How Bureaucracy is Holding international Business Back

Whilst the battle to fund Big Ben’s restoration and sound the bells to celebrate ‘Brexit day’ on 31st January continues, those in the know will tell you that this represents the first (and arguably easiest) stage of withdrawing from the EU.

Next comes the delicate and potentially problematic trade negotiations, which are now likely to commence in March and following the UK’s initial withdrawal from the single bloc. This will allow nine short months in which to negotiate a comprehensive free trade agreement, which will optimise revenues and minimise damaging bureaucracy. 

The latter point is interesting, not least because Brexit was partially sold on the premise that leaving the EU would minimise bureaucracy and red tape for businesses that trade across international borders. We’ll address this further below, while asking how international firms can beat bureaucracy in the current economic climate.

Leaving the EU – Will This Make it Easier for UK Firms to Operate Internationally?

In general terms, bureaucracy is thought to hinder commercial growth and business development, thanks primarily to the imposition of complex trading directives, excess paperwork and unnecessary administration costs.

Make no mistake; bureaucracy is often presented as being synonymous with the EU, and leaving was promoted as an excellent way of negating this and making it easier to trade internationally.

The issue with this assertion is that it fails to account for the fact that various UK firms will still need to trade with EU members states and customers post-Brexit, creating a scenario where they will have to comply with more stringent rules and barriers as entities from a ‘third country’.

One of the biggest issues is the fact that the EU has made the maintenance of the so-called ‘Level Playing Field’ (which refers to the idea of preventing a third country like the UK from undercutting the single bloc in areas such as employment, environmental and taxation laws) a prerequisite of any future trade arrangements. 

Adhering to this will require the UK to adopt a similar regulatory framework to that of the EU while also encumbering firms with additional bureaucracy, creating a lose-lose scenario which will frustrate British firms.

However, failing to follow this rule could completely scupper a free trade deal and see the UK revert to prohibitive WTO trading terms, creating even further bureaucracy in the form of excessive tariffs.

How Can Businesses Beat Bureaucracy in the Current Climate?

This is worrying for UK firms that trade with the EU, while it may also be concerning for those that also want to expand into non-EU markets (even in a supposedly positive post-Brexit marketplace).

We should also note that companies already have to deal with significant bureaucracy in every aspect of their operations. For example, signing off on a simple business loan and providing direct funding can require up to 30 signatures in some instances, and this doesn’t involve even a semblance of international trade.

Fortunately, there are ways in which firms can reduce bureaucracy in the current economic climate. Firstly, you should consider liaising with a professional risk management company like RSM, who can analyse your businesses standing and identify the economic and social factors (such as Brexit) which may impact on short and mid-term growth.

It’s also arguable that artificial intelligence (AI) can help in the battle to beat international bureaucracy, even by helping to maintain uniformity and controls while speeding up commercial administrative tasks.

This is definitely a space to watch in the future, particularly in the UK as the post-Brexit landscape continues to take shape. The good news is that businesses have the tools at their disposal to cope with rising levels of bureaucracy, regardless of our nation’s future trading arrangements with the EU.