- 8% of European businesses have cut ties with British suppliers
- EU businesses torn on whether to prioritise a US or UK trade deal
- 20% of EU and UK businesses have spent more than £10,000 responding to trade restrictive hurdles over the last 12 months
New research conducted for RSM, the 6th largest audit, tax and consulting network, shows that 8% of businesses in the European Union have cut ties with British suppliers as a direct result of the UK’s impending exit from the EU.
Worryingly for the British economy, European businesses are torn on whether the EU should prioritise a trade deal with the UK or USA. 23% believe a trade deal with the USA should be the priority, although the same amount favour prioritising the UK. As the EU’s two largest trading partners, the US and UK will both be a priority for EU officials to strike a favourable trade deal with. Following intense Brexit negotiations, almost half (47%) of EU businesses want to see the EU prioritise trade within the single market. With hard-line voices on both sides of the channel unwilling to compromise, the news underlines the importance of agreeing a free trade area before the Brexit deadline passes.
Conducted by the European Business Awards, Europe’s largest cross-sector business competition, the survey of more than 500 senior European business decision makers shows that businesses on both sides of the channel are feeling the financial costs of trade disruption. Over the past 12 months, 20% of EU and UK businesses have spent more than £10,000 responding to trade restrictive hurdles like Brexit and tariffs, with 16% spending more than £50,000.
Gregor Schmidt, European Regional Leader, RSM International, commented:
“We are at a watershed moment in international trade; regulatory barriers and trade policy must be addressed so businesses can collaborate and compete globally. The market thrives when smaller, more agile firms can challenge big incumbents. Large multinational firms will weather this storm. They have greater resources and contingency plans that have been well-funded over a number of years.
“Europe’s middle market businesses have the creative energy to unlock new routes to international expansion but to truly reach their potential we must keep our borders open to trade.”
Even with talk of a global trade war, the vast majority of European businesses (76%) expect to conduct more international trade over the next 12 months. Despite tit for tat trade sanctions between the EU and USA, 82% of European businesses that currently trade with North America expect their levels of international trade to increase over the next 12 months. News of a thawing relationship between President Trump and European Commission President, Jean-Claude Juncker, will be welcomed by the one in twenty EU businesses that have already lost business as a result of the sanctions.
Some European businesses also appear to be backing the EU’s decision to complain to the World Trade Organisation about China’s technology-transfer practices earlier this year. While 9% of those surveyed cite intellectual property theft as a barrier to international trade, 18% want the EU to place sanctions against countries found to encourage the practice.
Jean Stephens, CEO, RSM International, commented:
“Internationally-minded businesses are currently experiencing one of the most prolonged periods of global economic uncertainty in recent memory. I am encouraged to see so many businesses playing down the impact of global events and looking at the next 12 months as an opportunity to grow.
“Middle market businesses are resilient and have often come through extremely challenging periods to grow from a start-up to an established and thriving company. If trade barriers continue to increase, many of these businesses will need to draw from those experiences yet again. The companies we serve require certainty and predictability in order to plan for the future. As the EU Summit approaches, the time has come to listen to these leaders and dispel as much of the current uncertainty surrounding international trade as possible.”