British companies exporting to the EU will face a blizzard of red tape if there is no Brexit deal, and should consider hiring customs agents to help them deal with it, the government said on Thursday.
In a series of technical notices on the consequences of a no-deal Brexit, the UK’s Department for Exiting the EU (Dexeu) said trade with the bloc would revert to “non-preferential, World Trade Organization terms”.
It added that exporters should think about engaging “the services of a customs broker, freight forwarder or logistics provider to help, or alternatively secure the appropriate software and authorisations”.
Dominic Raab, the UK Brexit secretary, conceded that there would be "some extra regulatory" changes, but these would be offset by the opportunities for companies looking beyond the EU.
Red tape
The technical documents go into great length about red tape, outlining the host of forms that will need to be filled in – such as customs declarations, safety declarations and export licences – and quangos to notify.
Earlier this year, Jon Thompson, the chief executive of HM Revenue & Customs, told a committee of MPs that the fourfold increase in customs declarations that would occur under a no-deal Brexit, to 205 million a year, would cost UK and EU businesses up to £20 billion (€22 billion ) a year. Around £6.5 billion of the total would be borne by EU businesses, but this could be passed on to UK consumers in higher prices.
Mr Raab also revealed that 9,000 more civil servants would be hired just to deal with Brexit, on top of 7,000 already dealing Britain’s departure from the EU.
The CBI business lobby said failing to reach a Brexit deal would “wreak havoc”.
Companies had already spent millions of pounds and thousands of hours on getting ready for no deal, but smaller companies simply did not have the resources to assess the potential impact, said Josh Hardie, the CBI’s deputy director-general.
Mike Cherry, chairman of the Federation of Small Businesses (FSB) said the documents were too technical for most businesses to “make head nor tail of”.
“It’s all very well for the government to suggest that small businesses ensure they have the software, freight forwarders and brokers needed to make customs declarations in the event of a chaotic no deal,” he added. “What ministers need to understand is that these are not big corporations, they don’t have thousands of pounds to throw at consultants and new tech.”
Irish Border
There was no technical paper on the Northern Ireland Border, but in the notice on trade, there was a warning that work still needs to be done to deal with “the very significant challenges” of trading across the border in the event of a hard Brexit.
A technical notice on financial services warned that the roughly 1 million British citizens who live in the EU may suffer disruption to their banking services as the UK is severed from European payments infrastructure is severed. At the same time, however, 30 million European citizens use British financial services – giving Brussels an incentive to strike a deal, ministers believe.
The notice added that the cost of card payments is likely to increase for Britons buying from Europe because they will not be protected by an EU ban on credit card surcharges, which came into force in January. Credit card surcharges paid by British consumers at home and abroad amounted to £166 millio in 2015, according to the Treasury.
As he unveiled the technical papers, Mr Raab said he believes a deal is the “most likely outcome” of the negotiations, and that a no-deal scenario is “not want we want, not what we expect”.
Mr Hardie, of the CBI, said: “It’s right and responsible that the government have supplied information to businesses on issues from financial services passporting to food labelling, all of which will help lower the risks of the harshest outcomes from a ‘no deal’ Brexit. But without a similar response from the EU, many of these mitigating measures would be blunted.”
Mr Raab tried to calm fears by insisting there were no plans to deploy the military to secure food and medicines supplies in the event of no deal, although he told the BBC earlier that the UK would seek to stockpile six weeks of medicine in such circumstances.
– Copyright The Financial Times Limited 2018
