When the Brexit deal takes effect shortly before the New Year begins, it will herald in drastic changes in the UK’s trading and security relationship with the EU. This will be a historic moment, but not one that confines Brexit to history. The Brexit deal does not mean that Brexit is done.
There will be disruption at the border
The deal did little to ease new customs and regulatory checks at the GB/EU border – particularly on agri-food goods – meaning traders face checks and red tape that are more stringent than they had hoped. The agreement also lacked any comprehensive measures to phase in new formalities – with the EU expected to introduce full checks on British goods from day one.
But the last-minute nature of the deal, the devastating impact of the coronavirus on business preparations and a lack of customs specialists mean that many traders will not be ready, risking widespread disruption – especially at the key channel ports in Kent.
It is hard to predict exactly how bad these delays will be and when they will hit. The government will be hoping that new and expanded IT systems, which have only been subject to limited testing, hold up, but they have been delivered so late that traders and customs software providers have had little time to prepare to use them.
The level of disruption will also depend on the government’s traffic management plans. The French border closure provided an unexpected practice run, but Logistics UK description of the government’s handling of the crisis as ‘a national embarrassment’  suggests serious shortcomings.
The government is also having to make do without all the infrastructure it originally expected. Flooding means the huge new border site at Sevington will not be ready to handle new customs requirements until February, forcing the government to fall back on a contingency site nearby.
The timing of the end of the transition period, over the weekend and after Christmas, when traffic volumes tend to be lower, could help keep disruption at bay – at least initially. Many businesses have also stockpiled or sought alternative supply routes to reduce their exposure to delays in January. This means the impact of the changes may not be seen until later in the month. However, recent events has made the task more challenging, with Covid tests for all lorry drivers not part of the government’s original plans.
Traders also face new friction at the Great Britain/Northern Ireland border where avoiding disruption rests on the performance of new UK government IT systems and schemes to limit the impact of additional red tape on businesses.
Businesses may find themselves unable to trade with the EU or hire EU staff
Faced with such drastic changes in the rules that apply when selling goods or providing services to the EU – and with such little time and limited guidance to make sense of them – many businesses will face difficult choices.
Some may decide not to trade with the EU until they are sure that they can comply with new rules. This may include having their products re-tested, making sense of complex new rules of origin requirements needed to benefit from tariff free trade and getting to grips with the complex patchwork of rules on providing services in the EU – which differ greatly between member states and professions.
Other firms – perhaps unaware of the changes coming – may continue to trade, only to find themselves acting unlawfully and potentially subject to fines and penalties down the line.
Unprepared businesses will also find themselves unable to hire from the EU until they become sponsors under UK’s new immigration system.
Many Brexit changes will not take effect immediately
While most Brexit changes bite straightaway, many others will not. The UK government will only introduce full border controls on imports from the EU to Great Britain in July, and will allow traders to defer customs declarations and declarations of origin for up to six months. The UK and the EU have also agreed that traders will be able to import goods without declarations from their suppliers that their goods comply with rules of origin requirements until the end of 2021.
While these measures will help keep trade flowing and buy more time for firms to prepare – they increase the risk of costly mistakes going unnoticed and businesses building up liabilities that they may later find hard to meet.
At the GB-NI border, the Joint Committee recently agreed to a range of interim measures to help avoid disruption in January – including a temporary waivers on export health certificates and some EU rules for agri-food goods. But these only delay, rather than prevent, some of the new friction traders face.
Beyond the border, the UK government has said it will not fully implement new regulatory requirements in areas like product standards, chemicals and financial services for months or even years after 1 January.
While these measures are welcome, they create a complex patchwork of deadlines to prepare for. The government will need to do a better job of communicating these Brexit changes then it has done to date and should consider the Institute of Director’s call for a tracker tool so that businesses know what deadlines they’re working towards. 
It will take time for the impacts of Brexit to become clear
In many cases, the consequences of Brexit will only come to light as people travel to or trade with the EU.
From 1 January, individuals will face additional requirements when travelling, working or living in the EU – including the need to have six months left on their passport, more onerous rules when travelling with pets and new restrictions on short term business visits. Given the current low levels of international travel, individuals may not appreciate these changes until they find their travel plans disrupted.
Many may hope that reaching a deal marks the end of Brexit. But the reality, even after years of talks and preparations, is that Brexit is not done. In fact, 2021 will be a year when Brexit is felt more than ever.
- Logistics UK, ‘National embarrassment’ must not be repeated, Logistics UK warns government, Press Release, 29 December 2020, logistics.org.uk/media/press-releases/2020/december-2020/national-embarrassment-must-not-be-repeated-logist
- ‘What does the Brexit deal mean for business?’, IfG Live Podcast, 29 December 2020,www.instituteforgovernment.org.uk/ifg-live
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