According to a report by ParcelHero, British businesses have been hit hard by both Brexit and the Covid-19 pandemic, with each event costing them a staggering £250 billion by the end of 2021. While the pandemic was an unforeseen crisis, the report argues that Brexit was a “self-inflicted wound” that continues to impose significant costs on retailers and fashion firms.
One of the major challenges faced by businesses in the fashion industry has been the obstacles to both exports and imports. As a result, costs have risen and there have been delays in the movement of goods around the world. This has had a particularly detrimental impact on fashion brands that rely on timely delivery to meet seasonal demands, such as partywear.
The impact of Covid-19 on UK businesses was already evident by March last year, with lockdowns costing them £251 billion, according to the Centre for Economics and Business Research. The report highlighted that the value of the economy’s goods and services was over £250 billion lower than it would have been without the pandemic.
Small businesses alone have incurred an estimated cost of £126.6 billion due to Covid-19, according to business insurer Simply Business. A government report from November 2021 further revealed that the UK lost nearly £365 billion in GDP as a result of the pandemic.
While the arrival of the pandemic was unexpected and businesses had little time to prepare, the same cannot be said for Brexit. The UK Trade Policy Observatory has calculated that the reduction in trade since Brexit has cost UK businesses an additional £44 billion. This includes £32.5 billion lost in potential imports to the UK and £11 billion in exports to the EU.
In addition to these costs, the UK government has spent £8.1 billion on preparations for Brexit and the end of the transition period, according to the Institute for Government. ParcelHero argues that this funding could have been better used to promote UK trade across the EU and other markets.
Looking ahead, ParcelHero predicts that in the long term, Brexit could end up costing even more than Covid-19. Thomas Sampson, an Associate Professor at the London School of Economics, suggests that the impact of Brexit on the present value of UK GDP could be two to three times greater than that of Covid-19.
As the UK emerges from lockdown and travel restrictions ease, the challenges posed by Brexit are only expected to increase. A recent Government Business Insights report revealed that in the previous month, 66% of UK businesses faced difficulties with exporting, while 79% experienced challenges with importing.
Overall, the report from ParcelHero highlights the significant costs that both Brexit and the Covid-19 pandemic have imposed on UK businesses. While the pandemic was an unforeseen crisis, the negative impact of Brexit was a choice made by the UK government. As businesses continue to face these challenges, it remains to be seen how they will navigate the complexities of a post-Brexit era.
Useful links:
– ParcelHero: Home delivery firm providing insights into the impact of Brexit and the Covid-19 pandemic on British businesses.
– The Guardian: News coverage on the economic effects of Brexit on UK businesses.
