Business leaders are demanding cuts in red tape, greater mobility and entry to a trading convention as the UK government seeks to reset terms with the European Union.

On the fifth anniversary of Brexit, the British Chambers of Commerce has published a list of 26 recommendations to overcome obstacles to trade.

William Bain, head of trade policy at the BCC, said: “There is no time to lose. Firms are being held back by a complex web of red tape and regulatory burdens.

“This is ramping up costs, so improving our trading relationship with the EU could provide the impetus to growth needed to transform the dour outlook many are facing.”

Brexit is estimated to have cost the Scottish economy £4 billion, according to nalysis by the office of the chief economic adviser.

Trade with the EU is covered by the Trade and Co-operation Agreement (TCA) which was agreed on Christmas Eve in 2020, almost 11 months after the UK left.

The TCA allows tariff-free trade with the EU but requires British and EU firms to produce documentation and paperwork for all shipments. Services access is also limited by rules on business mobility.   

Companies say the biggest barriers to exporting to the EU are customs procedures and documentation (45), export documentation (39%), regulations and standards (35%) and tariffs (33%).  

Research by the BCC’s Insight Unit has shown that SME exporters have faced an uphill struggle to sell goods and services in Europe as paperwork and costs have ballooned.

Only 14% of exporters think the deal is helping them to grow, while more than a third (37%) want a reduction in VAT requirements to export to the EU. A quarter (25%) want the UK to align with rules and regulations with the EU in key goods sectors.  

 Mr Bain said: “Over the past five years, UK businesses have shown resilience, agility and creativity in responding to the biggest change in our international trading relationships in 50 years.

“But the fact remains that we are the only G7 nation yet to regain its pre-pandemic level of trade intensity.

“Meanwhile, comments from senior figures in Brussels in the last week suggest they are open to finding common solutions to some of the barriers to trade which are affecting the flow of goods and services in both directions. 

“Business welcomes this improving relationship and wants both sides to expand this quickly through scoping a pragmatic, growth-driven package of improvements.”

Mr Bain said two issues where there appears to be some promise of a meeting halfway are around linking Emissions Trading Schemes and rejoining the Pan-Euro-Mediterranean (PEM) Convention on rules of origin. 

“Linking the emission schemes, which cover the amount of greenhouse gases embedded in products, is possible within the current framework of the TCA. It would reduce the risk of UK exports of steel, aluminium, hydrogen, and fertilisers facing additional charges. 

“The BCC has also been calling for the UK to rejoin the PEM Convention for over two years.  This would allow UK manufacturers to integrate their supply chains more easily, while still avoiding tariffs, by sourcing inputs from across a wide zone of more than 50 countries.”

Among the BCC’s top proposals for discussions are:   

* Negotiate a deal with the EU which either eliminates or reduces the complexity of exporting food for SMEs.

* Produce a balanced Youth Mobility scheme between the UK and EU, covering school visits and exchanges, and a time-limited ability to work for young people.  

* Rejoin the Pan-Euro-Mediterranean (PEM) convention to align rules on raw material and components that can be used in exports without incurring tariffs.  

* Establish a supplementary deal, like Norway’s, that exempts smaller firms from the requirement to have a fiscal representative for VAT in the EU.   

* Make a deal to allow UK firms to travel and work for longer in Europe and vice versa, and provide mutual recognition of professional qualifications.  

* Link the Emissions Trading Schemes of the UK and EU to avoid charges on carbon embedded in exports in both directions.