How Brexit damages businesses and livelihoods

by the SNP
Posted on
1 year ago
7 min read

Scotland overwhelmingly voted against Brexit but it was imposed by the Tories, resulting in long-term economic decline and making the cost of living crisis even worse.

Brexit is now also fully supported by Keir Starmer and Anas Sarwar – even though it causes heavy damage to small businesses, workers and working-class communities that Labour has now abandoned.

Read on for a rundown of the everyday impacts of Brexit, and a set of case studies of businesses across Scotland suffering from higher costs, shortages and extra red tape.

Westminster and Big Ben

Brexit is making us all poorer: the facts

Higher prices worsening the cost of living

Immediately following the result of the 2016 Brexit referendum, the value of pound sterling fell by 12%, which led to higher inflation from the higher price of imports.

Unlike Scotland, the UK as a whole has a negative trade balance in goods – which means it imports more than it exports.

When imports get more expensive, so do basic items, like food or clothing.

This inflation alone has increased the cost of living by ÂŁ870 per year in the UK.

Big long-term damage to the UK economy

Recent OECD figures showed that the UK is heading for the lowest growth in the entire G20, apart from heavily-sanctioned Russia.

And IMF figures recently confirmed the UK’s sluggish economy – stating that the UK has the lowest growth in the G7.

For all the economic damage caused by the Covid pandemic, the UK government’s own financial body – the OBR – said that the long-term damage of Brexit will be twice as bad.

Lower productivity and lower wages

Recent statistics already showed that the UK now has the slowest wage growth since records began – and with a high level of inflation, this means a real-terms pay cut for most people.

Brexit adds an additional impact – as the OBR forecasts the UK’s productivity will be 4% lower compared to if we hadn’t left the EU.

This then results in falling wages. The UK real wages are expected to be 1.8% lower – a loss of ÂŁ470 per average worker every year.

Brexit is hurting Scottish small businesses: case studies

From Aberdeen to Ayrshire, businesses from all over Scotland have been getting in touch with SNP MPs to illustrate the damage that Brexit has caused to them.

Whether it’s extra red tape, higher costs of exporting or staff shortages, Scottish businesses are forced to pay the price of a Brexit we never voted for.

Here are some real-life examples.

 

Kilt business in Glasgow

A kilt hire company in Glasgow, A1 Kilt Hire, used to export across Europe – but this was brought to a grinding halt because of the extra red tape and paperwork caused by Brexit.

The company didn’t get the answers they needed from the UK’s Department of International Trade, and now the only place in the EU they deliver to is Ireland – at a significantly higher cost.

 

Cheesemaker in Comrie

A small cheesemaker based in Comrie, Perthshire, purchases their rennet from France and since Brexit, they’re finding many difficulties with getting essential supplies needed to make their cheese.

They said: “[We] have been making cheese since 2016. We order the cultures for one of our cheeses – Wee Comrie – from France, and since Brexit this has proven to be a difficult process.”

“Initially, the company in France said they wouldn’t supply UK companies due to the complexity of the process – but we have managed to convince them. However, our order has now been refused access to the UK, due to the fact that the cultures are of animal-based products.”

“In the past, pre-Brexit, it was nice and simple – email the order in, and it was delivered a few days later. This is now seriously affecting our business, as our Wee Comrie cheese makes up approximately 40% of our revenue.”

“Our business has been growing and we have been able to employ three people in a rural area – but this is now under threat.”

 

Seed potatoes from Angus

The seed potato sector is worth around ÂŁ112 million per year to the rural economy and employs more than 11,000 people.

However, after Brexit, seed potato businesses are unable to export to the EU – while EU growers can continue exporting to the UK, because of the way in which the UK government negotiated the Brexit deal.

Jute sacks are vital for Scotland’s seed potato sector and are normally imported from India and Bangladesh – however, following Brexit, they now come with tariffs on them, placing another burden of extra costs on the seed potato firms.

 

Salmon company in Brechin

Scottish food and drink is world-renowned, but exporting businesses have been hampered by layers of additional paperwork and lack of clarity from Westminster.

