The UK’s trade in goods deficit with the rest of the world has continued to widen, with the ongoing Brexit uncertainty being blamed for causing planning and investment paralysis among businesses.

The Office of National Statistics’ latest trade bulletin, which measures the UK’s trade on a rolling three-month basis to account for monthly volatility, shows that the UK’s trade deficit grew by £6.4bn to £43.3bn in the three months to March, widening for the fourth consecutive quarter.

At the same time, the Federation of Small Businesses’ Q1 index highlights that the UK’s small firms are scaling back exports as they’re left hamstrung by political uncertainty.

The report states that SME export intentions are at a record-low, with only 27% of smaller businesses that sell overseas expecting to increase exports in Q2. That figure stood at 42% during Q2 last year.

Elsewhere, Mark Fuller, UK business manager at British American Shipping, a global freight forwarder operating out of the UK and US that offers shipping and logistics services for manufacturers, suggests that British SMEs will be unable to formulate long-term exporting strategies for as long as the country’s future trading relationships remain unclear.

The latest Article 50 deadline for when the UK will leave the EU is set for October 31, but the situation remains largely unchanged since the original March deadline, with the threat of a no-deal scenario still looming large.

Fuller speaks to GTR about his UK exporter customers’ biggest challenges during this latest stage of the Brexit saga and where there may be opportunities for growth.

GTR: Were your customers ready for Brexit in March? If not, can they be ready by October? 

Fuller: We are regularly discussing the various outcomes with our customers and advising them what the effects are likely to be on their business and how best they can be prepared. Without knowing what the final agreement is going to be, it’s very difficult for companies to be fully prepared for all eventualities. I think most of our larger customers already have detailed plans in place while the SMEs are waiting to see what happens before investing time, effort and financial costs into Brexit preparations.

GTR: Many businesses are saying that the uncertainty around Brexit is the worst aspect of the situation. Do you agree?  

Fuller: Many of our customers were hoping for a quick and decisive outcome from the Brexit negotiations to help them plan future investment and forecast business flows. As this did not happen, we saw a rush from some exporters to clear orders before the original deadline who are now in limbo with no clear path forward emerging. On the other hand, it’s been business as usual for other customers keeping an open mind and flexible attitude that whatever happens there will be opportunities for them.

GTR: As a freight forwarder, does the Brexit delay affect your business?

Fuller: Importers and exporters will need to continue moving their products irrespective of delays or whether it’s a hard or soft Brexit. In the event of a hard Brexit or leaving the Customs Union, the physical work required to be completed by freight forwarders moving goods to/from the EU will increase due to the additional need for customs documentation and checks at borders.

GTR: Do you expect the overall cost of exporting between the UK and the EU to increase? 

Fuller: It is inevitable that the extra processing and time will result in additional costs being passed on to importers and exporters, along with potential delays and increased transit times.

GTR: How significant are the risks of delays to goods deliveries in a no-deal Brexit scenario? Can ports handle the percentage of their non-EU receivables increasing dramatically in a short space of time? 

Fuller: Although the systems are in place at ports and HMRC to handle a no-deal Brexit, it is highly likely that goods moving to/from the EU will be delayed. If ports become congested due to additional checks, this will also impact shipments moving to/from the rest of the world too.

GTR: Do you expect your clients to begin shifting to increasing trade with non-EU countries after Brexit? 

Fuller: Our customers are always looking for new opportunities and markets for their products. If Brexit and any future trade deals open-up new areas for business I absolutely expect trade with countries outside the EU to grow.

GTR: Where are the opportunities in Brexit?

Fuller: One of the potential benefits for new markets that Brexit could present for exporters and importers is regarding trade tariffs. At present all our trade agreements are negotiated by the EU and we are unable to make our own agreements.

The UK government is working on securing bilateral agreements that reflect the existing EU trade agreements to allow for continuity after Brexit and, depending on the final Brexit outcome, we should be able to negotiate more favourable trade agreements that open the door for trading in new markets.