About a fifth of small and medium-sized British businesses that export to the EU have temporarily halted overseas sales because of the complexity of new Customs rules, an accountancy firm said on Tuesday.
Since the end of a post-Brexit transition period on December 31, British businesses selling goods to customers in the EU have had to fill out Customs declarations and other paperwork, and there have been delays to freight services.
UHY Hacker Young said that of just over 100 clients, more than 20 per cent had temporarily stopped selling goods to Europe.
"These extra costs and paperwork could be devastating for UK SMEs who rely on their EU customer base," said Michelle Dale, a senior manager at the firm.
"EU customers will inevitably look elsewhere if it means they can avoid paying import costs."
While British goods being sold in the EU do not face tariffs or quotas, there are extra administrative costs from bureaucracy, so-called non-tariff barriers.
UHY Hacker Young said a particular challenge came from "rule of origin" requirements, which limit the number of foreign parts that can be included in goods assembled in Britain for sale elsewhere in Europe.
In November, the Bank of England estimated that Britain's economy would suffer short-term damage equal to 1 per cent of output, or £5 billion ($6.8bn), in the first three months of 2021 because of disruption from the new border rules.
Government budget forecasters pencilled in a 4 per cent annual cost over the longer term, or about £87bn a year.