With government talks on a new trading relationship with the EU expected to continue into the new year, a potential “reset” of post-Brexit relations cannot come soon enough for smaller UK businesses struggling to export to Europe.
Research by the Center for Economic Performance, a think tank based at the London School of Economics, published this month, said UK exporters suffered a £27 billion drop in goods exports to the EU. after Brexit, and smaller businesses were hardest hit by new trade barriers. .
The effect of Brexit was one of the main topics when The Times spoke to a panel of nine entrepreneurs who participated in Goldman Sachs’ 10,000 Small Businesses program, which offers free training and networking for business leaders.
the voice critics of Brexit Among the group was Rana Harvey, CEO of Monster Group, an online retailer of home goods, outdoor furniture, and kitchen appliances and appliances. It opened a warehouse in the Netherlands in 2018 to mitigate the rising costs and administrative burden of doing business with the EU, but Harvey, 47, said many “frictions” remain when trading with Europe.
“There’s still so much bureaucracy that never existed before,” said Harvey, whose head office is in York. “There are times when we still have to ship from the UK because we have run out of stock. [in the Netherlands’ warehouse] and that has been a challenge.”
Byron Dixon, 57, founder of Micro-Fresh, didn’t hold back either. His Leicester-based company makes an antibacterial coating that is added to products to protect them before they are sold. “It’s still a disaster. It costs us 10 to 15 percent more per invoice due to bureaucracy, customs jams and additional duties. “Sometimes we have to send things by plane to compensate our customers,” he said.
Byron Dixon, founder of Micro-Fresh, with some of the products his antibacterial product protects
ANDREW FOX FOR THE TIMES
Another consequence of Brexit was the exodus of skilled labor, as people returned to Europe during Covid and did not return. Katie O’Cearbhaill, the 44-year-old chief financial officer of Excelsior Land, a builder of affordable and sustainable homes, said labor shortages in the construction industry have been a “major issue” since Brexit. “I know it’s probably controversial, but many Eastern Europeans have a better work ethic than the English.” O’Cearbhaill said he has been working with West Midlands councils to visit schools and promote careers in construction, as well as considering how best to engage with other potential workers, such as ex-offenders.
Brexit aside, this year has also had its fair share of other challenges, including pent-up consumer confidence, rising bad debts, rising staff and raw material costs. But exports remained a big topic of conversation, especially with Donald Trump expected to impose trade tariffs when he takes office as president of the United States in January.
John Stirling, director and co-founder of Arbikie Highland Estate, which produces gin, vodka and single malt whiskey at its distillery in Montrose, Angus, said there was enormous “uncertainty” about what will happen when Trump returns to the White House. Home. “Substantial taxes were imposed on Scotch whiskey [before] and that did have an impact.” He remains optimistic and said that, despite the challenges, the United States represented “the largest export market” for his brand. “One of the advantages of exporting is that when one market does worse, another can start to recover again,” said Stirling, 60.
Amber Hunt plans to expand to Poland next year. She is managing director of Marshall Wolfe, an Ipswich-based recruitment agency specializing in people with technology and digital skills, and says she has “definitely seen a shift in recruitment demand”, downwards, in the UK this year. That is why it seeks to grow further. “We chose Poland because it is a long-standing technology hub, so it seems like the safest option. [to launch a European operation] before going and replicating that in other parts of the world. We have customers who are already there and asking us to be there too,” Hunt, 32, said.
Tajinder Banwait, founder of Urban Apothecary, a fragrance brand that sells candles and home, bath and body products, said growing economic uncertainty in the UK has also affected her business. The Office for National Statistics said this month that the UK economy contracted in October for the second month in a row, as households and businesses delayed spending due to uncertainty over the Labor Party’s economic plans. A grim survey by the CBI, the employers’ body, published on Monday, says businesses expect a “sharp fall” in activity in 2025.
Tajinder Banwait, founder of Urban Apothecary, in the studio of her home in Huddersfield
CHARLOTTE GRAHAM FOR TIME
“Consumers are still very cautious,” said Banwait, 45. “We are finding that people buy but the spend is not £80 or £90 like it used to be. “Shopping baskets have gotten smaller.”
Having to also deal with rising operating costs and raw materials means this year has been “really tough”, he added. “As a manufacturer, making products in the UK and doing them by hand is expensive and labor costs have really caused a problem; They will also continue to be a challenge in the future with the rise of NICs. [national insurance contributions].”
A possible positive point is the construction sector. Sir Keir Starmer last week reinforced his commitment to an “expanded” target for build 1.5 million homes. For the three companies on the Times/Goldman Sachs panel of 10,000 small businesses operating in the sector, these measures are welcome, but they want to see the details behind the promises.
“It would be surprising if the government reaffirmed plans that would allow our customers, with public money, to donate it to companies like ours to help them build green, planet-friendly homes,” Excelsior Land’s O’Cearbhaill said. It will closely monitor its margins if given the opportunity to bid for new projects.
“We only do them when we are going to earn money or wash our face. Many people continue to bid for contracts without thinking about inflation. Last week we lost a £3.8m contract because someone came in with £3m. “You simply cannot pay £800,000 cheaper, we are simply supporting more insolvencies.” According to the Insolvency Service, in the year to September, 4,264 construction companies went bankrupt. This is a slight decrease from last year, but a 32.5 percent increase from pre-pandemic numbers.
Dorian Payne, managing director of Castell Group, a fast-growing social and affordable housing builder based in Swansea, agreed that “the last few years for construction from 2020 to 2023 have been the most difficult ever.” . But he says the discipline learned during difficult times is invaluable. “If we had started making money from day one and had contracts on our desk, there would probably be more inefficiencies and waste,” Payne, 29, said.
Roni Savage, founder and owner of Jomas Associates, an engineering consultancy based in Uxbridge, west London, said the business had not grown as much as she had hoped this year. But he’s optimistic about 2025. “Instead of just working in the private sector, our real growth will come from doing big, dense work in the public sector,” Savage said. He hopes the Labor government will remove some of the administrative burden from the public procurement process for smaller businesses. “There are more hurdles to jump through with a box-ticking process that only benefits large global engineering companies, which means you’re excluded.” [as a smaller company] for those big contracts.”
Savage, 44, initially disappointed by some of the anti-business measures included in the October budget, said she is feeling more optimistic about next year.
“We have to get up, like all business people do, and move forward. I’m lucky that December is the end of my financial year, so January is a time when we’re resetting. It is a good time to be optimistic.”