One year on, Brexit’s impact on businesses
In this article, seasoned entrepreneur and investor Neil Debenham looks back on the first year of Brexit and its effect on UK businesses.
Post-Brexit, the UK-EU trade relationship is seeing a profound impact on businesses across all sectors and regions. Revised regulations, customs controls and added layers of red tape have forced businesses to adapt to a new trading landscape at a time when they are already feeling the pressure posed by the pandemic.
To highlight the significance of Brexit’s effect on trade, it is important to note that British companies had lost over £250bn to Covid and an equal amount to Brexit by the end of 2021. The Brexit tally is still rising exponentially.
Where businesses were dealing with one single state, the EU, the intricacies of doing business with 26 individual countries have become ever clearer. While one of the primary underpinnings of Brexit was to secure independence for Britain both politically and financially, the reality one year on is not wholly reflecting this goal.
Increased costs, new and extensive paperwork requirements and border delays are the main themes underlining these post-Brexit trade difficulties. The EU system’s set out guidelines and protocols now do not apply to Britain after ceasing their 47-year membership. There is no time for trial and error when cultivating new trade relationships, and so the initial impact of Brexit has inevitably, created significant ‘teething problems’ for UK-EU trade.
New customs controls have created unprecedentedly long delays at ports and on the roads, increasing delays in the supply chain which in turn has serious cash flow consequences for businesses who rely on trade with the EU.
Further challenges still facing UK firms include labour shortage and the end of freedom of movement. In order to continue prosperity, it is important to strategise a way forward for firms to realise their potential amidst multiple barriers to success.
Practical implications of Brexit, namely lack of access to skilled EU migrants makes the job more difficult, as now the talent pool is significantly smaller. Therefore, investment in training and development of employees is key for businesses who hope to maximise their profits in a post-Brexit, post-COVID world.
Moreover, where businesses feel incentivised to move their operations abroad, the UK market is at a crossroads. While efficiency is a key driver in business, it is important to note the human cost of relocating and moving business offshore. Retaining, training, and developing the skillset of employees is crucial if the UK economy is to thrive and maintain its status as a key player in the world market.
While spending more on training can come at a hefty cost, the ultimate benefit for firms is exponential. Improving the quality of both operational efficiency and staff capability can allow UK businesses to prosper at an advantageous level.
With the Prime Minister’s recent announcement of the ‘Brexit Freedoms Bill’, aiming to ‘cut £1billion of red tape for UK businesses, ease regulatory burdens and contribute to the government’s mission to unite and level up the country’, this ambition may well be truly underway.
SMEs can work in tandem with the government, by investing in development and training for staff and reaping the benefits of simplification of reporting burdens and restrictions as stipulated in the Brexit Freedoms Bill.
As the restrictions caused by the pandemic draw to a close worldwide, a new landscape for UK-EU trade may be given a greater chance to flourish. Well-considered adjustments and streamlining of operations will be key for businesses striving to prosper in the wake of Brexit. For this to occur, the government must deliver on their promise to support and promote British businesses while remaining in mutually beneficial collaboration with the EU.