UK clothing and footwear exports to the EU have plunged since Brexit, according to new research that shows the extent to which complex regulations and red tape at the border have prevented firms from sending goods across the Channel.
According to the consultancy Retail Economy and the online market Tradebyte.
The report said the decline meant British brands and retailers have seen sales in the EU fall since Brexit, despite a booming European e-commerce market.
The only sectors to increase export sales over the same period were health and beauty, and DIY and gardening, offsetting some of the decline from clothing and footwear.
Many of the hardest hit were small and medium-sized businesses, which faced a greater relative burden of bureaucracy than multinational firms.
One of the report’s authors, Richard Lim, head of Retail Economics, said part of the decline was simply due to a change in trade routes. UK firms that previously repackaged imports of Asian-made goods for sale in the EU have now reorganized their supply chains, setting up offices within the single market to circumvent border regulations.
However, red tape has forced many UK clothing manufacturers to move production to an EU country, at a cost to UK skills and jobs.
In one case, a Leicester-based hosiery maker, who declined to be named, has moved production to Italy, ending more than 100 years of production in the east Midlands, Lim said.
The UK has also failed to benefit from a boom in online goods sales in the EU since 2019, the authors suggest.
“Online retailing is estimated to add £323bn of annual sales to EU economies, but additional trade frictions caused by Brexit-related complexities are limiting this international sales opportunity for UK-based brands and retailers “, says the report.
Lim said: “It’s a huge opportunity for UK brands that’s not being snapped up.”
He said the fall in the value of trade with the EU was mitigated by last year’s rise in inflation, which increased the cost of goods for export.
A separate report on Tuesday by the UK thinktank A Changing Europe found that while exports of goods had fallen, exports of services had risen by almost 30% compared to February 2020.
He said analysis of the latest official figures showed that UK trade in services “has not only rebounded rapidly after the pandemic, but also exceeded pre-pandemic levels by the second half of 2022”.
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He added: “This growth has been driven by ‘a boom’ in the business services trade in the UK. This sector, which includes legal services and consultancy, has now overtaken manufacturing and transport equipment (including cars) as the UK’s largest export sector.”
UK services exports had remained resilient over the period 2020-2023 while services exports from France and Germany had declined.
Why UK service firms had boosted sales when they were largely unaffected by Brexit rule changes was unclear, the report said.
Rain Newton-Smith, head of the CBI, said there was a case to review the UK’s trading relationship as she set out the business lobby group’s wish list ahead of the July 4 general election.
Newton-Smith called for a “bold act” for international investors and said Britain and the EU should use a review of their trade deal in 2026.
“This will be a moment for us to think about how to improve and how to minimize some of those trade frictions that have an impact on the business,” she told Bloomberg.
Labor leader Keir Starmer has said he will join the EU on food and agricultural products if he becomes prime minister. But he has ruled out rejoining the single market or allowing free movement between Britain and the EU.