The looming issue of the next phase of post-Brexit border checks being applied from the end of this month on plant and food based products arriving here continues to raise concerns in UK supply chains over increased costs and reduced choice. The Guardian carried a report on Thursday that the common user charge (CUC) which will apply to goods entering via the port of Dover and the Channel Tunnel is set to cost UK businesses £2bn a year.
The figures came from the German business insurer Allianz Trade and amount to about 10% of the £21bn of agricultural products that Britain imports across or under the short straits each year. The Grocer said the new charges would “cripple the industry and drive up food prices”.
Even the wildly pro-Brexit Daily Express described it as a “hammer blow” tax charge on food, although it didn’t mention that its proprietor, tycoon Richard Desmond, had his hands firmly gripping the shaft as the blow was being readied.
However, the same Allianz report also calculated the government’s announcement that tariffs are being suspended until 2026 on 100 items that we import from countries with which Britain has no free trade agreement will save importers £7bn in total. The items include some agricultural products, cars, fuels, metals and other non-food goods. The tariff suspension is temporary whereas the CUC is permanent. Nonetheless, it’s an upside and we’ve added it.
Trade secretary Kemi Badenoch was up to her usual tricks in hailing new figures showing Brexit Britain is now the world’s fourth largest exporter of goods and services after leapfrogging Japan, France and Holland. She told baffled Express readers still reeling from the ‘hammer blow’ on food costs that the UK is now “punching above its weight on trade” after moving up from seventh place the year before.
She omitted to say the UN figures were from 2022, that Holland, a nation of 18 million and still a member of the EU, overtook us again in 2023 and saw its total exports increase by 53% between 2016 and 2022, compared to UK’s 30%.
CityAM said the improvement was all due to services rather than goods and the latest inflation adjusted ONS figures reveal that while UK’s services exports did increase very slightly in 2022 they have flatlined ever since with service imports actually rising faster. It is far from the Brexit success story Badenoch would have us believe.
The London stock market’s slow demise is being chronicled in the pages of that other pro-Brexit organ, The Daily Telegraph. In January we learned: How Brexit became prime suspect in the death of the stock market.
This week Sir John Bell, one of the UK’s leading scientists and a non-executive director of the giant Swiss pharmaceutical company Roche, said: The London stock market is “going down the gurgler”. He claims British biotech businesses “are all going to pack up and go somewhere else” unless the UK’s equity markets become a better place to raise money.
We also learned that: Britain’s stock market is being dwarfed by a blockbuster European rally.
This article reported on the number and value of flotations or IPOs (initial public offerings) across Europe which saw almost €5bn (£4.3bn) worth of new listings in the first quarter. London barely registered with just over €300mn in that total, according to figures from accountants Price Waterhouse Cooper.
To top it all, it now seems Shell could join the exodus with reports that the energy giant, with a market capitalisation of over £180bn, is considering shifting its listing and profits booking to New York alongside rivals Exxon Mobil and Chevron. This would be a massive shock to The City and may even lead to BP making the same move, leaving the LSE about a quarter of a trillion pounds smaller.
This week we added 12 more downsides and two upsides:
Food
The report by the business insurer Allianz Trade mentioned earlier claims that the new post-Brexit UK border controls coming into force at the end of April will cost British businesses £2bn, adding around 10% to the £21bn of imported food and agricultural products coming through Dover and Folkestone every year.
The former minister for Brexit opportunities Jacob Rees-Mogg, MP for North East Somerset, tweeted about the new charges describing them as an “unnecessary act of self-harm that will increase prices in an era of inflation”. Rees-Mogg, we all remember, claimed in 2017 that Brexit would potentially “reduce people’s food costs by 20%”.
The charges could also hinder efforts to get Britons to eat healthier foods according to Mike Parr, director at PML Seafrigo, a logistics firm specialising in chilled food distribution. Parr says:
“Post-Brexit, there is a growing reluctance to export fresh produce to the UK because it is now fraught with bureaucratic policies and red tape and this latest additional cost is just further ammunition for that argument.”
The MD of Graham’s Family Dairy, a £150mn business based in Stirling, says the post-Brexit labelling laws requiring dairy and meat products to carry a ‘Not for EU’ label on every pack is costing his company £300,000 even before considering the extra labour and complexity.
