By Dan Sarath, Digital Public Relations, Click Consult.
The coronavirus pandemic, which hit the United Kingdom in March 2020, has caused unprecedented struggle for small businesses across the country. National lockdowns, remote working and furloughing staff have each put immense pressures on SMEs over the last twelve months. Since then, SMEs have faced new challenges the likes of which the business sector has never encountered before.
One of the main ways in which businesses have been affected by coronavirus is in exports. SMEs with international customers have found it harder than ever before to get their products to buyers. After all, COVID has facilitated a disruption to almost every stage of an SME’s supply chain.
Data reveals automobile, arts and antiques SMEs have been hardest hit
According to data analysed by Freightline Carriers, exports of the United Kingdom’s top commodities dropped by 25 per cent between May 2019 and August 2020. They analysed HMRC figures for the top ten commodities exported from the United Kingdom including electronics, pharmaceuticals and precious metals, and discovered that the overall number dropped from 31,080 exports in May 2019 to just 23,146 in August 2020.
SMEs that experienced the largest drops in exports were those in the automobile sector. Exports plummeted by 41 per cent, from 3,048 in May 2019 to just 1,788 in August 2020. At the height of the coronavirus pandemic in May 2020, this figure even dropped as low as just 637 exports for that month. The art and antiques sector follows closely behind, which has seen a 58 per cent drop from 865 exports per month to 366.
Food sector exports also hit by COVID pandemic
According to the Food and Drink Federation, as reported by Farming UK, the food sector is also, rather unsurprisingly, one of the industries hardest hit by the COVID pandemic. New figures from the FDF revealed that the first quarter of 2020 saw UK food and drink exports fall by over £700 million compared to the same period in 2019.
Dominic Goudie, head of international trade at the Food and Drink Federation, told Farming UK: “We can now see how Covid-19 has impacted valuable overseas sales of UK food and drink that were worth over £23 billion in 2019. The closure of the hospitality sector in high-value export markets in the European Union and further afield has been devastating for many exporters.”
It’s not all bad news as some sectors have seen increases
Not all industries have been negatively impacted though. For instance, exports of pharmaceutical products have remained high and stable throughout 2020. Despite a temporary government restriction on exports covering 80 key medicines due to the pandemic, overseas sales of pharmaceutical products have since steadied and even risen.
Export stats revealed that these goods recorded a year-on-year increase of £181 million between May 2019 and May 2020. In part, this may be due to the fact that many companies have been searching for vaccines and treatments for COVID-19 and were experimenting on different products within the marketplace.
Uncertainty about Brexit could bring more chaos for SMEs
COVID-19 has undeniably had a huge impact on the economy and on exports, but Brexit is causing further unnecessary uncertainty. The UK is due to formally cut ties with the European Union when the transition period comes to an end in January 2021 and no trade deal has yet been agreed.
It remains to be seen exactly how much of an effect Brexit will have on economic activity, but the Office For Budget Responsibility has predicted a more than 5 per cent fall in potential GDP over the coming 15 years if a ‘typical’ free trade agreement is put in place with Brussels. Exporters will no doubt be watching the details of any possible trade deal with interest over the coming months to see how it may affect their businesses and industries more broadly.
As discussed in Global Trade Review, The independent National Audit Office released a report which suggested it would be “very unlikely” for the United Kingdom to European Union trade deal to be ready by the end of the Brexit transition period on January 1 2021. Under the UK Government’s reasonable worst-case scenario, the NAO also suggests between 40 per and 70 per of lorries travelling to the European Union will not be ready for customs requirements as a result of this.