Small UK businesses complain of being caught unawares by EU ‘red tape’

Small businesses are warning they have had to pause selling their products in the European Union and Northern Ireland since mid-December while they work out how to comply with new EU product safety regulations that caught many of them unawares.

Skye Weavers, a small family business on the Isle of Skye, says it has missed out on sales of its scarves, shawls and blankets to customers in both markets after halting internet orders from those locations because of the rule change.

“What I find extraordinary is it has gone pretty much under the radar. Nobody seemed to know it was coming, it was suddenly sprung on us without much announcement,” says Roger Holden, who has run Skye Weavers with his wife, Andrea, for over a decade.

‘It was suddenly sprung on us,’ says Roger Holden of Skye Weavers. ‘It just seems wrong,’ says Andrea Holden. Photograph: Skye Weavers

The EU brought in its general product safety regulation (GPSR) on 13 December, which applies to all consumer products, apart from a few exceptions including food, antiques and some technical items.

The European Commission said the measure was designed to improve product safety standards across the 27 member states, especially for items sold online from other countries, and “ushers in a new era of consumer protection”.

British companies, and others located in “third countries” that export goods to the EU, are required to have a “responsible economic operator” located inside the bloc – which could be a manufacturer, importer, authorised representative or a third-party company that manages storage and shipping – to deal with any problems with products or consumer queries.

The issue also affects sales in Northern Ireland because under the Windsor framework deal struck in 2023, the region follows certain EU product safety regulations, including GPSR, to allow it to have access to both the UK’s internal market and the EU single market.

Skye Weavers first heard about the new regulation from another textile business, and set about working out how to comply so they can keep selling online to European customers.

The vast majority of the company’s textile products are sold from their shop on the Isle of Skye, many to overseas visitors. Brexit reduced online purchases from the EU, because shoppers are wary of buying without knowing in advance the additional import taxes and handling costs they will have to pay. Nevertheless the Holdens set about finding a solution for this market.

“It just seems ridiculous to me not to export to our neighbours while we are exporting to America or Australia,” says German-born Andrea. “It just seems wrong.”

After hours of research, she found a company to act as Skye Weavers’ representative in the EU, at a cost of several hundred pounds a year. The textile business hopes to reopen its website to EU customers in the coming weeks.

Skye Weavers had to find a company to act as their representative in the UK at a cost of hundreds of pounds a year. Photograph: Skye Weavers

“As a small business you have limited resources of time and money, but on the other hand things can change so easily you need your income to come from various directions as you can’t count on one thing,” says Andrea.

The new EU safety regulation has hit small and medium-sized enterprises (SMEs) particularly hard, causing cost and confusion, says William Bain, the head of trade policy at the British Chambers of Commerce.

The BCC boss accuses British officials of failing to communicate the changes to companies, especially smaller ones. “The UK government typically doesn’t provide guidance on EU measures, because it’s not their legislation,” Bain says. “The real problem still is that we don’t have sufficiently good advance sight or cooperation on regulatory changes on either side of the … Channel, so that needs to be improved.”

Before the mid-December deadline, the UK government did post guidance for businesses selling products to Northern Ireland on the gov.uk website. However, Bain believes it should have gone further to ensure businesses of all sizes, and not just those belonging to trade associations or business groups, knew about the changes.

“You are talking about time-poor, resource-intensive SMEs, and sole traders, who don’t have the capacity to follow the … new legislative change,” Bain says.

“In some sectors, we are seeing regulatory difference between Brussels and London,” he adds. “How can we improve that this year to make sure that we don’t have any further examples like this in future, where SMEs feel unaware, unprepared and unsure about how to comply with new rules that affect key markets.”

The BCC’s call for better cross-Channel cooperation on upcoming regulatory changes comes as the government is looking to “reset” its relationship with the EU, five years after Brexit. Setting out her plans for growth this week, the chancellor, Rachel Reeves, stressed that a smoother relationship with the EU was in the “national interest”.

Bain says he has heard from companies who are “teaming up” and jointly engaging an authorised operator, in an attempt to reduce costs.

Tom Hagen runs Hagen Automation, a Bedfordshire-based business that sells lubricants and grease for cyclists online, and depends on EU customers for up to a fifth of his business. He has also had to pause sales to this market while he researched how to comply with the new regulation.

Tom Hagen has to add new stickers for his products that he has had to design in order to comply with the EU’s general product safety regulation. Photograph: Hagen Automation

“It’s a huge distraction from running the business and also a huge concern as you might be losing 20% of business overnight, like we did with Brexit,” he says.

“This is the latest in a long line of things which we have had to figure out and work around as best we can. No one is giving us any proper guidance.”

Hagen has found a representative based in Estonia, which he expects to cost him “several hundred” euros each year. He has also redesigned stickers for his tubes of chain oil and wax to include the requisite new product information.

While Hagen will be able to continue selling to EU customers, he adds: “It’s becoming a full-time job to deal with the red tape.”

The Department for Business and Trade said it had “published clear guidance” for businesses on how to prepare for the new regulation.

A spokesperson said: “We engaged extensively with businesses ahead of the regulations coming into force – including hosting information sessions for companies, and contacting hundreds of businesses and trade associations who could be affected.

They said the department would continue to support businesses so that it was easier for them to trade with Europe and “play a pivotal role in the government’s growth mission”.