in business losses.
Danny Hodgson runs Rivet & Hide, which sells quality menswear in stores in London and Manchester as well as online. He says sales in the EU, which he spent a decade building, fell by half in the first month after Brexit and never recovered.
“It’s really frustrating,” he said. Rivet & Hide has increased prices for EU customers to include new rates, VAT and shipping costs.
“I hear Johnson bragging about free trade and everything. I don’t know how he has the iron neck to talk about free trade when he was essentially the one who imposed sanctions on our company. “We used to trade freely with the EU and now we have had tariffs imposed on us through our Brexit deals.”
As the UK economy faces the risk of recession amid the cost of living crisis, Hodgson says the government has caused damage to the UK economy that could easily have been avoided.
“We’re less profitable, there’s a lot more work to do, there’s a lot more hassle, but I’m still working hard in the hope that one day things will get better,” he says. “But if there was a trade war, that would end that.”