Challenges Of EU Trade See No Let Up

Businesses are finding the trading relationship with the EU as challenging as they did a year ago, according to the latest data from the Institute of Directors.

In response to an IoD survey in July 2022, 47% of members indicated they were finding the UK’s trading relationship with the EU challenging. Nearly a year on, this figure has remained constant. In June 2023, 46% of members agreed the relationship is a challenging one. That figure increases to 59% when discounting those who do not trade with the EU.

In both 2022 and 2023, the top reason firms gave for why they were finding EU trade difficult was related to immigration, business mobility and travel. In June 2023, 72% of members cited these changes as having a negative impact on their organisation.

85% of large businesses cited changes to business mobility as a cause of difficulty, compared to 69% of SMEs. For SMEs, although mobility changes came out on top, there is a more even spread across the board, with 55% citing customs changes, and 45% citing non-tariff barriers to goods trade.

When invited to give their own comments on the situation, the most common responses from business leaders include the lack of a level playing field, regulatory divergence, exclusion from EU research funds and political instability.

Emma Rowland, Trade Policy Advisor at the Institute of Directors, said: “Anecdotally, the consensus from many businesses, particularly large ones, is that they are starting to get used to some of the regulatory barriers to trade, such as customs controls and labelling. However, our latest data shows there are still issues that need to be addressed."

“Changes to business mobility is a big sticking point, and one which larger businesses have expressed more concern over than SME's."

“For some businesses, the issue lies in how much friction there is to travel for work. For others, it’s about getting visas to work in the EU. For the majority, the biggest challenge seems to be filling skills gaps in the UK without the option of the EU pool of 500 million potential candidates."

“There are clearly many aspects of the Trade and Cooperation Agreement (TCA), signed between the UK and the EU in January 2021, that are proving detrimental to business. The fact is trade between the two is no longer completely seamless. The review of the TCA, which is due to take place in 2026, should provide an opportunity to address some of these pain points, depending on how much the EU is willing to negotiate.”