OneWorldExpress
As we move past peak retail season, attention naturally turns from order fulfilment, shipping arrangements and returns, and towards the general market conditions – in particular, how 2022 is likely to shape up for businesses. And a likely key focus for businesses this year will be how UK-EU trade is faring in the year following Brexit.
This is not a new consideration – in fact, it has dominated much of the political and social climate for more than half a decade. However, in truth, with the pandemic and supply chains combining for an upheaval which can credibly be called larger than Brexit, the UK’s fortunes following its exit from the EU on the turn of 2021 have been given little attention.
Given the eventual success of the UK’s vaccination drive, and the modest release of pressure on global supply chains, businesses will assess more closely how their trading relationship with EU markets has been altered.
Immediate impact
For one, memories of the initial transition to life outside the EU will be prominent in the minds of business leaders – highlighting as it did the fragility of UK-EU trade to complications at the border. In the first month of Brexit, January 2021, exports from the UK to the EU plummeted by 40.7% – the primary contributor to an overall 19.3% drop in exports that month.
As businesses adjusted to the new trading realities, exports to the EU made a modest but sustained recovery throughout the year. The three months to November 2021 saw a 2.6% increase in exports to the EU over the three months prior, while exports outside the EU rose only 0.7%.
However, a new year presents new challenges. This January marked a quiet but significant tightening of the rules around exporting to the EU, which will give some operations pause for consideration.
Stricter requirements for country-of-origin documentation, and the ending of a grace period allowing businesses 175 days to provide customs declarations to HMRC are major changes which will require more strategic effort from businesses. The positive news is that these tweaks to the rules are unlikely to markedly raise the cost of doing business with the EU – and therefore, should not price UK firms out.
However, adding further complications to the already-heightened bureaucracy of exporting goods to the EU may lead some businesses to reconsider their trading channels. Indeed, One World Express recently commissioned a survey of more than 350 decision-makers in UK businesses, to canvas their views on how Brexit had impacted on their operations, and what they anticipated looking forward. Strikingly, one quarter (26%) reported having made a strategic decision to stop imports and exports with the EU last year – a trend that additional bureaucracy is unlikely to buck.
More positively, our research highlighted that half of all businesses now felt confident in their adaptation to Brexit, with more than one quarter (27%) reporting they had already felt some benefit, and a third (34%) observing increased overseas demand over the course of the year, suggesting that businesses may consider exploring further trading opportunities further afield. And of course, One World Express is always on hand to help such companies navigate any difficulties in accessing courier options and offer practical insights on keeping operational costs down and suppliers and consumers satisfied with reliable service.
Given the EU’s position as the UK’s closest and most integral trading partner, such dramatic variations in fortunes as we saw in the immediate aftermath of Brexit were always to be expected – the true picture of the future of UK-EU trade is only becoming clearer now as the dust begins to settle. While there are springs of hope in how ably businesses have adjusted to the new processes, some concerns will still be raised within businesses about the added strain of further administrative bureaucracy. In light of this, business leaders looking to expand or maintain their presence within the EU would be well-advised to seek out the help of logistics experts in charting their course forward.
