Government on Thursday outlined plans for managing the fallout in the “unlikely” scenario of Brexit talks collapsing, warning that businesses faced more customs red tape and consumers risked higher card payment charges.
Brexit Minister Dominic Raab said London would adopt a series of EU rules in the event of no deal to allow EU imports in and urged Brussels to do the same for British goods travelling out.
Britain would continue to recognise batch testing and EU certifications for medicines to avoid disruption but the government has asked pharmaceutical companies to stockpile additional six-week supplies on top of their normal levels lasting three months, he added.
Trade associations were quick to point out the severe consequences of the measures outlined in the 25 so-called technical notices.
“The stark reality is that in a ‘no deal’ scenario, it appears that the government’s intention is to impose full-blown customs controls on trade between the EU and the UK immediately … Given well-publicised concerns surrounding the capacity and readiness of UK customs systems, we question whether this outcome is realistic,” said Adam Marshall, Director General of British Chambers of Commerce.
Retail and food industry representatives said the notices reinforce their warning about the impact of no-deal on food sector.
“Our food supply chain in particular is fragile and based on just in time principles, ensuring efficiency and economies of scale, bringing huge benefits to the British shopper. Any delays caused by increased red tape will have a serious impact on over one-third of our food imports,” said Helen Dickinson, Chief Executive of the British Retail Consortium.
“The Government’s technical notices demonstrate the facts of a No-Deal Brexit – reduced availability and higher prices of food and medicine, increased delays and red tape at borders, and a VAT bombshell for consumers and businesses,” Dickinson continued.
Ian Wright, Chief Executive of the Food and Drink Federation, in a separate statement, echoed similar sentiments.
“The Government’s laudable decision to publish these Technical Notices nevertheless confirms what a grisly prospect for UK food and drink a no-deal exit from the EU would be. There is no sign of further progress on negotiating frameworks with the devolved administrations. There is no substantive information on mitigating the effect of ‘no deal’ on the island of Ireland, where the implications would be most significant.
“Specifically for food, today’s notice about organic food certification makes clear that UK organic exporters may face a ban on their exports to the EU for at least nine months after a no-deal exit, while new approvals for certification are sought. These issues apply far more widely than just to organic food – any UK food that currently displays EU marks or logos will be in the same boat.
“Moreover, the UK food industry will doubt that the Government could replace TRACES (the EU Trade Control and Expert System that tracks the entire trade and certification process for animals, food, feed and plants) with a new, comprehensive, functional UK alternative IT system in time for the end of March.”
Both organisations asked the government to secure a deal with the EU in time.
Raab, however, insisted failing to reach agreement with the European Union ahead of its planned departure on March 29, 2019 was “unlikely”.
“I remain confident a good deal is within our sights, and that remains our top, and overriding, priority,” Raab said in a speech in London.
“If the EU responds with the same level of ambition and pragmatism, we will strike a strong deal that benefits both sides. But we must be ready to consider the alternative,” he added.
In the scenarios outlined by the government, Britons were warned of possible “increased costs and slower processing times” for euro transactions and told that “the cost of card payments between the UK and the EU will likely increase”.
Consumers may also have to pay more for online shopping and cross-border payments would also no longer be covered by a “surcharging ban” under EU rules, the technical notices said.
Surcharges, which were banned by the EU in January, cost Britons £166 million in 2015.
Another notice advised businesses that they could face additional customs costs and should consider buying appropriate software or hiring a customs broker.
The government reassured farmers it will continue to pay them subsidies currently made by the EU, but warned organic food producers they will need their exports certified by a body recognised by the EU to sell products inside the bloc.
As well as stockpiling drugs, Health Secretary Matt Hancock revealed arrangements were underway for post-Brexit air freight services supplying medicines with short shelf-lives, such as radioisotopes.
London and Brussels hope to strike a deal by October, to allow its ratification by the European and British parliaments before the UK leaves the bloc.