How Brexit turned made in Britain into a hindrance

Brexit has greatly hampered UK design brands' ability to sell their products in the EU and turned the "made in Britain" label into a costly burden, industry leaders tell Dezeen.

The UK formally left the European Union (EU) on 31 January 2020, departing the single market and customs union at the end of the same year.

For British brands exporting their products to the EU, the impact of the resulting administrative complexity has been severe.

"EU customers are wary about buying from the UK"

Furniture-maker Vitsœ is one such brand, selling both to business and private customers across the bloc.

"Five years on, Vitsœ's experience is that EU customers are increasingly wary about buying from the UK because they have been hit repeatedly by the barriers," company director Mark Adams told Dezeen.

"Brexit has imposed additional layers of bureaucracy, including customs declarations, VAT complexities, and border checks."

Heritage British furniture brand Ercol has also witnessed a huge downturn in trade with the EU.

"We've now seen an 88 per cent decrease in sales in Europe from 2019," chairman Henry Tadros told Dezeen. "As we weren't quite big enough to set up our own European operation, we've been hamstrung by shipping and customs fees."

"It's just so much easier for a European retailer to work with European brands than to deal with the headaches of importing from the UK."

For London-based furniture company SCP it has been a similar story.

"We have lost a number of our wholesale customers who gave up buying from us because of all of the extra paperwork," said founder Sheriden Coakley. "Our web sales to private clients [in the EU] all but disappeared."

EU customer confidence has got so bad as a result of burdensome paperwork and unexpected import charges that "made in UK" has become a turn-off for potential buyers, according to Adams.

"In the past, the country of origin was rarely a concern; however, today, it is," he said. "Vitsœ now considers carefully how and where its UK-production is mentioned."

"Brexit charges cost us £117,000 last year"

Businesses focused on importing design products from EU countries to sell to clients in the UK have also faced significant challenges.

"Brexit and customs charges cost us £117,000 last year, plus some delays," said James Mair, founder of London-based firm Viaduct.

Depending on the size of the project, these extra costs are either absorbed internally, hitting profit margins, or passed on to the client.

These costs are a reflection of the burden faced by the brand in an EU country on the other side of the transaction, explains Alice Breed, founder of UK-based design sales agency DNA.

"They too have to pay an export agent to complete paperwork," she said. "This cost is transferred to the UK buyer."

For buyers in the UK, the upshot is higher prices, often disguised by EU brands issuing UK-only price lists that incorporate higher shipping charges and unit costs.

All this doesn't just affect large orders – businesses like Breed's must even pay import paperwork charges for samples.

Bricks-and-mortar retail has felt the biggest impact, added Breed.

"Retail was already coming under intense pressure from several different directions before Brexit and margins for resellers were tight," she said.

"They are now squeezed further by import paperwork fees which can add anything between £25 and £250 per invoice."

"We find it difficult to operate from England"

Brands have attempted various different strategies to try to offset the pain of Brexit.

For businesses selling multiple small orders like Ercol, the admin and fees associated with selling in the EU are particularly cumbersome.

As a result, Tadros has increased Ercol's focus on sales within the UK.

"It is just so much harder to export and continue to be profitable," said. "We felt that we had an opportunity to focus on the UK and London and get it right here, and in doing so build a secure platform for us to look at exporting again in the future."

Nevertheless, according to the British Furniture Association, the trade organisation which represents the interests of the nation's furniture industry, challenging economic conditions have made it difficult to achieve buoyant trade within the UK.

Others have sought to set up operations within the EU, such as furniture and lighting brand Established & Sons.

Created in 2005 on strong British foundations, Established & Sons proudly began by manufacturing its products in the UK before expanding production across various countries.

A few months ago, the business launched a sister company in the Netherlands.

"[It's] a very simple and normal result of Brexit indeed," explained CEO Casper Vissers. "We are English by heritage, that will never change."

"But for the operations of an international business, we find it difficult to operate from England. And that would not have played any role without Brexit."

Buyers like Viaduct have also formed EU sister companies.

"For our orders within Europe using EU suppliers, we have registered for Dutch VAT to avoid those customs charges, but it leads to more additional costs," said Mair.

"The Netherlands then benefits from any VAT payable, rather than the UK," he added.

"It felt like we needed to apologise"

Others have tried to look further afield. One of the early political pledges in support of leaving the EU was that trade with non-EU countries would grow.

But the ongoing trade war with the US has hampered these efforts.

"Sales to Vitsœ's largest market in the US have been under pressure due to 25 per cent tariffs on aluminium and steel," said Adams.

"We did shift over to the US but that's been hammered by their own economic downturn and then all of the Trump tariff stuff happened," said Ercol's Tadros.

Ercol decided to shut down its US company in November and refocus everything it has on growing the UK business.

According to Adams, Brexit has even made trade with the US tougher.

"There have also been intellectual property issues for Vitsœ selling to the US because the UK is now a third country: EU IP registrations are no longer accepted in the US from a UK company," he said. "In other words, both EU and US markets have been adversely impacted for Vitsœ."

There have been other post-Brexit challenges too – notably with hiring talent from EU countries – while some of our interviewees pointed out a less tangible friction with European suppliers and clients who believed that they themselves had voted to leave the EU.

"At the beginning certainly it felt like we needed to apologise or explain that this wasn't something that we wanted as a company," said SCP Contracts managing director Debbie Donovan. "Many manufacturers were understandably offended that the UK had voted for this."

Everyone we spoke to was eager to rejoin the EU, or at least be back at the EU table.

"Apparently the buzzword is 'dynamic alignment': ease of movement of goods and people across EU borders," said Adams, something he said Norway and Switzerland have successfully managed.

Vissers feels disappointed by a change in perception of the UK. "I have so many friends around the world with businesses who just stopped focusing on the UK. That I find the most terrible effect of Brexit," he said.

"The UK has kindly given the ultimate present to the EU," said Adams. "No other country will be foolish enough to leave."

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