A new survey by the British Chambers of Commerce‘s Insights Unit of 1,111 businesses (92% SMEs) shows the urgency for the Government to reset trade relations with the EU is increasing.
The BCC report, assessing the fourth year of Brexit, identifies fresh challenges as regulations continue to diverge, creating further headaches for traders on both sides of the Channel.
The TCA was agreed on Christmas Eve in 2020 to allow tariff-free trade with the EU once Brexit took effect.
But services access is limited by rules on business mobility and only 15% of exporters think the deal is helping them to grow sales with Europe, while 41% disagree.
The BCC has sent the Government its report examining the main issues the TCA is causing for firms with possible solutions to many of the problems.
The survey also found that alongside easier movement of personnel between the UK and EU, 36% of businesses also wanted to see reduced VAT requirements for exports, and a quarter (24%) wanted mutual recognition of professional qualifications.
Businesses said the biggest barriers to exporting they faced were customs procedures and documentation (45%), export documentation (39%), regulations and standards (36%) and tariffs (34%).
Awareness of upcoming changes in trade rules and regulations being made by either the UK or the EU was also alarmingly low, with more than three quarters of firms knowing no details of much of the legislation.
This includes knowledge of the Carbon Border Adjustment Mechanism (CBAM), Border Target Operating Model (BTOM), Safety and Security Declaration Requirements and new rules on business-to-business movements of parcels to Northern Ireland.
Shevaun Haviland, Director General of the British Chambers of Commerce, said:
“The Government has said economic growth is its number one priority but if that is going to happen then we need to export more, and the EU is still our biggest market.
“Our modelling indicates that if exports had grown 1.0% in 2024, compared to our forecast of a 2.0% contraction, then the economy could have grown up to 1.7% instead of 0.8%. That is a big difference.
“But the structural trade problems created by Brexit have not eased and, in many respects, they are getting worse as EU and UK rules and regulations head in different directions.
“The Government has talked a lot about a new era of trade relations with the EU. But firms are grappling with increasing costs off the back of the Autumn Budget and this change cannot come soon enough.
“We need to see a smart and flexible approach to these negotiations. Our businesses are clear on what they want to see, less paperwork and bureaucracy, greater flexibility on business travel and a balanced Youth Mobility Scheme between the UK and EU.
“There is no time to lose in driving forward the changes we need to see. Firms are suffocating under a blanket of rising costs and improving our trading relationship with the EU could provide the growth needed to transform the dour outlook many are facing.”
The BCC’s TCA Four Years On report sets out 26 recommendations to improve UK-EU trade.
Its top five proposals for discussions in 2025 are:
1. Negotiate a deal with the EU which either eliminates or reduces the complexity of exporting food for SMEs.
2. Produce a balanced Youth Mobility scheme between the UK and EU, covering school visits and exchanges, and a time-limited ability to work for young people.
3. Develop new arrangements on changes to regulations to minimise disruption to businesses and raise awareness of any fresh impacts.
4. Establish a supplementary deal, like Norway’s, that exempts smaller firms from the requirement to have a fiscal representative for VAT in the EU.
5. Make a deal to allow UK firms to travel for longer and work in Europe and vice versa, and provide mutual recognition of professional qualifications.
