Abu Dhabi, UAEFriday 20 September 2019

Impact of Brexit is higher tariffs, vehicle checks and shortages of medicine

From tourist flights to car parts, no deal would mean significant new paperwork and long-run disruption

Poster calling for "No Border" between Ireland and Northern Ireland. Technology alone is not the solution, Karen Wheeler says. AFP
Poster calling for "No Border" between Ireland and Northern Ireland. Technology alone is not the solution, Karen Wheeler says. AFP

A blizzard of official documents and academic reports has detailed the impact of Britain leaving the EU without a deal. Here is a breakdown of the sector-by-consequences of cutting ties without a new framework in place.

Citizens and Residents

British passport holders will be able to travel to the EU for 90 days visa-free. However their passports will need to have six months validity. Travellers will join slower rest of world waiting lanes. Europeans resident in the UK can apply for leave to remain and patchwork of similar schemes is being adopted by member countries across the EU. In the long-run visa regimes will replace freedom of movement.

Trade and Customs

From November 1 goods from the UK entering the EU will be subject to customs duties, as will products travelling the other way. Brussels said on Wednesday that average EU tariffs are 2.7 per cent and 8.1 percent for agricultural goods. Exports and imports of heavily regulated products, including medicines will be subject to new checks and controls. The annual customs declarations lodged with the government is expected to rise to 250 million from 55 million.

Freight movements

The EU announced Wednesday that it would extend a temporary regulation government basic road freight and passenger connectivity to July 31, 2020. As part of no-deal planning the government has announced plans for stockpiles of medicines as well urging businesses to build buffer stocks of foods and components. However the British government’s own figures shows less than 10 per cent of business had registered for the transitional custom procedures.

Cars and manufactured goods

The UK in a Changing Europe think tank issued a report Wednesday that said no-deal Brexit posed a significant challenge to just in time production system. In particular the car and aerospace industries would be hard hit. An three-fifths of the components in a British made car are imported, mainly from the EU. Citing Honda alone with two million components used per day, every 15 minutes of customs delay affecting its shipments would cost it £850,000 a year.

Services

Britain is the world’s second largest services exported and almost half its £283 billion go to the EU. A government White Paper in 2018 estimated that up to 18 per cent of this trade would be wiped out by leaving the European-wide services agreements, including those of the EU. The EU has not extended so-called passporting arrangements for British financial services, meaning firms will have to reapply for access. British qualified accountants or lawyers could find their credentials are no longer recognised.

Fisheries and agriculture

Brussels said on Wednesday that it was prepared to extend reciprocal access for fishing vessels and catch quotas until the end of 2020 even in the event of no-deal. Once the UK leaves it will become a independent coastal state responsible for its own exclusive economic zone extending 200 miles from its coast line. Food producers face particular disruption. The end of October is the low point of domestic food output. Most UK fresh food is imported from the EU at that point with Spain providing a fifth of all fruit and vegetables sold.

Cross-border Ireland

As the only part of the UK with a land border with the EU, Northern Ireland faces particular structural challenges from no-deal. A third of the value of trade across the border is in goods that will attract tariffs of 15 per cent or more. Cross-border supply chains face significant disruption form newly imposed food and environmental standard inspection regimes. The EU has reiterated the so-backstop is the only way to keep this trade flowing.

Security

European security integration is set to be ripped up by a no-deal exit. Britain will exit the European Arrest Warrant, Europol and the Schengen information database network. Flows of data between crime agencies would be curtailed as automatic access to information networks is cut off. London would be forced to revert to 1950s era conventions on extradition, which would increase use of the courts and cost of expulsions.

Air travel and tourism

Arrangements on air travel are set to be extended under the current arrangements until October 24, according to Wednesday’s EU document. Elsewhere visitors will face changes. The validity of the European Health Insurance Card granting guaranteed access to health care will lapse. Drivers will need to obtain an international driving permit and cars display a GB sticker. Mobile phone roaming and bank card charges are predicted to rise.

Utilities and industry

Under the rules of the European Single Market, EU governments face restrictions on nationalisation and state control of private industry. Departure would mean that the British parliament could adopt a much more interventionist role in the economy. With an election looming the opposition Labour Party is on the doorstep of power. It has plans to nationalise utilities, such as the water and energy companies.

Updated: September 5, 2019 07:08 AM

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