Five years after Brexit, UK companies are still adjusting their plans

Tens of thousands of British-based companies are still exporting to the European Union, despite new regulations after the UK opted to leave the single market. The referendum on leaving the EU was in 2016, but the actual Brexit didn't happen until the last day of January 2020.

Five years on there's been a huge change in the business landscape, according to Julianne Ponan. She's the founder and owner of Creative Nature, an allergy-free food company based on the outskirts of London. 

"As a small business myself, we faced multiple things from cost of goods to raw material to packaging," she tells CGTN. "Everything has gone up. I don't think I can say anything has gone down."

New rules impact exporting, but also imports. There are more regulations, custom checks and time delays. In recent years, costs have increased too. That's certainly what Ponan found. 

"We used to import a lot prior to Brexit," she says. "However, because the supply chain is quite volatile, it's quite expensive and you have to buy so much at a time. 

"We decided to use a lot of UK suppliers and importers directly, and that's been able to help cash flow, and also give us more control of the product in the goods itself."

Different treatments

David Henig, director of the UK Trade Policy Project at the European Center for International Political Economy, says the authorities are treating imported products in different ways.

"For large businesses, they usually export in such quantity, they can get over the barriers, they can find ways they can organize their own transport," he explains. "For smaller companies, it's quite a nightmare -and that's why the biggest change we see since Brexit is a large decrease in the number of smaller companies exporting to the EU." 

For a food company like Ponan's, preparing and selling gluten- and dairy-free snacks that are safe for people with allergies or diet restrictions, there's a growing market internationally. Ponan says Australia has a high percentage of people with allergies. She's planning to increase her company's exports to Australia and the Middle East, as well as Europe.

"We chose to pull out of a lot of customers in the EU when Brexit first happened," she says. "However since then, nearly five years on, we're now going back towards those customers.

"I think that export is really important to us and we want to be growing our exports alongside our UK business." 

Other headaches

There are other headaches too. Different European countries, despite being members of a single market, are governed by their own individual rules on importing foodstuffs. 

It pays to do your homework, as exporting to the EU isn't the same in Spain as in Ireland for instance. That's all very time-consuming for small and medium sized companies, says Ponan.

"It's a lot of hours that I have to give and the operations manager has to give outside work hours just to understand the regulations," she says. "The support that's out there from bodies like the Federation of Small Business and the Department of Business and Trade are really, really valuable. And these are free resources."

In January, a UK Parliament report noted that Britain's total export of services and goods in 2023 was $1,038 billion, with EU-UK trade accounting for 41 percent.

Importing more than it exports from the EU, the UK had a trade deficit of $122 billion. That's partly offset by its trade surplus with all non-European countries of almost $95 billion.      

Slow progress

There are other encouraging developments. The UK's Office for National Statistics revealed that up to November 2024 the value of goods exported from Britain rose last year by $490 million.

However, more was exported to non-EU countries than to EU member states, and British exports to the European Union fell by around $250 million.    

David Henig doesn't think UK-EU trade barriers in the post-Brexit era are likely to change in the short term. 

"This new government has committed to trying to reset relations with the EU to reduce some of the trade barriers, but at this stage they've not been able to make any progress on that," he says. "What I'm expecting is that any progress they do make on reducing trade barriers between the UK and the EU will be slow."

Creative Nature, like thousands of other smaller and medium sized companies in Britain, will carry on exporting not just to the EU but also to developing markets worldwide, in the belief that it's one certain route to open up new opportunities. Whether that balance will change remains to be seen.