The British Chambers of Commerce's Insights Unit recently held a major new survey on the pressures businesses are facing. Over 1,300 businesses took part during July and early August and the survey found that customs procedures continue to be the main export hurdle for UK companies.
Top perceived trade barriers
When asked what businesses (regardless of whether they export or not) perceive as the main trade barriers, 45% of cited customs procedures and documentation as the top answer. That’s slightly down on the 2023 figure of 49%. Other top barriers cited include export documentation (39%), regulations and standards (35%) and tariffs (33%).
40% of companies say geopolitical events have significantly impacted their business in the last 12 months. Issues linked to the war in Ukraine, conflict in Gaza and Brexit are cited as the main events impacting trade. They include energy costs and shipping delays.
37% of exporting businesses expect an increase in exports over the next 12 months, with 16% expecting a decrease. Manufacturers are the sector most likely to expect an increase in exports.
When asked what most would do to encourage them to export, businesses cited a need to improve access to the EU market, simplify trade regulations and reduce bureaucracy, and provide greater export support.
Worrying lack of awareness for incoming trade changes
The survey shows awareness of incoming trade changes is low among firms who are actively doing business internationally. 65% of respondents are unaware of the Border Target Operating Model. Ahead of the UK joining the Asia Pacific trade bloc CPTPP in December, over half of respondents (53%) are unaware of the plans. 52% of firms have no knowledge of safety and security certificates needed from this month for imports from the EU.
The launch of new biometric checks for foreign travellers, including Britons, entering the EU has the highest level of preparedness from business. 34% of respondents are not aware and 37% know some details or are actively preparing for the change, due later this year.
William Bain, Head of Trade Policy at the British Chambers of Commerce said: “Though the picture has improved slightly in the last 12 months, customs procedures remain a significant stumbling block to trade for businesses.
“Successful exporting businesses are crucial to a thriving UK economy. We need roadblocks lifted to allow more companies offering their goods and services on the global stage.
“Our forecasts show the trading environment will continue to be challenging over the coming years, against a backdrop of geopolitical uncertainty.
“We’re urging the Government to continue the implementation of customs simplification started by the last administration. Businesses also need to see a clear timetable for further trade digitalisation which will help reducing costs and border friction.”
The findings, from the BCC’s Insights Unit, also show a rise in impact since February 2024, when firms were asked specifically about Red Sea disruption, and two-fifths (37%) were affected.
Shipping container rates have fluctuated significantly since the current Middle East conflict began in October 2023. The cost of shipping a 40ft container from Shanghai to Rotterdam has risen from just over $1,000 then, to just under $4,000 now, having peaked at over $8,000 in July.
Commenting on the findings, William Bain, Head of Trade Policy at the BCC, said: “Alongside the grim human impact of the ongoing conflict in the Middle East, the situation continues to have economic reverberations around the world.
“The effect on businesses here in the UK has continued to ratchet up the longer the fighting has continued.
“If the current situation persists, then it becomes more likely that the cost pressures will build further.
“Certain sectors of the economy are obviously more exposed to this than others. But with the on-going war in Ukraine, wider geopolitical uncertainty, and the prospect of tariffs looming, the UK needs to think carefully about its trade strategy.
“We need to seek out new deals with like-minded nations on critical raw materials, components and minerals to ensure their supply. And we must lean more heavily into the digital trade revolution to reduce costs and make exporting and importing simpler.
“The use of economic diplomacy can also not be underestimated. The UK has a powerful brand and distinctive reputation around the world which we must harness to greater positive effect.
“Overseas trade is vital to growing our economy. We must do everything we can to see businesses through these tough times, and then set a laser-sharp focus on expanding exports for the future.”
The results from the latest ONS data on trade for September further supports the survey findings.
September’s Goods Trade
September was a bad month for UK goods exports with a 9.8% decline in month on month volumes. There was a 10.9% drop in goods exports to the EU – with lower machinery and transport equipment, fuel and chemicals sales. Outside the EU there was an 8.7% fall, led by a decline in manufactured goods, machinery and transport equipment, and chemicals.
Goods import volumes also dropped in September by 3.1%, with a 1.4% fall in goods imports from the EU, and 4.7% decline from the rest of the world.
September’s Services Trade
September was a better month for UK services trade, with import volumes growing by 0.5% in real terms. Services exports were estimated to have fallen only very slightly by £0.1bn (0.26%). But it is clear that the momentum on services exports growth from the first quarter has stalled.
Across The Third Quarter
Taken across the whole of Q3, there were declines in value terms in UK goods trade with the EU and non-EU countries of 2.5% in goods and 2.3% in services, compared with the previous quarter. The drop in goods exports trade with the EU was 3.7% and to non-EU countries was 1.4%.
Similar findings on imports were identified in with a 3.1% drop in goods imports from the EU, and 2.7% from non-EU countries. Imports of services increased by only 0.8% across the quarter.
More detail on the ONS data can be found here.