If you had to design a scenario guaranteed to fatten up big business while squashing the rest of the economy, it would probably resemble what Britain is living through.
Thousands of independent businesses are shuttered up. Amazon and the big supermarkets, boosted by the suspension of anything other than “essential” retail but gleefully selling a huge range of stuff, have carved up consumer spending between them. And the economic impact of Covid-19 is now fusing with an issue that will endure even as lockdown restrictions are eventually eased: the dire effects of Brexit on smaller companies staring into the future with a mixture of fear and bafflement.
Amid the pandemic, there is not much room for this story to intrude. But week by week, things are starting to become clear. Figures to be published today in the latest Manufacturing Barometer survey of small and medium-sized firms show that two-thirds of such companies have seen negative price changes in their supply chains since leaving the EU. A majority, meanwhile, have seen post-Brexit “complications” with both exporting and importing. Roughly a week ago, it was reported that exports going from the UK to EU countries via British ports were down 68% year on year. By summer, the burgeoning crisis that all of this highlights may have burst into the political foreground.
Last week, I talked to people who make their living in the UK’s fashion and clothing industry. Their trade is reckoned to be worth around £35bn a year to the UK economy, and is routinely at the forefront of British trade missions and export drives. But with the once-simple business of selling into Europe now a matter of huge complexity, small companies that were already having to deal with Covid restrictions are facing a set of impossible obstacles.
After three days of trying to comprehensively understand the new rules governing UK-EU trade, I can safely say that it gives you the mother of all headaches. Among the most basic changes are “import VAT” now being payable in the countries where exports are delivered, some goods being subject to customs duties, and even the most basic transactions suddenly being synonymous with onerous paperwork, “disbursement charges” and hiked courier fees. Multinationals can just about cope with these things, but small businesses are mired in no end of problems. Some have been forced to put up the prices offered to customers in EU countries by as much as 30%; others have put up notices online bluntly telling people that they are “unable to fulfil orders to Europe”.
Ben Taylor, 29, is the co-founder of the knitwear company Country of Origin – a proudly ethical firm that directly employs four other people and has a stake in a factory in Leicestershire, where around 15 others work. Around a third of the company’s turnover, he told me, came from trade with people in EU countries, many of whom are individual customers buying sweaters online. “It’s been absolutely…
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