London Daily

Focus on the big picture.
Friday, May 30, 2025

Analysis: 100 days later, Brexit isn't working and business wants it fixed

Analysis: 100 days later, Brexit isn't working and business wants it fixed

When British Prime Minister Boris Johnson announced his Brexit trade deal on December 24, he said it would enable UK companies "to do even more business" with the European Union.

Britain would be "prosperous and dynamic and contented" after completing its exit from the European Union, Johnson declared, free to strike trade deals around the world while continuing to export seamlessly to the EU market of 450 million consumers.

But it's been 100 days since the United Kingdom split from its single biggest trading partner and Brexit is proving to be disastrous for many British exporters, which have rejected Johnson's description of the issues as "teething problems" and are now asking the government to take urgent action to prevent further losses.

"We are calling on both the UK and EU to get back around the table and produce solutions that reduce trade barriers and give exporters a fighting chance," British Chambers of Commerce co-executive director Hannah Essex said in a statement on Monday.

"The difficulties exporters are facing are not just 'teething problems.' They are structural issues that, if they continue to go unaddressed, could lead to long term, potentially irreversible weakness in the UK export sector," she added.

The deal has been bad for trade. But it's also contributed to recent violence and rising anger in Northern Ireland.

During negotiations on the Brexit deal, the problem of goods moving between Ireland, which is a member of the European Union, and Northern Ireland, which is part of the United Kingdom, proved the most intractable. Honoring the 1998 Good Friday Agreement that ended three decades of sectarian violence meant avoiding the return of a border on the island of Ireland.

Instead, Johnson agreed that Northern Ireland would remain subject to EU market rules and to erect a trade border down the Irish Sea to police them, angering pro-British unionists who object to Northern Ireland being treated differently than the rest of the United Kingdom. Johnson had pledged in 2019 that there would be no checks on goods moving between Britain and Northern Ireland.

Riots and violence in the streets of Belfast this month have stoked fears of a return to Northern Ireland's troubled past and led a spokesperson for the US State Department to warn that the Good Friday Agreement must not "become a casualty of Brexit."

Exports collapse


The UK government has not published an assessment of the economic fallout from Brexit, and continues to tout its purported benefits.

A government spokesperson told CNN Business that the Brexit deal "protects high quality jobs and investment right across the UK and ensures that businesses continue to trade effectively and sell to their customers in the European Union."

But a survey of over 1,000 UK business leaders conducted by EY and lobby group London First in late February found that three quarters have experienced disruption to their operating model following the end of the Brexit transition period, and half expect it to continue over the long term.

UK exports to the European Union collapsed 41% in January compared to December, according to the Office for National Statistics, and many companies say that their ability to continue trading with the bloc is at risk due to issues arising from the trade agreement. Businesses that could previously get goods into Europe within hours of an order being placed are now facing lengthy and costly delays due to new customs and food safety checks.

Cargo trucks in Dover heading to the European Union on 5 February 2021.


A British Chambers of Commerce survey published Monday of 2,900 UK exporters found that 41% of firms reported decreased export sales in the first quarter, driven by Brexit and the impact of the coronavirus pandemic.

UK exporters are struggling to adjust to "the sheer volume of paperwork" that they must now tackle, according to Suren Thiru, head of economics at the British Chambers of Commerce.

There is also a lack of clarity around the payment of sales taxes as well as confusion about new rules of origin requirements, with companies reporting very little accessible advice from the UK government on these issues, he told CNN Business. Rules of origin determine where goods, including raw materials and component parts, originate and whether they should face tariffs.

"The fact is, companies trading with the EU did not need to know or understand customs until now. And there isn't enough capacity in the [customs] industry to provide the required support," said Anna Jerzewska, the founder of international trade consultancy Trade & Borders.

While larger companies can absorb new costs, small businesses have been particularly hard hit. A survey of 132 exporters by the Federation of Small Businesses in March found that 23% have temporarily stopped sales to the European Union and five have stopped permanently.

"Smaller traders are struggling, and considering whether exports are worth the effort anymore," the organization's national chairman Mike Cherry said in a statement last month.

Can the deal be fixed?


On Monday, a group of lawmakers, business leaders and economists announced an independent commission to scrutinize Britain's trade deals with Europe and the rest of the world.

The UK Trade and Business Commission, which counts Virgin chairman Peter Norris among its organizers, will make recommendations to government on how to improve these deals.

"We will be looking in detail at the impact of these deals, particularly upon the small businesses that are bearing the brunt of new red tape at our borders," Conservative member of parliament Roger Gale, who sits on the commission, said in a statement. "This is about setting ideology aside and finding a pragmatic, evidence-based way forward," he added.

The situation is particularly urgent for food producers, which have seen exports all but wiped out by the new trading arrangements. As of January 1, all plant and animal products entering the European Union require an export health certificate (EHC) that must be stamped by a government-certified vet.

That has prevented the Cheshire Cheese Company from selling to online shoppers in the European Union because the cost of a certificate is many times its average sales price of £25 ($34) to £50 ($69) per order.

Before Brexit, these sales were worth about £180,000 ($247,800), or 20% of the company's revenue, and on track to reach £250,000 ($344,000) this year, according to managing director Simon Spurrell. "We used to have an ocean of opportunity, we dealt with 27 different countries. That quickly became a pond," Spurrell said.