Dairy UK, the trade body for the dairy sector, say the financial cost per business of changing labelling alone has been quoted as up to £500,000, and up to £2mn per business when factoring in all other costs.
Economy
The Times reports how the new British regulation raising the minimum salary threshold for a skilled work visa from £26,000 to £38,700 is expected to increase the 120,000 current vacancies in the UK’s hospitality sector. Research indicates that over 90% of the 8,500 migrants recruited in the sector in 2023 wouldn’t qualify under the new threshold. The rule is also expected to impact workers in other sectors as well.
Glasgow-based airline Loganair has reported how Brexit red-tape is bringing “unwelcome cost” and exacerbating global aircraft overhaul and maintenance supply chain pressures. The company said:
“In the UK’s case, the challenges have been exacerbated by new border import and Civil Aviation Authority certification requirements following Brexit and the UK’s consequent departure from the EASA common European aviation system.”
Services
Zoos are said to be facing difficulties in importing animals from EU countries after Brexit. New legislation is making it complicated and time-consuming. Markus Wilder, the curator of Port Lympne Wild Animal Park and Wingham Wildlife Centre in Kent, has claimed that getting animals from outside the UK has become more difficult while in the UK, there are only a limited number of animals that can be moved around.
The Shropshire Star reports the closure of a popular local hostelry. The Baron of Beef Country Inn and hotel at Bucknell is shutting down due to the combined impact of Brexit, Covid-19, and the cost-of-living crisis. Owners Debra and Phil Wright said:
“Hospitality has had a very challenging few years. Firstly, the effects of Brexit, making staff recruitment much more difficult, then Covid and three lockdowns, and most recently the cost-of-living crisis. These have had a huge impact on the sector.”
Citizens’ rights
In what is being described as a major blow to thousands of British residents in Spain, the Spanish government has announced plans to end the so-called ‘golden visa’ scheme which provided residency rights to wealthy foreigners making a significant investment in the Spanish economy as well as visa-free access to the Schengen Zone. It was used to avoid the rule permitting stays of just 90 days in any 180-day period.
A quirk of the new immigration rules has caught out a British man and his French wife who moved to France in 2015 after 25 years living and working in the UK . Stephen Kaye and his wife Carmen cannot now return because they did not have five years of unbroken residency in Britain immediately before Brexit.
IT specialist Kaye, who has Parkinson’s disease, said:
“My first reaction upon discovering that Carmen did not have an automatic right to return to England was one of disbelief. It did not seem possible that a ‘civilised’ country (the UK) could invent such an outrageous rule.”
Northern Ireland
According to Politico, experts are warning that the new carbon border adjustment mechanism (CBAM) regime threatens to create more problems over the Northern Ireland sea border. The EU’s CBAM rules are set to apply from 2026 with the UK expected to introduce its own scheme a year later, leaving Northern Ireland in a half-in half-out status.
Immigration
Analysis by experts at the immigration and visa law firm A Y & J Solicitors has revealed that the UK government’s post-Brexit plan to attract the “brightest and best” to work in the UK accounted for less than 2% of the total work visas issued in 2023.
Based on figures from government immigration records, 2,186 high potential individual (HPI) visas and 4,181 global talent visas were issued last year, out of a total of 337,240. Director Yash Dubal said the data illustrates the gap between the government’s messaging on immigration and the reality of the points-based system.
Upsides
The government has announced a temporary suspension of import tariffs on around 100 different products not covered by free trade agreements, until 2026. A report by Allianz Trade, a business insurer, suggests the move would cut import costs by £7bn. The list includes some agricultural products but also cars, fuels, metals, and other non-food goods. Allianz says the products represent 45% of total UK imports, it would have the effect of reducing overall inflation by 0.6 percentage points over the next year.
We should perhaps also point out that it may also increase imports, exacerbating the widening trade deficit.
And finally, plans by Labour to scrap the VAT exemption on private school tuition fees announced last year would not have been possible under EU law. If Labour win the next election they intend to charge private schools 20% VAT, as well as ending business rate relief, to raise about £1.7bn.
Of course, if you’re Jacob Rees-Mogg or any parent with children destined for a private education, this might also be considered a downside.
