On Tuesday afternoon, the British Chambers of Commerce in the United Kingdom (BCC UK), in partnership with the British Chamber of Commerce for Luxembourg (BCC), held a webinar entitled "Brexit, Borders and Trade".
During this online event, representatives of the British Chambers of Commerce presented in detail the results of the latest BCC Quarterly Economic Survey (QES), the largest independent business survey in the UK, one year after the impact of Brexit was first felt by businesses that import and export goods.
Following an introduction by BCC Customs and Trade Specialist Emmanuel Gianquitto, David Bharier, Head of Research at BCC, and Stuart Morrison, Policy and Research Executive at BCC, explained that, according to the results of the BCC QES for the fourth quarter (Q4) of 2021, British businesses were facing four main issues: inflation, exporting, the EU-UK Trade and Cooperation Agreement (TCA) and investment.
Inflation: the survey revealed that businesses have been under "unprecedented pressure" related to inflation since the start of 2021. Remuneration and utilities emerged as the top forms of price pressure, with manufacturers even more exposed to cost pressures, particularly regarding raw materials. The survey also found that microbusinesses (i.e. those with fewer than ten employees) were the least able to absorb cost increases.
Exporting: the global supply chain crisis paired with Brexit have "disproportionately affected" British exporters, most of whom reported no improvement in export sales.
TCA: serious challenges associated with the EU-UK TCA persist, according to the survey, which also revealed a widespread perception that the agreement was not enabling growth for British exporters.
Investment: on a more positive note, the survey found that, whilst some uncertainty remains, confidence is growing as we ease our way out of the COVID-19 pandemic; 63% of businesses said they expected to increase investment over the next twelve months. David Bharier noted that optimism and an appetite for growth is there, but it needs to be capitalised on.
Nevertheless, the survey also highlighted the feeling among respondents that their views were not taken into consideration when the UK Government made decisions, such as those related to priority markets for future deals.
Stuart Morrison cited some of the specific issues raised by respondents, namely VAT, customs delays, confusion surrounding rules of origin, difficulty in recruiting and retaining skilled labour from the EU, the Northern Ireland Protocol (and the associated increased costs and administration for businesses) and equivalence. Regarding challenges and opportunities in general, Brexit emerged as the top issue, followed by trade, costs and inflation.
Liam Smyth, Managing Director of Chamber Customs and BCC Director of Trade Facilitation, then looked at the changes, deadlines and challenges related to border controls since the entry into force of the EU-UK TCA in January 2021. Common issues since then included confusion regarding responsibility for import processes, failure to use postponed VAT accounting or to apply for a duty deferment account and waiver. In such cases, businesses risk receiving penalties of £2,500 for each issue (up to £10,000 in any year), which in turn can have an impact on applications for preferential tariffs in the future. Referring to what his colleagues had said about businesses feeling like they are not consulted by the government on such issues, Mr Smyth noted that the UK Government has actually tried to engage with businesses through various consultations.
The webinar ended with a question and answer (Q&A) session.
