MOSCOW (Pakistan Point News / Sputnik - 01st February, 2021) The United Kingdom left the European Union's single market on January 1, and while Prime Minister Boris Johnson lauded up his no quotas, no tariffs trade deal with the EU, businesses have raised alarm at the delays and extra costs they now face shipping goods to the bloc.
Negotiators in London and Brussels spent almost all of 2020 battling over the terms of a new future partnership agreement. The UK officially left the bloc in January of that year, although the withdrawal agreement stipulated that an 11-month transition period would come into force that would keep the UK in the single market as a deal was reached.
After months of wrangling and threats of a no-deal Brexit, Johnson and European Commission President Ursula von der Leyen announced on December 24 that an agreement had been reached, with the new deal coming into force on January 1.
For businesses conducting trade between the UK and the EU, the post-Brexit era has brought in a series of customs checks on goods moving into the bloc. Logistics firms and manufacturers have complained about delays, with further issues expected when the UK introduces its own checks over the coming months.
After a year of reduced economic activity caused by the coronavirus disease pandemic, businesses have urged the UK government to cut the red tape and help them navigate the new regulations.
BUSINESS LEADERS CALL FOR ACTION
The magnitude of the current issues on the UK-EU border was revealed in a poll of business leaders conducted by the Chartered Institute of Procurement & Supply.
In the survey of 185 UK and EU supply chain managers, six in 10 respondents said that goods going through the UK-EU border had been delayed, with 37 percent saying that products had been held up for several days.
The delays have caused a 50 percent fall in the volume of goods traveling from the United Kingdom to the Republic of Ireland, as EU-based logistics companies instead choose to sail directly from the continent to Ireland.
Late last week, representatives from the UK's so-called B5 business groups, comprising the British Chambers of Commerce, Confederation of British Industry, Federation of Small Businesses, the Institute of Directors, and Make UK, held a meeting with Cabinet Office minister Michael Gove, who was one of the most prominent government officials throughout the Brexit process.
During the meeting, the B5 outlined the "substantial difficulties" currently faced by businesses as they adapt to the new regulations, according to a joint statement published by the group.
The B5 also warned that the situation on the UK-EU border could deteriorate further if trade volumes increase in the near future.
"It was recognized by all parties that the level of activity remained low post-Christmas and that further problems might appear as volumes begin to increase once stockpiled supplies were exhausted. Concerns were also raised on further disruption to trade flows when grace periods fall away in the coming months," the statement read.
Additionally, business leaders urged the government to provide "transition vouchers" that would aid smaller businesses, and give customs agents greater training in order to mitigate the current difficulties.
Make UK, which represents manufacturers in the United Kingdom, said in a written statement to Sputnik that the government needed to take urgent action to ensure that businesses can conduct trade with EU countries.
"There are significant and substantial issues that are arising from delays at the border in respect of additional paperwork and rules of origin requirements in particular. As we said in the statement we have urged Govt to acknowledge these issues and work with EU partners and industry to address them urgently," Make UK's press representative said.
The Office for National Statistics (ONS) reported in mid-January that the UK's gross domestic product had fallen by 2.6 percent in November, as a result of the lockdown measures brought in across all four nations to combat the country's second COVID-19 wave.
Despite the overall economic downturn, the ONS said that the manufacturing sector was continuing its recovery, as output grew by 0.7 percent. However, Make UK said that much of the growth was the result of stockpiling rather than increased sales.
"The figures ... were skewed by the amount of stockpiling that companies were doing ahead of the end of the transition period and don't represent any wider picture of manufacturing growth," Make UK said.
In December, the manufacturing organization downgraded its growth forecast for 2021 from 5.1 percent to 2.7 percent, citing the uncertainty over the end of the Brexit transition period and the continued disruption caused by the COVID-19 pandemic.
Roughly one-third of UK companies are now expecting it to take more than 12 months before their trading returns to pre-pandemic levels, Make UK's press representative added.
"We'd already downgraded our forecasts at the beginning of December due to a range of factors of which Brexit was one, but mainly due to the time that companies are expecting normal trading to return, approximately a third are now expecting it to take more than 12 months to get back to normal," Make UK said.
Commenting on the delays at the UK-EU border, as well as issues currently being faced by Scottish fisherman, Boris Johnson said last week that a number of "teething problems" had arisen during the country's adjustment to life outside the single market.
HAULERS CONTINUE TO FEEL BRUNT OF BORDER DISRUPTION
Logistics companies that shuttle goods between the UK and the EU have been particularly hard hit over recent months, not just because of Brexit.
The emergence of a new highly infectious variant of COVID-19 in southeast England, which was made public in mid-December, prompted the French government to introduce a temporary ban on human-accompanied freight transport from the UK.
Drivers were forced to queue up for miles on the main highway from London to Dover, the UK's largest port, and an estimated 4,000 trucks were eventually moved to Manston Airport, a disused military airfield, to wait for several days before the French government eased the restrictions.
France eventually lifted the ban on December 23, although drivers were required to present a negative test certificate for COVID-19 before they were allowed entry.
One month later, logistics firms are facing significant red tape delays as they attempt to move products from the UK to the EU.
The new customs restrictions for goods entering the bloc mean that an estimated 65 percent of trucks that traveled across the English Channel to France in the week ending January 24 were, in fact, empty, according to data provided by French regional governments.
Paul Mummery, the press executive at the Road and Haulage Association (RHA), told Sputnik that his organization was concerned about the impact delays were having on logistics companies, adding that the situation may deteriorate further still.
"Delays and complexity are bad news for the economy, and now we're seeing lower volumes than usual and a huge number of empty trucks returning to EU states. We're very concerned about the impact logjams are having on firms moving goods across borders at the moment, and things will only get worse as volumes increase," Mummery said.
The RHA press executive said that the current issues faced by haulers were not, as Boris Johnson said, "teething problems."
"Traders and commercial vehicle operators have been thrown in the deep end and are having to learn new processes as they go which is hitting bottom lines and strangling the supply chain. These are not teething problems as described by the Government. Firms need easements to give them the time and support to adjust to massive changes," Mummery added.
Johnson has pledged to "build back better" after the coronavirus disease pandemic, although it remains to be seen if the prime minister will be able to keep this pledge should companies in the United Kingdom face continued challenges in conducting trade with EU countries.
In 2019, the EU accounted for 43 percent of all UK exports, totaling 294 billion Pounds ($403 billion), meaning that for many businesses, red tape delays on the UK-EU border will have a major impact on their bottom lines.