A salmon business in Brechin told us that Brexit “has resulted in added costs, time, and more than likely, the demise of a number of small businesses who do not have the resources to deal with this added pressure.”

“We had a free trade deal with Europe that has now been destroyed – and along with it, the UK economy and a huge amount of import/export businesses.”

Langoustine and shellfish company in Ayrshire

From labour shortages to new export processes, almost every individual and organisation involved in Scottish seafood has been hit hard by Brexit in recent years.

One company in Ayrshire told us: “My local fishermen didn’t manage to export anything to the EU in January 2021, and we’re still having problems as transport takes longer – and therefore our lobster and langoustines, 85% of which went to the EU before Brexit, don’t get such a good price.”

 

Whisky distillery in Speyside

Speyside Distillery, winner of best whisky at the World Whisky Awards, told us that sales are dramatically down since Brexit and that the UK government’s awful Brexit deal has led to the cost of its goods going up by 20% – as well as increased shipping costs and delays.

The business said that a deal with Australia “will not even scratch the sides of substantial losses from Brexit”, and distilleries across Scotland – which export a lot to the EU and beyond – are all paying the price.

 

Specialist vehicle manufacturer in Fife

A company that manufactures a wide range of vehicles for refuse collection, based in Fife, buys chassis from Europe for the bodywork to be mounted onto.

After Brexit, extra tariffs mean extra costs – 10% added to the chassis and 4% added to the bin lifter, which amounts to ÂŁ9,800 extra per vehicle.

While its Europe-based competitors don’t have to suffer from extra tariffs, it’s put at a significant disadvantage selling to customers in the UK and beyond.

 

Cosmetics company in Argyll and Bute

Gracefruit, a company that has exported chemicals for cosmetics to the EU for almost two decades, is struggling with the red tape, soaring costs and the loss of market because of Brexit.

In the first year following Brexit, their business fell by 65% – and her product line had to be reduced from 350 products to just one.

The company has weathered the 2008 financial crash, but the impact of Brexit was so big that the owner said she “no longer has the mental or emotional energy to make a success of a once-thriving business.”

 

Sportswear manufacturer in Troon

A specialist sportswear company in Troon, Foxglide, has suffered from “additional workload, reduced margins and delays due to customs”, in the owner’s words.

UK customers make up about 55% of its businesses, but their primary production partners are in Romania.

Due to the fees associated with Brexit, as well as higher transport costs, the company has been operating on reduced profit margins – and had to pass on higher costs to their customers.

Around 35% of the company’s trade is to the EU – and exporting to the EU has been the most difficult part.

Foxglide told us: “Previously we imported materials from the EU, and then sold the finished product to different EU countries. As the goods are not of UK origin, we can no longer benefit from the trade deal, therefore all items have an additional tariff of 12-20%. This is impossible to absorb.”

In order to manage their EU trade, the business has now established an operation in Romania and trades from there direct to other EU countries. As they said, “The Romanian government will reap the benefits of the additional tax and the VAT that HMRC don’t seem to want.”

 

Florist in Brechin

A florist in Brechin contacted their local SNP MP about the rising costs from their wholesalers, and higher prices and transport costs as a result of Brexit.

From the 1st July 2022, cut flowers will have to be inspected at the borders – which will cause another estimated 12% rise in costs for the business, and an extra delay in getting the flowers to them.

The business told us: “Already I know of three local florists who have closed their doors. As the owner of two shops, I myself am about to close one of mine.”

Scotland has the choice of a better, more prosperous future

After Brexit, the UK is poorer, more unequal and less productive relative to its neighbours.

While small independent countries – like Ireland, Denmark or Belgium – are thriving, Scotland is lagging behind under Westminster control.

Scotland hasn’t voted Tory since the 1950s, and yet we’re having to keep paying the price for damaging policies, such as a hard Brexit, that they impose against Scotland’s will.

Our businesses, people and communities can choose a better future as an independent nation. Pledge your support here and get involved in the campaign.