Overcoming Brexit challenges: Analysing the trade data
Updated: Jun 14
Amid a slow but steady recovery in global trade, UK exports continue to lag behind. In addition, many exporters say that the UK-EU Brexit trade deal does not help them increase sales abroad. That shouldn't really be surprising: red tape, customs duties and import VAT pose a serious challenge to trade, especially for smaller businesses. It’s why we designed a flexible, customised trade solution that makes navigating post-Brexit bureaucracy simple, cost-effective and efficient.
It’s 2022. In a perfect world, traders would have fully optimised operations for Brexit by now.
Yet importers continue to face practical hurdles. Red tape is proving costly and confusing, especially for small businesses. And that shouldn’t really be surprising.
The simple fact is that international trade is complex: VAT, customs and logistics are challenging at the best of times. For businesses that have never had to negotiate these barriers before, the challenge is especially daunting. A clear-eyed examination of the trade data confirms that UK businesses need flexible and effective trade solutions if they wish to compete on the global stage.
What the trade data tell us
Let’s start by looking at the big picture. Globally, trade volumes are showing a steady recovery following the Covid pandemic. By contrast, the picture in the UK is less rosy. Official data shows that the volume of UK exports declined 14% in the three months to January compared to the same timeframe in 2020. By comparison, the global average increased by 8.2% in the same period.
We can draw down and see the effect at the country level. For instance, UK exports to Cyprus halved, a decline experts attribute to Brexit.
Of course, trade data only tells us part of the story. What is the experience of businesses themselves? Unfortunately, the majority of exporters say that the UK-EU trade deal does not help them increase sales. More concerning, most exporters worry the trade deal increases costs and red tape.
The costs and complexities of trade
In retrospect, the dip in trade shouldn’t really surprise us. The basic fact is that customs procedures are complex, import VAT can wreak havoc with cash flow and securing the most competitive logistics rates takes experience and expertise.
Consider a practical example. The UK-EU trade deal promises tariff-free trade if the Rules of Origin are met. In plain language, that means you don’t have to pay customs duties on exports from the UK to EU states if you can show that your goods originate in either the UK or EU. But what does ‘originate’ mean? In practice, the regulations are different for different types of goods. There’s one rule for how much imported fabric you can use in a pair of jeans, another for the batteries in electric vehicles. Get it wrong, and your goods might not make it past customs at all. You could even face penalties.
Even in the best case, you now still need to get all the paperwork in order to prove to customs officials that your goods really do qualify for zero customs duties.
Everything is connected
Fortunately, optimising trade is not some mysterious process. With expert guidance, navigating the complex world of VAT and customs becomes much easier. But there’s a catch. A supply chain is only as strong as its weakest link. You don’t get your goods to market more efficiently by concentrating your resources in one area. You need an integrated trade solution, that eliminates bottlenecks at each stage of the process. And you need a team on the ground to troubleshoot problems as soon as they arrive. Because expertise is necessary but it’s not enough. You also need fast, flexible, practical support that adapts when the unpredictable happens.
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