How has Brexit affected businesses? The impact on British companies to access the EU market

The LSE research indicates that “UK worldwide goods exports and imports fell 6.4% and 3.1% respectively, between 2020 and 2022”, compared with predictions of what would have happened had the UK remained inside the EU. Other economic models, such as those from Aston University, suggest the impact has been more severe, with UK exports to the EU estimated to be 17% lower and imports 23% lower than they would have been without Brexit. This divergence in findings highlights the complexity of measuring Brexit’s true impact on trade.

But regardless of macro-level metrics, Brexit has clearly reshaped the economic landscape between the UK and the EU, introducing new trade barriers and regulatory complexities:

• the reintroduction of customs checks
• Sanitary and phytosanitary (SPS) controls
• Tariffs in some cases, tax representation issues
• The risk of regulatory divergence
• Increased bureaucratic hurdles such as rules of origin requirements, VAT complications, and border delays

These changes have particularly affected small and medium-sized enterprises (SMEs), which often lack the resources to navigate the complexities of new compliance measures.

The Office for Budget Responsibility (OBR) still forecasts a 4% long-run hit to UK GDP due to Brexit, factoring in trade impacts as well as reduced investment and productivity. The OBR expects UK exports and imports to be 15% lower in the long run, although the LSE study suggests businesses are adapting better than initially feared.

The UK government has taken steps to support smaller exporters, such as the Export Support Service, but significant barriers remain. While some UK exporters have diversified into new markets, the EU remains the country’s largest trading partner, making it crucial for policymakers to address ongoing trade frictions.

For many exporters, this region’s proximity to the UK is a very important asset: they get their goods across the Channel, through the Eurotunnel or ferries to Calais or Dunkirk, and then clear them for customs and tax. From then, their goods can be sent to any of their clients across the EU, freely and with no other hurdles, from Lisbon to Helsinki.

For companies trading in services, the London-Lille connection works very well: Eurostar trains only take 1h15 minutes to get from one to the other. British business people and service providers can easily jump on a Eurostar train at Saint-Pancras in the morning, have an entire business day in Lille, meeting clients and service providers, and come back to London in the evening.