Survey shows “positive shift” in UK-Portugal business confidence

 In Bi-lateral trade, News, Trade

Trading between Portugal and the UK is still facing a high-level of uncertainty and complexity according to the 2nd edition of the survey report ‘Trading between Portugal and the UK’ which was published in November.

Produced by the British Embassy in Lisbon, the report did show that 68% of respondents faced challenges in the past year, with uncertainties around new trade regulations and legal complexities topping the list in the continuing wake of Brexit.
However, the good news was that respondents’ confidence in trading with the UK increased from 5 to 7.5% on a scale of 0 to 10, signalling a positive shift.
Reliability of UK companies, market reputation, and historic/cultural ties were cited as key drivers for doing business with the UK, while The impact of the UK’s exit on businesses’ decision to do business with the UK was rated at 5.8, on a scale of 0 to 10, with a breakdown indicating a nuanced perspective on the specific types of impact.
44% of respondents redirected part of their supply chain away from the UK, citing customs, rules of origin, licensing, and VAT as key factors. Germany (21%), France (18%), and Spain (14%) featured as the main alternative locations.
57% of respondents had to increase product and service prices due to the introduction of the TCA – EU–UK Trade and Cooperation Agreement.
Looking ahead, 23% of respondents anticipate an increase in their volume of trade with the UK within the next 6 months; that figure jumps to 58% over a 5-year horizon. That compares with 45% in the previous edition of the survey, signalling an improvement in prospects for bilateral trade.
Customs, licensing, regulations and VAT are the most commonly mentioned problems faced by companies doing business with the UK, while Clearer guidance regarding the implementation of the new rules and procedures, more information and easier access to local authorities were cited as the main actions to overcome these challenges.
In terms of future prospects, within the next six months, half of respondents expect their level of business with the UK to remain broadly unchanged and 23% expect that level to go up. That percentage rises to 46% within the next year and to 58% within 5 years.
That combination of results suggests a high degree of confidence in the UK as a trading partner and an expectation that some of the constraints faced recently are temporary in nature.
In summery, the survey report suggests that inevitably, economic agents are still facing difficulties navigating through the rules and procedures imposed by the TCA, following the UK’s exit from the EU. But some positive conclusions could be drawn about the prospects ahead for bilateral trade, as businesses successfully adjust to the changed operating environment.
In his foreword, the British Ambassador to Portugal, Chris Sainty said: “The second edition of the “Trading between Portugal and the UK” survey is a good opportunity to reflect on the evolving economic relationship between our two countries.
Following the entry into force of the EU-UK Trade and Cooperation Agreement, in 2021, our focus remains on the implementation of the agreement, ensuring it serves the interests of both Portuguese and British businesses.
In Portugal, building on our Ancient Alliance and historic people-to-people links, we are committed to strengthening bilateral trade.
This commitment involves increasing flows of goods, services, and investments between Portugal and the UK. By maintaining a close collaboration with Portuguese authorities and stakeholders, we aim to support businesses and people as we navigate this new phase of our relationship”.