It’s been another interesting week for Brexit aficionados. We are a few days away from Britain introducing the much delayed checks on EU imports as agreed under the EU-UK trade and cooperation agreement (TCA). The Fresh Produce Consortium (FPC) say a DEFRA decision to reclassify many fruit and vegetable consignments from the EU as ‘medium risk’ from ‘low risk’ as of 31 October will add £200mn to the cost of imports.
This is presumably in addition to the £330mn that the government admitted last October would be added to businesses’ costs as a result of the additional red tape that was known about at the time, but what’s half a billion among friends?
Elsewhere, The Belfast Telegraph has picked up on the new EU’s General Product Safety Regulation (GPSR) becoming an obstacle to Amazon sellers trading in Northern Ireland. Small merchants on Amazon are quoted as saying the new rules may put them off selling goods in the province.
This can only add to concerns expressed in a survey by the NI Consumer Council which showed a quarter of shoppers had already had first-hand experience of GB retailers not delivering to NI. It was, in fact, the top concern.
In an effort to persuade the DUP to return to Stormont, the government has offered to introduce a requirement that all new UK laws are ‘screened’ to ensure they don’t create ‘extra trade barriers’ in the Irish Sea. Not to put too fine a point on it, that does seem slightly late to me. The Telegraph headlined the report: Rishi Sunak offers to sacrifice Brexit freedoms to re-establish government in Northern Ireland.
Naturally, Conservative MPs who want to see total divergence from the EU are said to be angry because such a policy “would make it almost impossible for Great Britain to diverge from EU rules”. I assume this includes Trade Secretary Kemi Badenoch who thinks the UK needs to diverge from EU rules to make Brexit worthwhile.
On Northern Ireland specifically, government policy is well and truly jammed like a juggernaut down a narrow Devon lane. It can neither go forward or reverse.
The result is highlighted in the latest UK-EU divergence tracker from the think tank UK in a Changing Europe (UKICE). It shows what reforms the government has undertaken are “are symbolic rather than substantive” and intended mainly to bolster the PM’s credibility before this year’s general election. UKICE say “there is very little meaningful divergence taking place”.
So, Britain is following EU law as if it had remained a member while bearing the huge burden of extra trade friction which the other 27 member nations do not. It seems that even when the UK “held all the cards”, it still ended up losing. Quite a feat.
This week in the bunker we recorded 16 more downsides.
Post-Brexit trade talks
As of 25 January, the government had given up on improving the UK-Canada trade deal, according to the BBC. Talks aimed at extending a time-limited agreement allowing Britain to continue to sell cars and cheese without high import taxes have broken down. The UK’s trading terms with Canada will now be worse than when it was part of the EU’s deal. British car companies face the prospect of higher tariffs from the start of April.
Food / beer
The creation of customs and border controls 22 miles inland from the port of Dover will represent a “hole in the border” that could threaten biosecurity according to the Dover Port Health Authority (DPHA), the Telegraph reports. The DPHA say it could lead to importers circumventing checks or offloading potentially contaminated items en route.
Again, the Fresh Produce Consortium (FPC) says a DEFRA decision to reclassify many fruit and vegetable consignments from the EU as ‘medium risk’ from ‘low risk’ as of 31 October 2024 will add £200mn to the cost of imports. Nigel Jenney, CEO of the FPC, told ITV News:
“These increased costs will apply in October and be passed straight on to consumers, and they are a threat to the viability of numerous small businesses.”
Several other UK trade bodies are also said to ‘fear disruption‘ when the new border checks begin. Marco Forgione, director general of the Institute of Export & International Trade, representing UK importers, said large EU firms would probably cope with Britain’s new rules but smaller ones, specialist food exporters for example, could struggle and some might decide it has become too complicated to trade with the UK and stop exporting.
The Labour Party has also warned the government about potential disruption and risks to its food supply chains on 31 January.
Another trade body that represents the salmon industry, is frustrated over the ongoing red tape blaming Brexit for extra costs of £12mn. Tavish Scott, CEO of Salmon Scotland, said:
“Four years on since Brexit, our farmers continue to face excessive red tape, while progress at smoothing trade flow and opening new markets remains painfully slow.”
