British exports of clothes and shoes to the EU have fallen sharply since Brexit, according to a new study which shows the extent to which complex regulations and red tape at the border have stopped companies from sending goods across the Channel.
Exports of clothing and footwear sold to EU countries have fallen from £7.4 billion in 2019 to £2.7 billion in 2023, contributing to an 18% decline in all non-food sales goods exports to countries that fall under the EU’s internal market, according to figures from the consultancy Retail Economics and online marketplace Tradebyte.
The report says the decline means British brands and retailers have seen sales to the EU plummet since Brexit, despite a booming European e-commerce market.
The only sectors to see export sales growth over the same period were healthcare and beauty, and DIY and horticulture, offsetting some of the decline in clothing and footwear.
Many of the hardest hit companies were small and medium-sized businesses, which faced a relatively greater administrative burden than multinationals.
One of the report’s authors, Richard Lim, head of Retail Economics, said some of the decline was simply due to a change in trade routes. British companies that previously repackaged imports of Asian-made goods for sale in the EU have now reorganized their supply chains by setting up offices within the single market to avoid border rules.
However, red tape has forced many manufacturers who make clothes in Britain to move production to an EU country, to the detriment of British skills and jobs.
In one case, a sock maker based in Leicester, who asked not to be named, has moved production to Italy, ending more than 100 years of manufacturing in the East Midlands, Lim said.
Britain has also failed to benefit from the boom in online sales of goods in the EU since 2019, the authors suggest.
“Online retail adds an estimated £323 billion in annual sales to EU economies, but additional trade frictions caused by Brexit-related complexities are limiting these international sales opportunities for UK brands and retailers,” the report said.
Lim said: “It is a huge opportunity for British brands that is not being seized.”
He said the decline in the value of trade with the EU was mitigated by last year’s inflation spike, which pushed up the cost of export goods.
A separate report on Tuesday by think tank UK in a Changing Europe found that while goods exports have fallen, services exports have increased by almost 30% compared to February 2020.
Analysis of recent official figures shows that UK services trade “not only recovered quickly from the pandemic, but also exceeded pre-pandemic levels in the second half of 2022”.
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It added: “This growth has been driven by ‘a boom’ in the UK business services trade. This 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 had remained resilient over the period 2020 to 2023, while services exports from France and Germany had declined.
Why British service companies had increased sales while being largely unaffected by the Brexit rule changes was unclear, the report said.
Rain Newton-Smith, head of the CBI, said there was reason to review Britain’s trading relationship when she drew up the business lobby group’s wish list ahead of the July 4 general election.
Newton-Smith called for a “bold pitch” to international investors and said Britain and the EU should use a review of their trade deal in 2026.
“That will be a moment for us to think about how we can improve and how we can minimize some of those trade frictions that are impacting 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 has ruled out a return to the single market or free movement between Britain and the EU.