Major report paints bleak picture of Brexit impact on Wales

Martin Shipton

Brexit has created barriers for business that have resulted in higher prices, with the impact on Wales worse than in the rest of the UK, according to a review of our first four years outside the EU undertaken by four Senedd committees.

The report also raises serious concerns about the UK Government’s failure to consult the Welsh Government about a strategy to improve relations with our former European partners.

It’s the first time since the outset of devolution in 1999 that four Senedd committees have worked together to produce a joint piece of work.

Running to 103 pages, the report examines how the UK–EU Trade and Cooperation Agreement (TCA) – the main treaty governing post-Brexit relations between the UK and EU – has worked for Wales since it came into force in 2021.

The committees that looked at the TCA were:

Economy, Trade and Rural Affairs (ETRA);

Culture, Communications, Welsh Language, Sport and International Relations (CCWLSIR)

Legislation, Justice and Constitution (LJC)

Climate Change, Environment and Infrastructure (CCEI)

Common themes

The report states: “Throughout the committees’ deliberations, common themes emerged. The evidence was clear that the EU remains the largest priority export market for key industries in Wales. Organisations described post-Brexit trade rules as having led to increased bureaucracy, costs, time, disruption to supply chains and unintended, or unforeseen consequences.

“Despite the challenges, it was also clear that there is a willingness and desire to continue trading with the EU, and respondents suggested practical improvements, including simplifying processes and better guidance and support.

“There were also calls for more wide-ranging solutions, such as for the UK to rejoin the EU, for the UK to rejoin the EU’s Single Market and customs union, and for the restoration of freedom of movement.”

The report quotes from evidence given to the committees by organisations affected by Brexit.

The Horticultural Trades Association (HTA), for example, said that border arrangements have “resulted in extreme levels of cost, administration, complications and loss for traders, while infrastructure and operational aspects of the border have compounded all of those issues”.

Increased costs

Many who gave evidence highlighted the impact of increased costs on food security and prices, and border delays, including as a result of the UK’s new Border Trade Operating Model (BTOM) which the Farmers’ Union of Wales (FUW) described as “hugely frustrating”.

HTA said that the UK Government’s estimates do “not reflect industry feedback or awareness of more hidden costs”.

Public Health Wales (PHW) noted that the delays disrupt the availability of fresh produce, while Logistics UK said they have resulted in financial losses for traders of perishable goods.

Written evidence from organisations including Make UK, Logistics UK, FUW and RSPCA Cymru, pointed to the UK’s phased implementation of border controls and the EU’s immediate application of border controls as having created an uneven playing field, with EU traders at a competitive advantage, including in relation to Welsh lamb.The Scottish Parliament’s Committee also said this “deepened” challenges. There were concerns that this breaches World Trade Organisation rules.

FUW highlighted “substantial declines” in exports (up to 50% for some meat products), an increase in illegal meat imports (85 tonnes of illegal meat being seized since September 2022) and increased biosecurity risks as a result of this and border delays. It said that there are delays in importing certain items and some items are no longer available. Evidence suggested some EU suppliers will no longer trade with the UK and that some UK traders have withdrawn from the EU market.

The UK’s importance as an EU trading partner has declined, according to Logistics UK.

Some, including HTA and the Scottish Parliament’s Committee said that smaller businesses were most affected and are less able to absorb the additional costs and regulatory burdens.

HTA highlighted reports that hauliers are reluctant to accept smaller SPS consignments – shipments of plants, plant products, animals, or animal products that are subject to Sanitary and Phytosanitary (SPS) controls to protect public, plant, and animal health – because of the associated complexities and delays.

Customs charges

Antique book dealer Acanthophyllum Books said customs charges sometimes exceed the value of the book, “which is ludicrous” and that “the administrative cost of current arrangements must greatly exceed the revenue raised”. Charges are incurred for books sent to EU customers regardless of value, unlike to the US, whereby books up to $700 in value do not incur customs charges.

PHW warned of changes to the detection and prevention of illicitly traded alcohol, tobacco and drugs. The UK no longer has access to several EU databases for identifying this activity and, while border checks can be advantageous for tackling illicit trade, “new international trade agreements and proposals for freeports in the UK and Wales, create new opportunities, which criminals may seek to exploit to smuggle illicit goods into Wales and the UK”.

HTA said that “GB [Great Britain] to NI [Northern Ireland] trade remains at an all-time low, with some businesses ceasing trade with NI all together because it is not commercially practical or viable”.

In spite of such difficulties, Make UK said that nearly three in four companies (74% of Britain’s manufacturers) continue to favour trading with the EU, which remains the UK and Wales’s biggest market.

Rebecca Evans, the Cabinet Secretary for Economy, Energy and Planning, gave evidence that the TCA “will never replace what was lost by exiting the European Union”. She said: “Leaving was always going to result in barriers to trade and issues in relation to mobility … But, nevertheless, it’s the deal that we now have, so we should be focusing on how we use those structures to the best benefit of Wales.”

She also set out her view that: “… by any measure, I don’t think that Brexit could be described as a success, particularly in relation to trade.”

Welsh exports

Ms Evans highlighted that the volume of Welsh exports to the EU fell by around 31% between 2019 and 2024, while EU imports into Wales fell by 20%. She continued: “But despite this, the EU is still our biggest trading partner, accounting for around 61% of Welsh exports, as compared to 50% of UK exports overall. So, I think that demonstrates that Wales is particularly impacted and is more reliant on trade with the EU than other parts of the UK. So, in that sense, it’s been disproportionately impacted. “But then I would just also make the point that it’s really hard to disentangle the impact of Brexit from other things that have happened in that intervening period, and particularly, of course, the pandemic. So, I think that there’s still research going on in that space to try and better understand what you can attribute to Brexit and what you can attribute to the pandemic.”

The report includes a series of findings and recommendations:

Trade with the EU remains vital for Wales, but businesses face ongoing challenges including higher costs, delays, and complex rules since Brexit. ETRA wants the Welsh Government to do more work to fully understand the deal’s effects.

Touring artists and creative workers are struggling with red tape and fragmented visa rules. CCWLSIR is disappointed that this issue isn’t a priority for the Welsh Government or addressed in the UK–EU’s plans to reset their relationship and says it must be kept on the table.

Calls for a dedicated EU strategy: The CCWLSIR and LJC have previously urged the Welsh Government to set out a clear, long-term plan for its relationship with the EU.

EU programme participation: CCWLSIR welcomes plans to rejoin Erasmus+ but questions why other funding programmes that are a priority for Wales aren’t included in the UK-EU reset plans.

Environmental concerns: Wales faces a governance gap post-Brexit. CCEI wants clarity on the climate and environment impacts of UK–EU agreements .

Border control posts: The Welsh Government has paused development of new posts, pending a UK–EU agreement on food and plant health. ETRA says it’s vital that the devolved governments are included in negotiations in this devolved area.

Representation matters: Wales only has observer status at TCA meetings. CCWLSIR and LJC say this is not good enough and call for full participation rights.

Lack of transparency: The UK Government hasn’t shared its review priorities with devolved governments. ETRA says this undermines scrutiny and cooperation. LJC wants a new Memorandum of Understanding between the UK’s governments on UK-EU relations.

Stakeholder voices need support: Welsh organisations are underrepresented in UK–EU forums. LJC wants better funding and engagement mechanisms.

The Committees have submitted their recommendations to the Welsh Government and expect a formal response outlining how the government will act on the findings ahead of the UK–EU implementation review, due in 2026.