North Brewing Co, has become the latest brewery to blame Brexit at least in part for having to appoint administrators. In a statement, the founders said that they were looking to obtain “additional investment” adding that:
“Like the rest of the hospitality and brewing world, over the last four years we’ve endured the turbulence of Covid, Brexit, material cost increases, cost of living crisis and interest rate rises.”
The British Meat Processors Association (BPMA) say, as of 15 January 2024, it will not be possible to import meat from overseas to a central hub in mainland GB, then send it onwards in smaller consignments for further processing to Northern Ireland. This is down to EU rules which consider this to be ‘triangular trade’. A UK vet cannot re-certify meat from New Zealand for example, for onward movement to Northern Ireland.
As mentioned, a survey of over 1,000 people by the NI Consumer Council has found that more than half were concerned about the impact of Brexit and the costs of online shopping. Retailers not delivering to NI was the top concern reported, with a quarter of consumers saying they had experienced this first-hand.
The Road Haulage Association has blamed the Windsor framework for a Stena Line ferry being unable to divert to an Irish port after being caught in storm Isha and unable to enter Belfast port because of seriously rough conditions. The Stena Estrid spent 11 hours at sea. John Martin, said:
“Prior to the Windsor framework/protocol vehicles could have been re-routed quickly from GB to Southern Irish ports. However, this option is now subject to lengthy delays due to the completion of paperwork and the requirement to notify journeys in advance.”
A four year delay in completing a nuclear power station at Hinckley Point in Somerset is being partly blamed on Brexit. According to EDF, the French firm in charge of developing the site, issues on the project had been caused by Brexit, the pandemic and inflation. The station may not be operational until 2031 with costs almost double the original estimate at £35bn.
The FT claims that a government impact assessment puts the central estimate for the soaring costs of re-registering chemicals on a new UK database, in many cases duplicating existing registrations with the EU, at £2bn. This is double the estimate of the UK chemicals industry which warned last year that the new system would cost about £1bn.
The government now realises that many more substances will have to be registered than previously thought.
The British Generic Manufacturers Association (BGMA), say since Brexit there has been almost zero investment in the UK generics industry compared with £4bn in Europe, and manufacturing output is down by one-third in the decade to 2021. Budget cuts and restructuring at the UK regulator, the Medicines and Healthcare Products Regulatory Agency (MHRA), have led to a doubling of wait times to get generic medicines approved while the European regulator (EMA) no longer recognises ‘batch testing’ done in the UK.
The NFU’s chair of the horticulture and potatoes board, Martin Emmett, has warned that changes to import rules in April, which will impose checks at the border for nearly all young plants coming into the country, could cause long delays and result in plants being damaged or destroyed. Emmet warned of an “existential threat to horticultural businesses in this country”.
An analysis by The Guardian suggests that Britain is lagging behind the EU on almost every area of environmental regulation, as the bloc strengthens its legislation while the UK weakens it. At least seven big policies have been changed that means water in the UK will be dirtier than in the EU, more pesticides in Britain’s soil and firms will be allowed to produce products containing chemicals that the EU has restricted for being dangerous.
Chancellor Jeremy Hunt has called in Britain’s largest banks to discuss why they remain so poorly valued compared with global peers, according to the FT. All major UK-listed banks trade below the book value of their assets and the FTSE 350 bank index has fallen 9% in the past year.
Privately, the paper claims, bank executives place much of the blame for the declines on the loss of EU market access after Brexit and policy mis-steps including Truss’s ‘mini’ budget, which undermined the UK’s reputation for sound economic management in the eyes of investors.
Citizens / digital markets
Google has published several new features to its range of services in response to the EU’s Digital Markets Act (DMA), but these will only be available in the EU.
The DMA is designed to make markets in the digital sector fairer and more contestable. For example, EU users will now be able to download or transfer a copy of their data from more than 80 Google products and services. It will also prevent the removal of pre-installed apps on their systems and stop the tracking of end users outside of their core platforms without user consent.
Once again, there were no upsides.