Brexit has had a negative impact on the coatings sector’s trade with the EU since Brexit. This is according to a new survey of British Coatings Federation members, which set out to measure companies’ experience of the UK-EU Trade and Co-operation Agreement (TCA) now it has been in place for over a year.
Findings show that while a few firms had managed to retain or increase exports, the majority of survey respondents saw exports to the EU fall over the past 15 months. Members also reported they had experienced a significant increase in operating costs due to the various new rules, procedures, and knock-on effects of the UK-EU TCA. Conversely, there was, as yet, little sign of compensating growth in trade elsewhere in the world due to new FTAs. Moreover, there is still substantial concern about the future UK chemicals regulation regime, particularly UK REACH, and how this will impact on future business competitiveness.
- Brexit is costing UK companies more. Nearly one in six members (59%) reported increased operating costs due to Brexit of more than 4%. Nearly a third (32%) said it had added more than 6%. One in ten had experienced additional costs of more than 15%.
- Nearly four in ten (39.5%) reported that exports to the EU had decreased, with a plurality losing between 6-10% of exports over the last year or so, although some significantly more.
- Logistics remains the biggest issue for members: availability of hauliers (69%), delays to shipments of raw materials coming into the UK (67%), and cost of shipping (64%) are the most commonly cited ongoing problems due to Brexit.
- Worryingly, nearly a quarter of members (23.1%) reported that EU suppliers no longer wanted to export to the UK, up from 19% last year.
- Looking ahead, regulatory issues still loom large in terms of worries over future business competitiveness. The top three concerns cited were: additional trading costs due to customs paperwork (59%); the impact of future divergence of UK REACH from EU REACH (59%); and the impact UK REACH could have on raw material prices in the UK (61%).
The full survey results can be found in the BCF downloadable report here.
Commenting on the survey results, Tom Bowtell, CEO of the British Coatings Federation, said:
“Our survey shows the impact Brexit has had on our members ability to trade with the EU. Most are having to deal with time-consuming extra bureaucracy, increased logistical problems, and substantially increased operating costs.
“The Government needs to work harder with businesses to help make exporting to and from the EU easier, ideally looking to enhance the terms of the TCA. Instead, it looks as though things are moving in the opposite direction with threats to trigger Article 16 of the Northern Ireland Protocol which could collapse the whole trade agreement. That would be a disaster for industry, especially given we are in the middle of the worst global raw material and supply chain crisis seen for a generation.
“Looking beyond the EU, we need to see more support for UK businesses growing their exports to the rest of the world. At the moment, despite new FTAs being signed and talked about there seem to be few opportunities developing for our sector. BCF will be playing its part by working with the Department for International Trade, most imminently through a joint export seminar in Manchester next month.
“Finally, we must not take our eye off the regulatory ball. Our survey showed problems and concerns about UK REACH have slightly diminished since this time last year. This is probably because Defra has said they are looking at a new model that should hopefully be less burdensome on industry. However, those concerns about REACH are still substantial and loom large over our members’ future business competitiveness. We need to see Defra come up with a new approach for UK REACH as quickly as possible to provide businesses with the certainty they need to plan, and the ability to access a full range of necessary substances to aid innovation in future.”
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