Last Week in Brexit: funding for SMEs announced, but how far will this go?
Last Thursday, the UK government announced a £20 million support package for SMEs facing Brexit challenges. The fund’s intention is to help SMEs adjust to new customs, Rules of Origin, and VAT rules when trading with the EU. Businesses who trade with the EU and the EU alone will be encouraged to apply for grants of up to £2000. Traders are encouraged to take up opportunities to train their staff in key skills that will help them become more confident exporters and importers.
This announcement comes ahead of, and to prepare businesses for, the new import controls coming into force from April and July, as set out in the Border Operating Model.
Commenting on the announcement of the fund, Suren Thiru, Head of Economics at the BCC, said:
“This is a welcome first step in dealing with some of the major issues that small businesses trading with the EU are facing. With their finances already under a significant squeeze firms, particularly those which export, are inevitably encountering difficulties in adapting to the complexities of the new arrangements.
“It is now crucial that the grants provide sufficient funds to make a real difference and the government should stand ready to increase their size if needed. We will continue working closely with government to make sure this scheme is delivered as quickly and smoothly as possible for firms still adapting to the new EU trading arrangements and the impact of the pandemic.
“The BCC will also continue to offer as much direct support as we can to SMEs especially through ChamberCustoms - our dedicated customs advisory, training and brokerage service.”
However, the question remains – will this support from the government be enough?
In a recent survey caried out by the Chamber on behalf of the BCC our Research team found that Three-fourths of businesses that are currently trading with EU markets reported serious difficulties in preparing for the new rules. Of these, 15% are preparing to scale down EU trade because they find the new procedures too complex or costly to comply with. Evidently, the impact of Brexit will not be fading into the background for businesses anytime soon, and a finite amount of support may not be enough.
Commenting on the results of the survey Subrahmaniam Krishnan-Harihara, Head of Research at the Chamber, said
“It is now clear the trade deal secured in the eleventh hour is not the silver bullet it was touted to be. The devil is in the detail and compliance is not easy. Indeed, commonly cited concerns for scaling back EU trade included increased paperwork and administration costs, border delays and confusion about what rules to follow.
Over half of survey respondents have taken on more debt compared to a year ago. A quarter of businesses have cash reserves to see them through for less than three months. That being the case, many businesses do not have the firepower to invest in Brexit preparation.
It is imperative that the UK government does not rush into introducing full customs checks on imports in July. The timescales need to change, and additional support should be made available for businesses who are battling to adapt to new trading conditions. Without flexibility and support, there is likely to be further damage and the path to recovery will remain long and thorny.”
Additionally, this week Chris Fletcher, Policy, Campaigns & Communications Director, spoke with Dave McNamara the Director of Advanced Supplies a typical SME, with customers in the EU as well as in other parts of the world. Advanced supplies’ concerns echo those found in the Chamber’s recent survey findings. The business is running into problems with goods stuck in Spanish ports due to ‘incorrect paperwork’ and a costly overhaul on its distribution model in France. As Brexit costs and the time spent dealing with it piles up, Dave must ask, “How long before these people decide it’s too much trouble and cost to deal with the UK?”.
Read more about Advanced Supplies’ story here.
As a business, you do not have to face the challenges of post-Brexit trade alone. The Chamber has a qualified team of international trade experts and the support of our Membership team to advise, guide, and listen to your Brexit concerns. Please call us on 0161 393 4321, or email firstname.lastname@example.org for more information.