A new report has found that small British companies are withdrawing £10 billion in exports from the EU. This diversion of a significant portion of international trading is the result of growing concerns overreaching a trade deal between the UK and the EU.
The anticipation of no-deal Brexit fuels redirection of export
Research from Aston University, Birmingham, was released at the beginning of June, ahead of the first direct negotiations between UK Prime Minister Boris Johnson and Brussels since the UK’s exit from the EU.
With the unexpected impact of the Covid-19 pandemic grinding trade negotiations to a halt in the first half of the year, British companies are increasingly skeptical of whether a trade deal can be secured before the deadline of the year. Failure to achieve such an agreement will result in World Trade Organization regulations applying to UK-EU trade as default, which would see British companies facing more tariffs and barriers when trading with the EU.
The latest data shows that small British firms have diverted a total of £10 billion a year in exports away from the EU in preparation for such an eventuality. Statistics investigated by Aston University have revealed that a significant portion of exports has recently been redirected to countries in South America and Asia. A team at the UK-based university analyzed 340,000 export transactions made by 26,000 UK firms between 2016 and 2020 to understand the nature of how to export behavior had changed since the referendum.
Optimism over trade deal remains
Cabinet minister Matt Hancock remains optimistic that a trade deal can be reached before the UK’s reasonable demands. While differences remain in the four critical areas of fisheries, competition rules, governance, and police cooperation, many officials believe that once activity over trade talks is ramped up again, a deal will be reached.
UK businesses will benefit from a deal being settled as it will facilitate trade with neighboring countries. With the uncertainty surrounding the UK-EU trade deal, many small companies face tough decisions over whether to change their trading strategies to protect themselves in case of a no-deal outcome. At Exports News, we aim to keep you up to date with the latest and most relevant trading news to help you navigate these uncertain times.