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The National (Scotland)
The National (Scotland)
Ninian Wilson

Businesses 'banging their heads against the wall' due to Brexit trade blocks

BUSINESSES are “banging their heads against the wall” in the aftermath of Brexit and increased red tape, a new report has suggested.

The British Chambers of Commerce (BCC) has said firms are still wrestling with barriers to trade with the EU following the UK’s decision to leave the trading bloc.

In a bid to maintain trade flows with the EU, the UK Government struck the Trade and Co-operation Agreement (TCA) on Christmas Eve 2020, a deal which means tariff-free goods and services could move between the two parties after Brexit.

Some 1168 businesses were questioned by the BCC to produce its report, with 514 of them saying that they traded overseas or were otherwise affected by the deal.

And more than half of them said they were finding it difficult to navigate the new rules which force them to deal with new forms, checks or other processes.

An Ayrshire firm said leaving the EU had "made us uncompetitive with our EU customers", adding that they had to set up a base in the EU so they didn’t lose trade with the bloc.

They continued: "This has cost our business a huge amount of money which could have been invested in the UK had it not been for Brexit."

Another business in Dorset said it had been a “nightmare” importing parts to fix their machines.

They added: "Brexit has been the biggest ever imposition of bureaucracy on business."

In the face of a likely recession, the BCC has urged the UK Government to have an “honest dialogue about how we can improve our trading relationship with the EU" and cut more red tape before 2026 when the deal is reviewed.

The group has also put 24 recommendations to the Government, which included finding a prompt resolution to the Northern Ireland Protocol.

Commenting on the report, the BCC’s director general, Shevaun Haviland, said: “Businesses feel they are banging their heads against a brick wall as nothing has been done to help them, almost two years after the TCA [trade and cooperation agreement] was first agreed.

"The longer the current problems go unchecked, the more EU traders go elsewhere, and the more damage is done.”

This follows a separate report published by the Centre for European Reform which suggests that Brexit may have shrunk UK trade by around 7% while also reducing investment, meaning UK economic output is 5.5% smaller than it would have been otherwise.

This outstrips the damage forecasted by the Office for Budget Responsibility (OBR), which said there would be a 4% drop in productivity.

Back in March, the OBR predicted that exports and imports would be cut by 15% in the long run and that trade deals with other parts of the world would not negate the impact by much.

Commenting, the SNP's Europe spokesperson, Alyn Smith, said that Brexit "has and will continue to be, an unmitigated disaster for Scottish households and businesses".

He added: "However, with both the Tories and Labour determined to 'make Brexit work' - something that clearly cannot happen - more and more people in Scotland are now recognising that independence is the only way to escape the long-term economic damage created by Brexit and continued Westminster control.

"Scotland did not vote for Brexit nor any of the economic harm it has brought to these islands. That is why it is vital the people Scotland are offered the chance to choose a different path - one that leads to a more prosperous, fairer and greener country in the European Union."

Scottish Greens MSP Maggie Chapman commented that “Brexit has been a disaster right from the start".

She continued: "It was cooked up by extreme Tory MPs who wanted to live out their xenophobic fantasies and didn’t care about the consequences. It has failed on all of its own terms. All of the worthless pledges and promises that were made - of prosperity, of wonderful international trade, of economic growth - have fallen apart. 

“The longer that Brexit endures the worse it will get. That is why we need the powers of a normal independent country, so that we can rejoin Europe and finally move on from the reactionary xenophobic Tory Brexit that is doing so much damage.”

A UK Government spokesperson said: “The TCA is the world’s largest zero tariff, zero quota free trade deal. It secures the UK market access across key service sectors and opens new opportunities for UK businesses across the globe.  Despite difficult global economic headwinds, UK-EU trade is rebounding, with recent data showing that UK trade to both EU and non-EU countries is above pre-COVID levels.

“The UK has provided exporters with practical support on the implementation of the TCA, including launching an ambitious Export Strategy and a new Export Support Service. We’ve also removed 400 trade barriers across 70 countries in the past two years, removed tariffs on £30 billion worth of goods and cut £1bn business costs arising from current retained EU law.” 

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