Hundreds of UK companies could switch operations to countries inside the EU in what is threatening to become a dramatic exodus of investment and jobs caused by Brexit. The Observer can reveal that by 1 January this year some 500 businesses – mostly UK-owned, or UK-based with overseas owners – were already making inquiries about setting up branches, depots or warehouses in the Netherlands alone, for “Brexit-related reasons”. Since then the number of inquiries from UK companies has increased further. If companies switch all or parts of their operations to Europe it will mean the loss of jobs, economic activity and tax revenue at home. The figures have been compiled by government unit the Netherlands Foreign Investment Agency, which said that while most of the firms were already based in the UK, a minority were new companies from the US and Asia which had investigated a UK move, but had decided against investing here because of Brexit. Lyne Biewinga, of the Netherlands British Chamber of Commerce, said she and her team had been working “night and day” on inquiries from UK companies in recent weeks. Meanwhile, in an interview with this newspaper, Austria’s economic affairs minister, Margarete Schramböck, said inquiries from UK companies about moving to her country – which had been high for several years – had increased threefold since 1 January. In 2019 and 2020, 50 UK-owned or UK-based firms established operations in Austria, according to the Austrian Business Agency. Twenty more had made inquiries in the last few weeks, when the UK left the single market and customs union for good. “We have a lot of companies approaching us to come to Austria. From the UK it is three times higher than before,” said Schramböck. “It is all different kind of companies. It is IT companies, companies interested in R&D who are searching for a location in the EU. We have a special programme to help them and that is good for us. It had already started prior to Brexit but it has increased since Brexit, especially for small- and medium-sized companies. “It is because they are not part of the European Union any more and they [now] have barriers. Even if there is a trade agreement they fear that the barriers will hinder them to do business inside the European Union. “It is always good to be close to your customer and in this case the European market is a single market, so if you want to sell to the European market you have to have an imprint there.”
The British Chamber of Commerce’s branch in Brussels said there had also been a number of inquiries from UK firms about setting up in Belgium. A leading UK manufacturer of cheddar cheese, Simon Spurrell, has announced he will be switching £1m of investment to France. Last week the Observer revealed that the Department for International Trade was advising UK businesses worried about the new burden of regulations, customs checks and added costs of transporting goods to the EU, to set up warehouses, depots or entire new operations there. Two managing directors of UK firms told the Observer they were setting up new European companies and would have to sack staff in this country and employ new staff in the EU. By moving back inside the single market, companies with large numbers of customers in the EU can transport goods in bulk, avoiding the charges on individual items that have afflicted couriers this year. They can also avoid the problem of VAT charges hitting their customers. While ministers have tried to dismiss business concerns about the new barriers to trade caused by the UK exit from the single market and customs union, the loss of jobs, investment and tax revenue is fast turning into a full-blown crisis. On Friday the leaders of Britain’s five largest business groups warned the government that firms faced “substantial difficulties” at UK ports since Brexit, with the prospect of a “significant loss of business” if the situation was allowed to continue. Biewinga added: “The number of companies searching for a base in the Netherlands has surged in recent months. We help a lot of companies to set up a separate business in the Netherlands to circumvent border issues and to get around extra charges, paperwork and additional taxes resulting from Brexit. From the Netherlands they can distribute their goods far more freely. “There are many reasons that businesses may choose to go to the Netherlands. The two countries share a 400-year-long trading relationship, are friends, political allies and North Sea neighbours. We are also geographically very close as well as fast digital connections and a good logistical infrastructure with Europe’s largest port, Rotterdam, as well as Schiphol airport in Amsterdam.” The Netherlands – like Austria – is offering a range of financial incentives to UK firms and expat workers. On Friday, in a letter to Conservative party supporters, international trade secretary Liz Truss said Brexit was going well and was a great opportunity to build global Britain. “We have taken back control of our trade to deliver jobs and prosperity across the UK,” she said. “Already seizing vast opportunities across the world with trade deals worth £885bn with 63 countries and the EU already agreed. “Having left the EU our ambitious trade strategy is at the heart of our vision for global Britain and in 2021 we are more than ready to seize our potential on the world stage.” The government said: “We are helping business seize the opportunities open to a fully independent global trading United Kingdom. Businesses across the country have adapted well to the changes to trading with the EU, and trade continues to flow smoothly, with no disruption at UK ports. “We are working closely with industry to get businesses tailored support to tackle any outstanding issues. We have set up export helplines, invested millions in the customs intermediaries market and developed the Brexit checker tool so businesses know exactly what they need to do.”