The effect of Brexit.

New opportunities beyond the European single market.

Global reach.

After Brexit, the United Kingdom has become more assertive in global trade. Due to its highly regulated status and considerable red tape, the food sector is a leading case in analysing smaller firms’ export operations beyond the EU block. However, as Britain became something next to a third party, the Uppsala paradigm does not apply to the UK-EU trade relations.

Small business under pressure.

It seems clear that the biggest loser of Brexit were small traders, who backed off due to red tape concerns. So while the UK has fared better than expected in the Brexit aftermath, there has been a natural selection process that ousted small players.

UK food export to the Far East.

As costs and time affected British exports to the EU, firms shifted to trading in more distant countries where earnings could be higher.
Growing demand for British quality food in Asia favoured a shift to non-EU markets.

+28.2%

China

+18.5%

South Korea

+6.2%

Japan

A shift in importance.

EU trade is lagging behind.

Exports to the EU dropped in the first quarter of 2021. However, red tape has discouraged smaller exporters from going ahead, which has started a selective process.

Uncertainty.

Food standards: an ongoing discussion.

While food standards in the Far East are far from new (along with other non-tariff barriers), UK-EU common standards are still a discussion ground.

Port congestion.

Planning for catastrophe has paid off: no stalemate. 

British firms made substantial preparation for Brexit, mainly through stockpiling. By looking at the result of the 2021 first quarter (the first Brexit record available), there were no dramatic queues at Dover, and Kent did not deviate from “The garden of the UK” to “The toilet of the UK”.
Despite political hardliners, the French customs kept a 7% stop and search quota for all inbound vehicles coming from the UK.

Small firms concerns for red tape also affected drivers. Accordingly, there was a shortage of available lorries routing to and from the UK.
Brexit effects will be permanent. EU markets will question British food’s competitiveness, as well as its shelf life.

To retain a higher margin of competitiveness, firms have modified their export procedures, so finding a VAT representative in the UK (especially in the Netherlands) and managing groupage operation through a Northern Ireland’s branch have become mainstream actions. In January 2021, the UK will establish a complete border with the EU. Small traders and logistic operators look worryingly at that event. Therefore, while relying on a VAT representative will still be compelling, the advantage of a Northern Ireland branch will become null.

One more thing.

Manage complex issues through careful interpretation.

Following Brexit, Bridgemaker Ltd. has paid attention to the opportunity shift for small to medium companies. We design sustainable export solutions on our clients’ specific requirements and specific assets.
Please contact us to know more about how we deal with international operations.