UK food and drink exports collapsed in January, driven by a 76% decline in sales to the European Union compared to the same month last year, according to the Food and Drink Federation. Exports of salmon tumbled 98%, beef slid 92% and animal feed declined 80%. Whisky exports fell 63%.

"The solution is to swallow our pride and strike a veterinary agreement," according to L. Alan Winters, founding director of the UK Trade Policy Observatory at the University of Sussex. "Without it we are going to see little chance of animal products picking up," he added.

There are several other areas that also need attention.

For example, mutual recognition of professional qualifications, such as for doctors, accountants and architects, must still be agreed to on a sector by sector basis. That has not yet happened and it's a "major issue" facing businesses, said Thiru.

Johnson's Brexit deal made no provision for financial services, an industry that accounts for almost 11% of government tax revenue and 1.1 million jobs, according to PwC and the Office for National Statistics.

Prospects for an agreement that would grant Britain the same market access rights as some other non-EU countries look slim, and that could further undermine London's position as Europe's top financial city.

Since the referendum, international financial services firms have migrated almost £1.3 trillion ($1.8 trillion) worth of assets and relocated 7,600 jobs from Britain to the European Union, according to data tracked by EY. Amsterdam has already overtaken London as Europe's top share trading center.

"The days of significant swathes of asset and job relocation announcements appear to have passed and will likely be replaced by the slower yet ongoing movement of people and assets to Europe for compliance purposes," Omar Ali, a financial services managing partner at EY, said in a report last month.

Long-term consequences


Leaving the EU single market means the end of frictionless trade and higher costs for UK companies, even once they have adjusted to the new way of doing business.

"It's important to recognize that there are some teething troubles, but there are also troubles to come as the long-term consequences of making commerce more difficult come home to roost," said Winters.

That will knock foreign direct investment into the United Kingdom over time because companies wanting to serve the European market will no longer choose to base themselves in Britain, he added.

The new trading relationship is expected to lead to a long-run loss of output in Britain of around 4% compared to remaining in the European Union, according to the UK Office for Budget Responsibility, which produces economic forecasts for the government. Exports and imports will be around 15% lower in the long run.

According to Jerzewska, the trade expert, the main consequence will be the gradual shift of supply chains as EU producers find alternative suppliers. "Businesses follow the path of least resistance and the new barriers to trade can make the UK suppliers less competitive on the EU market," she said.

Newsletter

Related Articles

0:00
0:00
Close
Satirical Sketch Sparks Political Spouse Feud in South Korea
Indonesia Quarry Collapse Leaves Multiple Dead and Missing
South Korean Election Video Pulled Amid Misogyny Outcry
Asian Economies Shift Away from US Dollar Amid Trade Tensions
Netflix Investigates Allegations of On-Set Mistreatment in K-Drama Production
US Defence Chief Reaffirms Strong Ties with Singapore Amid Regional Tensions
Vietnam Faces Strategic Dilemma Over China's Mekong River Projects
Malaysia's First AI Preacher Sparks Debate on Islamic Principles
White House Press Secretary Criticizes Harvard Funding, Advocates for Vocational Training
France to Implement Nationwide Smoking Ban in Outdoor Spaces Frequented by Children
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
Russia's Fossil Fuel Revenues Approach €900 Billion Since Ukraine Invasion
U.S. Justice Department Reduces American Bar Association's Role in Judicial Nominations
U.S. Department of Energy Unveils 'Doudna' Supercomputer to Advance AI Research
U.S. SEC Dismisses Lawsuit Against Binance Amid Regulatory Shift
Alcohol Industry Faces Increased Scrutiny Amid Health Concerns
Italy Faces Population Decline Amid Youth Emigration
U.S. Goods Imports Plunge Nearly 20% Amid Tariff Disruptions
OpenAI Faces Competition from Cheaper AI Rivals
Foreign Tax Provision in U.S. Budget Bill Alarms Investors
Trump Accuses China of Violating Trade Agreement
Gerry Adams Wins Libel Case Against BBC
Russia Accuses Serbia of Supplying Arms to Ukraine
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
Chinese Woman Dies After Being Forced to Visit Bank Despite Critical Illness
President Trump Grants Full Pardons to Reality TV Stars Todd and Julie Chrisley
Texas Enacts App Store Accountability Act Mandating Age Verification
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Vatican Calls for Sustainable Tourism in 2025 Message
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
Trump Threatens 25% Tariff on iPhones Amid Dispute with Apple CEO
Putin's Helicopter Reportedly Targeted by Ukrainian Drones
Liverpool Car Ramming Incident Leaves Multiple Injured
Australia Faces Immigration Debate Following Labor Party Victory
Iranian Revolutionary Guard Founder Warns Against Trusting Regime in Nuclear Talks
Macron Dismisses Viral Video of Wife's Gesture as Playful Banter
Cleveland Clinic Study Questions Effectiveness of Recent Flu Vaccine
Netanyahu Accuses Starmer of Siding with Hamas
Junior Doctors Threaten Strike Over 4% Pay Offer
Labour MPs Urge Chancellor to Tax Wealthy Over Cutting Welfare
Publication of UK Child Poverty Strategy Delayed Until Autumn
France Detains UK Fishing Vessel Amid Post-Brexit Tensions
Calls Grow to Resume Syrian Asylum Claims in UK
Nigel Farage Pledges to Reinstate Winter Fuel Payments
Boris and Carrie Johnson Welcome Daughter Poppy
×