The initiation of new post-Brexit border controls between the UK and the EU on April 30 is anticipated, with businesses preparing for the potential implications. A report from Allianz Trade suggests these controls may increase import costs by 10% in the first year, imposing £2bn in extra costs on British businesses and exacerbating the cost-of-living crisis.
The government's Border Target Operating Model (BTOM) is expected to inflate costs for imports valued at £21bn, particularly affecting agricultural products. This could lead to a 0.2 percentage point increase in the UK's inflation rate. Despite a decrease in inflation from last year's peak, food prices have risen by 30% over the past three years. The government, however, predicts a negligible impact on food inflation from these checks over three years.
The Fresh Produce Consortium (FPC) has criticized the introduction of Common User Charges (CUCs), describing them as a significant financial burden on the sector. These charges, amounting to £200 million industry-wide, pose a particular challenge for SMEs, with fees set at £145 per consignment for entries through Dover or Eurotunnel.
While the government downplays the potential impact on food prices, the FPC highlights concerns over EU exporters reconsidering their UK market presence due to these charges. The FPC advocates for industry-managed solutions to streamline inspections, though an "assured operator status" for businesses is yet to be developed.
The broader UK-EU trade relationship is also under strain, with diverging regulations post-Brexit. As the UK adjusts to new EU standards without a say in their development, the importance of compliance for UK exporters remains high. A government spokesperson has contested the projected figures, asserting that the new checks will minimally affect food prices while offering savings to traders compared to previous models.
Source: fpcfreshtalkdaily.co.uk