The global upswing in trade is leaving the U.K. behind, an early sign of the challenge Brexit is presenting its economy.
The U.K. formally began its new relationship with the European Union Jan. 1. Before then, and before the Covid-19 pandemic upended world trade, Jason Wouhra’s food wholesale business in England’s West Midlands, Lioncroft Wholesale Ltd., generated up to a quarter of its annual revenue from customers in Spain, Portugal and other markets in the EU.
Lioncroft has now stopped exporting to the EU altogether. Sending 300 products to the EU before Brexit was as easy as moving goods within the U.K. Now, Mr. Wouhra said, he would have to pay thousands of dollars to hire a customs agent to assemble the correct information for products to clear customs, and more to actually ship them. “Your profitability is knocked out the window straight away,” he said.
Leaving the EU has put the U.K. outside the EU’s vast internal market of 445 million consumers and a customs territory that is bigger still, stretching from the Atlantic to Turkey. It is hobbling trade just as its economy needs all its engines firing to power out of its worst downturn in a century.
For British businesses, the shift means reams of paperwork and ballooning costs. Trade with the EU accounts for about half of all British exports.
As a result, the U.K. is trailing the trading performance of its peers as the pandemic recedes and global commerce picks up. The U.K.’s split with the EU is also intensifying the disruption felt in Britain from the supply-chain bottlenecks bedeviling the global economy, including a shortage of truck drivers and gasoline.
“U.K. PLC has become harder, slower, more expensive, more difficult to deal with as a result of Brexit,” said Dale Harris, chief executive of ATL Turbine Services Ltd., which repairs turbine components for customers worldwide in Dundee, Scotland.