New research conducted for RSM, the 6th largest audit, tax and consulting network, shows that 8% of businesses in the European Union have cut ties with British suppliers as a direct result of the UK’s impending exit from the EU.

Worryingly for the British economy, European businesses are torn on whether the EU should prioritise a trade deal with the UK or USA. 23% believe a trade deal with the USA should be the priority, although the same amount favour prioritising the UK. As the EU’s two largest trading partners, the US and UK will both be a priority for EU officials to strike a favourable trade deal with. Following intense Brexit negotiations, almost half (47%) of EU businesses want to see the EU prioritise trade within the single market. With hard-line voices on both sides of the channel unwilling to compromise, the news underlines the importance of agreeing a free trade area before the Brexit deadline passes.

Conducted by the European Business Awards, Europe’s largest cross-sector business competition, the survey of more than 500 senior European business decision makers shows that businesses on both sides of the channel are feeling the financial costs of trade disruption. Over the past 12 months, 20% of EU and UK businesses have spent more than £10,000 responding to trade restrictive hurdles like Brexit and tariffs, with 16% spending more than £50,000.

Gregor Schmidt, European Regional Leader, RSM International, commented: “We are at a watershed moment in international trade; regulatory barriers and trade policy must be addressed so businesses can collaborate and compete globally. The market thrives when smaller, more agile firms can challenge big incumbents. Large multinational firms will weather this storm. They have greater resources and contingency plans that have been well-funded over a number of years.

“Europe’s middle market businesses have the creative energy to unlock new routes to international expansion but to truly reach their potential we must keep our borders open to trade.”