British clothing and footwear exports to the EU have plummeted since Brexit, according to a new study which shows how complex border regulations and red tape have deterred firms from sending goods across the English Channel.
Exports of clothing and footwear sold to EU countries fell from £7.4 billion in 2019 to £2.7 billion in 2023, it said, contributing to an 18% drop in sales of all non-food exports to countries covered by the single market EU. consultancy Retail Economics and online marketplace Tradebyte.
The report said the drop means UK brands and retailers have seen a drop in sales to the EU since Brexit, despite a booming European e-commerce market.
The only sectors to increase export sales over the same period were health and beauty, DIY and horticulture, offsetting some of the decline from clothing and footwear.
Many of the worst affected were SMEs, which faced a greater relative burden of red tape 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. British firms that previously repackaged imports of goods made in Asia for sale in the EU have now reorganized their supply chains by setting up offices in the single market to circumvent border regulations.
However, red tape has forced many UK clothing manufacturers to move production to an EU country, at the expense of UK skills and jobs.
In one case, a Leicester-based sock manufacturer, who declined to be named, moved production to Italy, ending more than 100 years of manufacturing in the East Midlands, Lim said.
The UK has also failed to benefit from the boom in online sales of goods in the EU since 2019, the authors suggest.
“Online retail is estimated to add £323 billion in annual sales to EU economies, but further trade frictions caused by Brexit-related complexities are limiting this international sales opportunity for UK brands and retailers,” the report said.
Lim said: “It’s a huge opportunity for British brands that aren’t taking it.”
According to him, the decrease in the value of trade with the EU was mitigated by last year’s sharp increase in inflation, which increased the price of goods for export.
A separate report on Tuesday by think tank UK in a Changing Europe found that while exports of goods fell, exports of services rose by almost 30% compared to February 2020.
It said an analysis of recent official data showed that UK trade in services “not only rebounded rapidly after the pandemic but also exceeded pre-pandemic levels in the second half of 2022”.
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He added: “This growth has been driven by a ‘boom’ in the UK business services business. The sector, which includes legal services and consultancy, has now overtaken manufacturing and transport equipment (including cars) to become the UK’s largest export sector.
UK services exports remained resilient over the period 2020 to 2023, while French and German services exports declined.
It is not clear why UK service firms increased sales when they were largely unaffected by Brexit rule changes, the report said.
Rain Newton-Smith, the head of the CBI, said there was a case for a review of the UK’s trade relations as she set out the business lobby’s wish list ahead of the July 4 general election.
Newton-Smith urged international investors to take a “bold stance” and said Britain and the EU should take advantage of a 2026 review of their trade deal.
“It will be a time for us to think about how we can improve and how we can minimize some of the trade frictions that impact 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 ruled out rejoining the single market or allowing free movement between Britain and the EU.