EIGHT in 10 smaller firms which face being impacted by the imposition of import checks next year have said they are not fully ready to comply with the new paperwork.
The Federation of Small Businesses (FSB) said 79% of smaller companies were in that position and 21% of small exporters said they had temporarily or permanently stopped exporting to the EU. A further 7% were considering stopping sales to the bloc.
In September, Boris Johnson’s government was forced to delay imposing the checks in a bid to stop Brexit causing further problems in the supply chain.
It means that from the middle of 2022, British exports to the EU will be subject to full checks, while imports into the UK from Europe will be mostly free of paperwork and border controls.
The FSB said the slowdown in economic growth in the third quarter of this year – quarterly GDP was down 2.1% on its level before the pandemic – had seen the UK’s trade balance fall to a deficit of -1.2% over the same period, while taxes increased by 1.8%.
“These deeply concerning figures point to the scale of the mammoth task that lies ahead in securing a sustainable economic recovery,” said Mike Cherry, national chair of the FSB.
“As they attempt to focus on getting back to full strength, small firms are up against supply chain disruption, spiralling costs and debilitating skills shortages.
“Unfortunately, it’s against this backdrop that the government has decided to hike national insurance contributions and dividend taxation.
“We are now hurtling towards a flashpoint in April when the jobs tax and national living wage will rise at the same moment whilst business rates also kick in for many.”
He said the festive season could be make-or-break for many smaller firms, and urged people to support their favourite small businesses.
Cherry added: “The Budget was the government’s chance to bring in measures to assist small firms with rising employment, tax and shipping costs – it missed that chance.
“It’s vital that policymakers now move to increase the Employment Allowance to £5,000 to help the smallest employers, which are being hit with a jobs tax hike as furlough ends.
“We’re also encouraging government to revamp and relaunch the SME Brexit Support Fund – the first iteration gave us eligibility criteria that were too narrow and a timeframe for applications which was unrealistic.”
William Calder, from Scrabster Seafoods, in Thurso, has been in the fishing industry for half a century, but said Brexit had made it easier for Scottish firms to trade with China than Europe.
He told The National he thought that fragile, rural communities were more at risk, but Brexit had affected everybody.
“We originally were optimistic with the politics and what had been promised … because it was about the fishing and the opportunities,” he said.
“That on the ground has not materialised. Whichever way they want to paint the political picture, it’s not happened.
“We were optimistic originally but as time moves on, I’m becoming more pessimistic for the future of the smaller companies or medium sized companies.”
Calder said Scrabster Seafoods was still exporting to Europe, but “hugely less” than previously.
“The paperwork and the bureaucracy and the cost of producing the paperwork means you’d need a multinational company to handle it, so I don’t know where it’s going to go.
“I’ve seen lots of problems in my lifetime in the industry I’ve been involved in for 50 years, and I think this development is one of the biggest challenges we’ve ever faced.”
He said local environmental health officials were doing all they could to help, but they too were under enormous pressure.
“I don’t know how much more people can handle,” he said. “It’s a perishable product we’re working with and it’s freshness and quality is what sells it from a Scottish perspective.
“And if we’re going to be held up with the bureaucracy and paperwork, I don’t see a very bright future at all.
“When Europe has become such a place that it’s easier for businesses in the UK and Scotland to trade with China than it does with Europe, something has gone dreadfully wrong.”