The repercussions of the Brexit decision in 2020 have proven to be costly and complex for UK businesses, with enterprises reporting an average loss of £143,870, according to recent research commissioned by Avalara, a provider of tax compliance software. The study sheds light on the challenges faced by businesses in the wake of the UK's departure from the European Union (EU), uncovering increased costs and diminished profitability.
Since 2020, UK businesses have incurred additional costs averaging £96,281 due to Brexit, leading to a reported 73% reduction in profitability, as revealed in the survey. "Businesses in the UK are feeling the negative financial impact of Brexit on their bottom line. Thousands of businesses are reeling from the customs and tax obligations imposed on trade across Europe," commented Alex Baulf, Vice President of Global Indirect Tax and E-Invoicing at Avalara. "At a time when the UK economy needs to repair itself, encouraging business growth and expansion is key. Unlocking cross-border trade should be central to this."
The survey further highlights that 26% of businesses are grappling with supply chain challenges when trading with the EU. A staggering 81% of businesses in the UK face increased cross-border complexity compared to the pre-Brexit era, and 68% are actively seeking expansion into non-EU markets.
Brexit Disruptions Evident
78% of UK business leaders claim that the UK did not experience a trade boom following Brexit, with 81% believing they face more cross-border complexity today. Additionally, 26% of businesses have reported disrupted supply chains post-Brexit.
Three-quarters (75%) of UK businesses have witnessed a decline in sales or an increase in complications when trading with the EU, prompting over two-thirds (68%) to explore trading in non-EU markets. The surveyed businesses are actively expanding into the US (45%), Canada (41%), New Zealand (27%), and China (26%). Notably, 82% of British businesses support the UK Government's efforts to improve trade across Europe.
Technological Adaptation Post-Brexit
To navigate the post-Brexit landscape, nearly half (43%) of UK businesses have invested in technology to enhance operations. The study also reveals that 29% of Scottish businesses reduced exports to the EU, while 26% of companies in the South East of England pivoted their operations to succeed. In Wales, 29% shifted focus away from customer experience to mitigate Brexit's fallout.
Despite only 18% of British businesses reporting no impact from Brexit, three-quarters (74%) of business leaders believe it created more stress for businesses. Industries across arts and culture (94%), healthcare (90%), and HR and education (88% each) reported elevated stress levels due to Brexit.
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