Brexit has been a disaster for Britain as collapsing European trade puts UK firms out of business

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boris johnson brexit
Prime Minister Boris Johnson's Brexit promises have so far fallen short. Getty
  • Brexit has led to a collapse in the UK's trade with its European neighbors.

  • The Brexit deal has led to the largest recorded fall in UK exports to Europe.

  • Many UK businesses could soon become unviable because of the new trading friction.

  • See more stories on Insider's business page.

The UK government promised that Brexit would liberate Britain from European trading regulations and herald a bright new era for Britain on the world stage.

Yet after spending years campaigning for the UK's exit from the European Union, Prime Minister Boris Johnson and his colleagues have been oddly quiet about Britain's fortunes ever since it left.

The reason for their silence is becoming increasingly obvious. Since Britain left European trade and customs rules at the start of this year, there has been a dramatic decline in UK trade.

According to the UK's Office for National Statistics, trade between the EU and the UK was hit hard in January, with exports down by 40.7% compared with December and imports from the EU down by 28% in the same period.

This is the biggest overall fall in exports since records began, yet the decline for some sectors has been even worse.

Analysis by the Food & Drink Federation published last week showed that exports in January dropped to £7 million - or about $9.6 million - from £45 million year-on-year, while whisky exports dropped to £40 million from £105 million.

This is a colossal decline. For some sectors, including parts of the UK's world-renowned shellfish fishing industry, the decline could be permanent because of the EU's effectively locking Britain out of its market altogether.

Brexit is hitting British businesses hard

boris johnson ursula
Johnson and the European Commission's president, Ursula von der Leyen. Getty

Far from liberating trade, Brexit has led to a massive increase in bureaucracy for many British businesses because of the additional checks now required.

For some smaller businesses, the piles of paperwork, bureaucracy, and export health-certificate checks that are now required to trade with Britain's closest trading partners now make it very difficult to export anything at all.

"What I'm hearing a lot is that a lot of small businesses have been shut out completely," Dominic Goudie, the head of international trade at the Food & Drink Federation, told Insider.

Brexit is not the only reason that trade with the EU nosedived in January: Part of the drop-off was the result of pre-Brexit stockpiling and the COVID-19 pandemic, which has shuttered businesses across the continent, said Goudie, and a British government official told Reuters that trade in February had partially rebounded, though official figures are yet to be published.

Many leading business figures, however, believe that Brexit's impact will be permanent, with Adam Marshall, the outgoing director-general of the British Chambers of Commerce, telling Bloomberg last week that the impact appeared to be serious and "structural."

A lot of small businesses have been shut out completely.

For an island nation heavily reliant on imports, even small delays to trade can have a big impact.

"If you have a problem with one single item in that entire lorry, it delays everything else," Goudie told Insider.

"That's the stuff that really worries me," Goudie said. "Larger businesses are adapting - the volume should start to pick up.

"But the smaller businesses, in particular, are going to be badly hit. That's what really concerns me in all of this."

Sales of many lower-value items have, in many cases, simply become unviable. Simon Spurrell, a cofounder of the Cheshire Cheese Company, stopped exporting his packs of cheeses, which were priced at about £30 each, to the EU because each parcel needed to be accompanied by a £180 health certificate, he told The Guardian.

He said he had been advised by a minister to simply focus on exporting to other markets instead.

All of this is a long way from the bright new trading future promised by Johnson and the UK government.

And while the political debate in Britain has been dominated by the coronavirus pandemic in recent months, the longer-term impact of the UK cutting its ties with its closest trading partners could soon become a massive political issue once again.

Read the original article on Business Insider