Avalara, Inc., a leading provider of tax compliance automation software for businesses of all sizes, which was published on 31st January 2024, new analysis exploring the impact of Brexit on businesses based in the United Kingdom (UK).
The findings reveal that leaving the European Union (EU) generated additional costs for UK businesses, costing £96,281 on average since 2020. The survey also revealed that 73% of UK businesses report being less profitable in the wake of the decision.
“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,” said: 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.”
One of the main drivers behind Britain’s decision to leave the EU was its trading relationship with the customs union. However, 78% of UK business leaders claim that the UK did not experience a trade boom. Most UK businesses (81%) believe they face more cross-border complexity today than they did before Brexit. Further, 26% of UK businesses have reported disrupted supply chains post-Brexit.
Three-quarters (75%) of UK businesses saw their sales into the EU fall or become more complicated, driven by the increased complexity when trading with Europe. As a response, over two-thirds (68%) of businesses have explored trading into non-EU markets following Britain’s exit. Businesses are actively expanding and investing into the US (45%), Canada (41%), New Zealand (27%) and China (26%). Overwhelmingly, 82% of British businesses would support the UK Government’s efforts in improving trade across Europe.
British businesses continue to feel the effects of Brexit. Brexit has forced almost half (43%) of UK businesses to invest in technology to improve their operations. Nearly a third (29%) of Scottish businesses have had to reduce exports to the EU, and companies in the South East of England have had to pivot their operations (26%) in order to succeed. In Wales, 29% have had to refocus away from customer experience to combat Brexit’s fallout.
With only 18% of British businesses reporting no impact from Brexit, it is no surprise that three-quarters (74%) of business leaders believe Brexit created more stress for businesses. More businesses reported stress across the arts and culture (94%), healthcare (90%), and HR and education (both 88%) industries.
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