9% of British exporters have already suffered setbacks following Brexit, with increased border checks and new paperwork resulting in higher export costs. The withdrawal has led to changes in trading arrangements, further aggravating supply chain issues initiated by the COVID-19 pandemic. Thus, Britain’s hopes of recovering from the forced economic stall brought on by the pandemic are being significantly challenged.
In order for the UK to bounce back successfully from 2020’s economic slump, which is its worst since the Great Frost of 1709 when Europe experienced incredibly low temperatures for three months that lead to a 13% decline in GDP, it needs to begin trading again. However, a recent survey conducted by HSBC UK found that 40% of British companies involved in importing and exporting reported being negatively impacted by the new trade agreements struck between the UK and the EU, with many traders finding the new arrangements making trade less convenient.
So, What Must Be Done?
According to the IHS Markit, UK-based manufacturers have suffered the most during the first month of 2021. While experts believe some damages may be permanent, with the Bank of England predicting a long-term 10% reduction in trade, some effects may be reversible.
The EU-UK Trade and Cooperation Agreement (TCA) provides the framework for trade between the UK and the EU. However, the TCA is not set in stone, and its guidelines will continue to be tested and reviewed, meaning it may be improved in the future to benefit both parties. Additionally, there are several specialized committees within the TCA that will work to investigate what improvements may benefit trade between these two regions. This is good news for British businesses, as it provides hope that the rules and regulations are adjustable and can be updated if problems arise.
For now, the best way British traders can weather the storm is to educate themselves on what the changes may mean for their business. They must also strategize ways that could help minimize the impacts of the UK’s exit from the union.
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