No-deal Brexit could cut UK-EU trade flows by half



James Blitz | Financial Times

The flow of goods across the UK-EU border could be cut by more than half in the event of a no-deal Brexit on October 31, according to the most up-to-date assessment by Whitehall’s efficiency watchdog. 

In what it calls a “reasonable worst-case planning assumption”, the National Audit Office said cross-border shipments could initially be reduced to as much as 45 per cent of normal levels on day one and could take up to 12 months to flow normally if the UK leaves the bloc without a deal.

In a report published on Wednesday, the NAO said its assessment was based on the prediction that only 30 per cent to 60 per cent of hauliers travelling to the EU would have appropriate documentation after a no-deal Brexit. 

The NAO said that despite the government’s most recent efforts, much of the essential work needed to maintain flows across the UK-EU border — especially the Dover-Calais strait — were not in place.

It said government would not have time ahead of 31 October to ensure it had all the infrastructure and staff needed to help reduce queues on lorries as they approach the Channel ports by introducing mandatory readiness checks to identify and divert hauliers who are not ready for French customs Recommended Brexit UK small companies hit by Brexit fatigue and confusion.

It also found that by the start of this month, only 25,000 of the 150,000 to 250,000 traders that may need to make a customs declaration on day one of a no-deal Brexit had registered with the government’s “Transitional Simplified Procedures” scheme. This is designed to allow registered businesses to delay submitting customs declarations and paying of customs duties on imports from the EU to the UK. 

The NAO also cast doubt about the effectiveness of the £100m communications campaign launched by the government last month to help businesses prepare for EU exit.

“At this late stage and with ongoing uncertainty about the prospect of no-deal on October 31, this may have limited impact,” it said.

One of the key conclusions of the NAO report is that on top of all the uncertainties within the UK’s own planning procedures, many factors affecting border traffic in the event of no deal are outside Whitehall’s control.

The NAO said that three factors — business readiness, the extent to which EU member states impose controls and the arrangements for the Northern Ireland border — were key variables.  Trade Secrets Trade Secrets is the FT’s must-read daily briefing on the changing face of international trade and globalisation. 

“Although the government has actions under way to influence these, mitigating these risks is now, to some extent, out of its control,” says the NAO. “It is impossible to know exactly what would happen at the border in the event of no deal on 31 October 2019.” 

Gareth Davies, the head of the NAO said that preparing the UK border for EU exit with or without a deal was extremely complex and has required a huge amount of work from many government departments, agencies and third parties such as traders.

“Despite their efforts, significant risks remain which may have consequences for the public and businesses.”

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