Trade to and from the EU has seen a dramatic slump.

Data from the Institute of Directors (IoD) showed that almost half of businesses that trade internationally are exporting less to the EU compared to the last five years. And almost a third are importing less.

The figures, published yesterday, were compiled from a survey of business leaders in March. They showed a 42 per cent reduction in exports and a 28 per cent reduction in imports from the EU.

The reduction in trade was even larger amongst SMEs with 45 per cent exporting less and 31 per cent importing less.

The IoD said businesses have been struggling to deal with the administrative and cost-related burden of new customs arrangements.

In January 2021, 40 per cent of traders said they found the changes challenging. By March 2022, this figure had risen to 44 per cent.

New import controls were introduced in January 2022 and more are due later this year, putting more pressure on firms.

Emma Rowland, policy advisor at the Institute of Directors, said: "Over the past year, UK businesses have lost EU clients and experienced a loss in revenue. EU firms have pulled out of the UK market due to increased trade frictions.

"The UK Government needs to work pragmatically with EU leaders to put business first. Restoring confidence on both sides of the Channel in cross-border trade is an urgent business priority.

"This means prioritising the effectiveness and development of digital systems like the Single Trade Window to alleviate the administrative and time-consuming burdens on businesses. Traders also need guidance that is clearer, more straightforward and more easily accessible.

"The UK Government should engage further with EU member states to encourage consistency in the application of the TCA, and further develop targeted support lines and funding for traders.

"The IoD is also calling on the Government to monitor its own progress in reducing friction at the border - to enable them to understand and react in real time to the impact on the lived experiences of importers and exporters."

The IoD survey was conducted in response to an EU Select Committee inquiry into the UK-EU trading relationship.

It will look at the impact new trading arrangements are having on businesses and other stakeholders, how they are being managed, implications for the UK's wider trade policy and likely future developments in the UK-EU trading relationship.