Msheets Brearley is still frustrated with Brexit. More than a year after Britain’s formal exit from the EU, on terms agreed by Boris Johnson’s government, it has not become easier for the London – based producer to export the goods his company produces.
Describing it as “the same nightmare week after week”, he says: “It takes a lot more time for things to go wrong. The EU really feels like the hardest place in the world to send things to sometimes.”
For the past seven decades, the company Brearley runs, Kaymet, has been making and selling tea carts, trays and hobs from its factory just off Old Kent Road to customers, including the British royal family. It is believed that Kaymet’s goods were used by the Queen – who celebrated her platinum anniversary this week – on her world tour for coronation. The company sells goods in 40 countries around the world.
But leaving the EU has increased Brearley’s costs and made it harder to sell goods abroad. “There are lots of things I could have done if it were not for these problems. We could do things that lead us forward, rather than back,” he says.
Official figures show that UK exports to the EU remain significantly below pre-Brexit levels, despite some recovery from an initial dip in January 2021 at the end of the transition period. Exports had fallen 40% a month as traders adapted to new bureaucracy and border delays, but came back late last year, a fall of 11% compared to 2018 – the year used by the Office for National Statistics as the most reliable comparison before Brexit- stocks and the Covid pandemic affected trade flows.
However, concerns are growing that new Brexit roadblocks are threatening as the government threatens to tear apart the Northern Ireland Protocol, which covers trade between Britain, Northern Ireland and Ireland. Despite Boris Johnson claiming to have “got Brexit done”, his government now considers this central plank in his deal to be broken.
“There’s a sense of, ‘Oh God, now we’re going again,’ says Brearley, who is worried Kaymet will suffer if the EU responds with new trade barriers.
Raoul Ruparel, who was Theresa May’s special adviser to Europe during the first round of Brexit negotiations, says companies can start dusting off their old Brexit plans without agreement if the situation worsens.
“Any business will tell you it’s not useful,” he says. “In this case, many of them are just doing it and they just need to get the best out of it. But what they do not want is constantly changing trade rules with the UK and the EU.”
Despite business concerns about retaliation from Brussels, the government has insisted that it is the right thing to push forward. “The United Kingdom’s solution to the protocol problems and to protect Belfast [Good Friday] The agreement will reduce costs for businesses, eliminate unnecessary paperwork and protect the markets in the UK and the EU, ”said a spokesman.
However, there may be financial costs. Steffan Ball, the former chairman of Philip Hammond’s council of advisers when he was chancellor and now chief economist in the UK at Goldman Sachs, says the most likely outcome is a “compromise deal”. Still, there is a risk of “significant financial consequences” if not achieved, he warns.
“Back in 2020, Office of Budgetary Responsibility [OBR] estimated that a “no-deal” Brexit would reduce the level of real GDP by a further 2% in the long run. In addition, the escalation of tensions raises the prospect of a trade war with potential tariffs on exports to the EU, ”he says. “But this result is very unlikely in our opinion.”
Even with the current agreement, the OBR – the Ministry of Finance’s economic forecasts – expects that Brexit will cost the economy 4% of GDP over 15 years, double the long-term effects of the scarring from the Covid pandemic.
Trade figures suggest that British exporters are already feeling the pinch. According to the Dutch Bureau of Economic Policy Analysis, which tracks trends in global trade, exports of goods from advanced economies in March – including the UK, US, Japan and the euro area – were 2% above the 2018 monthly average after adjusting for inflation. In the UK, however, real exports fell by almost 22% in the same month.
Some sectors have a little more dramatic than others. Exports of clothing and footwear to the EU have both fallen by almost 60% compared to 2018. Meat exports have fallen by almost 25%, vegetables and fruit by 40%, while car exports have fallen by more than a quarter.
Paul Alger, director of international affairs at the UK Fashion and Textile Association, says the big hit for his industry is probably due to the fact that many of the goods sold by UK firms do not qualify for the post-Brexit trade deal. Under its terms, goods must comply with the “rule of origin”, which requires a certain part of a product to be domestically produced in order to enjoy duty-free access. But much of the clothing sold by UK retailers is made in Asia or the US, which does not justify it.
“They also find the customs very difficult in some countries. Especially around labeling,” said Algiers. “Many companies would say we were not aware of how good an agreement we had to move goods from the UK to the EU. before we actually left. “
As an example of changing trade patterns, Marks & Spencer is setting up a warehouse to handle EU supplies of clothing and household goods to reduce the impact of tariffs and export costs. The British high street man said last week that Brexit had cost it £ 29.6 million in profits and £ 15 million in lost trade.
Danny Hodgson runs Rivet & Hide, which sells quality menswear from stores in London and Manchester as well as online. He says EU sales, which he spent a decade building, fell by half in the first month after Brexit and never recovered.
“It’s really frustrating,” he says. Rivet & Hide has pushed up prices for EU customers to include new tariffs, VAT and shipping costs.
“I hear Johnson bragging about free trade and everything else. I do not know how he has got his throat talking about us doing free trade when it is basically him who has imposed sanctions on our business.” We traded freely with the EU and now we have been imposed tariffs through our Brexit agreements. “
As the UK economy faces the risk of recession in the midst of the cost-of-living crisis, Hodgson says the government has caused damage to the UK economy that could easily have been avoided.
“We’re less profitable, there’s a lot more work involved, there’s a lot more hassle, but I’m still struggling with it in the hope that one day things will get better,” he says. “But if there was a trade war, it would end it.”