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SMEs call for Brexit "side deals" to ease trade with EU

3 January 2023

New research conducted by the British Chambers of Commerce has found that British businesses are being hampered in their trade with the EU because of the current Brexit deal but it finds that some changes and a few "side deals" could solve some key problems.

A high proportion of businesses say they are still having major problems trying to use the Trade and Co-operation Agreement (TCA) Brexit deal to trade with Europe. That's the key finding of a new survey of 1,168 businesses (of which 92% are SMEs) conducted by the British Chambers of Commerce (BCC). The TCA was agreed on Christmas Eve in 2020 to allow tariff-free trade with the EU once Brexit took effect.

The BCC report, TCA Two Years On, reveals that:

  • 80% of firms have seen the cost of exporting rise in the past year;
  • 77% of firms say the TCA is not helping them increase sales or grow their business;
  • 70% of manufacturers have experienced shortages of goods and services;
  • 56% face difficulties adapting to the new rules for trading goods;
  • 45% face difficulties adapting to the new rules for trading services; 44% report difficulties obtaining visas for staff.

Businesses feel as though they are "banging their heads against a brick wall", according to BCC director general Shevaun Haviland.

"Businesses want political leaders on both sides to move on from the debates of the past and find ways to trade more freely. This means an honest dialogue about how we can improve our trading relationship with the EU. With a recession looming we must remove the shackles holding back our exporters so they can play their part in the UK's economic recovery.

If we don't do this now then the long-term competitiveness of the UK could be seriously damaged. It is no coincidence that during the first 15 months of the TCA we stopped selling 42% of all the different products that we used to." Shevaun Haviland, BCC director general

The BCC says that while there are "clearly some structural problems built into the TCA which cannot be addressed until it is reviewed in 2026", there are some key issues that "do not need to wait on months of negotiations or major reviews to be fixed."

Five quick fixes for UK-EU trade

The BCC's TCA Two Years On report sets out 24 recommendations to increase UK-EU trade. Its top five proposals for quick action are:

  • Create a supplementary deal with the EU which either eliminates or reduces the complexity of exporting food for SMEs.
  • Establish a supplementary deal, like Norway's, that exempts smaller firms from the requirement to have a fiscal representative for VAT in the EU.
  • Allow CE marked goods and components to continue to be used in Great Britain after 2024.
  • Make side deals with the EU and member states to allow UK firms to travel for longer and work in Europe.
  • Reach an agreement on the future of the Protocol on Ireland/Northern Ireland with the European Commission in the early months of 2023, to stabilise our trading relationship.

Written by Rachel Miller.

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