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22 December 2022

Two years on, our trade deal with the EU is a rotten turkey

A poll finds more than three quarters of companies believe the Brexit deal has been unhelpful to their business.

By Will Dunn

Most people have experienced the discomfort of opening a Christmas present – perhaps an oddly shaped bottle of aftershave, or a foot massager – and feigning gratitude while thinking: I can’t get this to the charity shop quickly enough. The season of consumerism is a great chance to reflect on how few things you actually want.

As far as Britain’s businesses are concerned, all they wanted for Christmas two years ago was tariff-free trade with the EU, to paraphrase Mariah Carey. On Christmas Eve 2020, Boris Johnson dropped a trade and cooperation agreement in their stockings, but like all the worst Christmas presents it was bought mainly with the giver in mind, and quickly showed signs of not working.

As a poll released last night (21 December) by the British Chambers of Commerce (BCC) has found, the Trade and Cooperation Agreement (TCA) between the UK and EU has turned out to be a turkey for most of the businesses that use it. Of a representative sample of more than 1,100 companies, 77 per cent said the deal was “not helping them to increase sales or grow their business”, while 56 per cent said they had “difficulties adapting to the new rules for trading goods”.

Trading companies told the BCC they had often didn’t know what the costs involved in trade would be, that there was constant confusion over customs, and that they have been forced either to move some operations in the EU or simply to stop exporting.

“Brexit has been the biggest ever imposition of bureaucracy on business,” one manufacturer told the BCC. “Simple importing of parts to fix broken machines or raw materials from the EU has become a major time-consuming nightmare for small businesses, and Brexit-related logistics delays are a massive cost.”

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The BCC’s poll is supported by the monthly data collected by the Institute of Export and International Trade, which shows a consistent and ongoing decline in the number of British businesses trading overseas, driven mainly by small businesses ceasing trade with the EU.

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In many cases this happened because the TCA, like that shower curtain you hastily bought for your uncle at the petrol station on the way to his house, was a last-minute purchase unconvincingly wrapped by someone who was frankly uninterested in the results of its use. A customs agreement is one thing but the new IT systems and buildings needed to implement it are quite another.

The unfinished nature of the TCA and the infrastructure required to enforce it is evident in the fact that even two years after it was agreed, the UK still hasn’t imposed customs checks on EU imports.

When we do eventually fix this, it may not be because it gives European companies an unfair advantage over British businesses, but because the other countries with whom we’re still seeking trade deals will also feel it’s unfair to them, and refuse to sign agreements with us until it’s fixed. Similarly, one of the big reasons to agree a deal with the EU on the Northern Ireland protocol is the fact that the United States has its own views on Northern Ireland and if we want a trade deal with them, we’d better respect their wishes concerning what happens on UK territory. Isn’t it nice to have taken back control?

The EU, too, will continue to influence policy made in the UK, because any hope of an improved Brexit deal next year will depend on the EU’s willingness to renegotiate an agreement that is already working in its favour. It’ll also depend on how much the government offends the EU with policies such as free ports, and how much Rishi Sunak can get past a party that has already harrumphed mightily at the idea that Britain (GDP per capita $47,300) might enter into an economic situation more like that of Switzerland (GDP per capita $93,400).

The good news is that he may have more public support for doing so. Business groups that once held back from the toxic politics of Brexit are increasingly strident about its economic effects, while just 32 per cent of voters continue to think Brexit was a good idea (and one in five Leave voters have changed their minds). A referendum on rejoining the bloc would be a mad political proposal – the appropriate response to which is to lie down underneath the nearest table – but one of the government’s big projects for 2023 will be undoing some of the damage that Brexit has caused.

[See also: 60 per cent of Brits on £80,000-100,000 say they’re “about average”]