Aside from the all the factors which have affected the UK, such as inflation, the COVID-19 pandemic, and the workforce shortage, the new bureaucratic Brexit checks will make the situation even more complicated.
Before the 1st of January 2022, Brexit trade checks were only really imposed on British exports to Europe. From the 1st of January, checks were implemented on all imports into the UK, which is increasing the cost as well as the bureaucratic formalities.
Among all the aspects that are to be considered, one of the most important ones is the customs declarations. If in 2021, British importers bringing in goods from Europe could delay the submission of their customs declaration for six months, now they have to submit them at the border, filling in a complex, laborious document, with multiple data fields crammed full of technical detail.
Even if most goods are subject to low or non-existent tariffs because of the trade agreement the UK and EU signed, the traders would still need to struggle with bureaucratic aspects. In order to avoid customs payments, the trader must prove that the goods originated in Europe. This is what country of origin check means. If a company is importing an Italian sausage from Rome, say, they need to forensically demonstrate that all the ingredients came from Europe.
The most demanding of all requirements are sanitary and phytosanitary checks (SPS), which are intended to protect against disease in plants and animal products. The most complicated part of these checks, which would involve physical inspections and extensive documentation signed off by vets, has been postponed until later in the year.
The last aspect in terms of customs checks is Goods Vehicle Movement Service (GVMS). This system gathers all the declarations and attaches them to a vehicle so that customs authorities know everything has been completed. However, some issues have already been reported. For example, some companies failed to provide the correct details, and some businesses reported various error messages.
This is the picture Brexit created within the trading network: increased costs, more bureaucratic formalities, and massive delays. All of the old obstacles to trade that used to stifle the continent before the creation of the customs union and single market have been reintroduced for the UK. It's like going backward in time.
The UK government will be keen to make sure there are no massive queues of lorries appearing on the evening news. They know the politics of how this works. That image would make them look ridiculous. If it threatened to come true, most customs experts expect them to ease the checks to make sure traffic flows, regardless of the lack of control it would imply. This, after all, has largely been the approach so far - repeatedly delaying the imposition of controls for fear of what would happen if they initiated them.
Their strategy is to localise the delays, which is why the controls are not taking place at the border, but at the depots, where lorries are held up until all the documentation is correctly filled in.
In 2021, a survey made by the British Chambers of Commerce shows that 45 percent of companies found it complicated to trade goods with the EU. The Food and Drink Federation concluded that sales to Europe were down 23.7 percent in the first three quarters of 2021 as a result of Brexit trade barriers. The UK Trade Policy Observatory reported a Â£44 billion hit to the UK economy.
When the British Chamber of Commerce conducted a survey recently of the impact of Brexit on British businesses, eight out of ten of them reported increased costs, half reported employee shortages and two-thirds of exporters reported problems in trade. A medium-sized manufacturer in Ayrshire replied to the survey by saying: "I don't have the time to relate all of the difficulties we have experienced. Brexit has cost us business, increased our costs dramatically, and killed our sales expansion in the EU. ["¦] My anger and frustration cannot be properly expressed."
At the same time, businesses were already being affected by the pandemic, particularly in supply chains and demand volatility. Even if the Government knew that it decided not to extend the transition period. It decided to impose the chaos of Brexit on top of the chaos of Covid.
Now inflation is rising, worker shortages are grinding the country down and consumers are hurting. But instead of helping, No.10 is introducing measures that will make the situation even more difficult. And many of the businesses affected will eventually have to pass on the costs of all these changes to the consumer, worsening the cost of living crisis.
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