Brexit delays in the EU: how bad are delays for companies with new rules and laws?

Truckloads of British pork waiting to be shipped to Germany and stuffed into bratwurst perished in British ports this month while queuing for customs clearance.

It’s a story that has barely made a ripple in the UK as the country’s first month outside the EU was overshadowed by the coronavirus and the grim milestone of 100,000 dead.

With freight traffic well below normal, partly due to stockpiling, the overall Brexit effects were also less visibly dramatic than expected. The government avoided the embarrassment of several thousand trucks queuing in Kent and was able to claim victory for its planning.

Companies tell a different story, a story of bureaucracy and delays that add until higher costs. Elsewhere, hidden under the impact of virus locks, Brexit seeped into all parts of the economy, affecting everyone from online shoppers to fishermen, car dealers, bankers and farmers.

Some problems may be short-lived as companies get the hang of the situation. But while the UK is almost trying to untangle an economic and trade relationship for half a century, some frictions will linger, creating a hindrance economic growth.

“People call a lot of the problems teething,” said Sam Lowe, Senior Fellow at the Center for European Reform in London. “But as companies will learn how to fill out forms, we must recognize that new bureaucracy is the new reality and much more to come.”

Shortage in the UK

The virus and Brexit can cause factories to run out of raw materials

Source: Confederation of British Industry

The series of headaches in the first weeks of Brexit was sometimes ridiculous, such as the seizure of a truck by Dutch customs. ham sandwich because of the new rules for the import of meat and dairy products. Popular sweet Percy Pig hit the headlines when retailer Marks & Spencer Group Plc was faced with new rules on exports to Ireland.

But the changed landscape also poses a question of survival, especially for companies relying on hassle-free and cheap transportation of products inside and outside the continent.

“When the EU went to get ham sandwiches from truck drivers, saying they don’t know if the meat meets EU standards, it was insignificant and ridiculous,” said Essex-based pig farmer Fergus Howie, who runs Wicks Manor export company. “It’s really disappointing that they are so bureaucratic at the border, especially when their trade to us is normal.”

January may not even have told an accurate trading picture. Many companies stockpiled to avoid any frontier chaos in early 2021, but those inventories won’t last long.

Government officials recognize that the number of logging failures may increase as flows across the channel return to normal levels of about 75% currently, although they do not expect to reach the worst-case scenarios modeled last year. They also say some issues are related to the need for truck drivers to pass a negative Covid test instead of Brexit.

But companies say that what was once simple is now cumbersome. Documentation – especially for loads of different types of goods from multiple suppliers, also known as groupage – is one of the problems causing delays.

Some carriers returned empty to the continent to skip queues, increasing freight rates for six weeks straight while others avoided Britain altogether. Transport volume between France and the UK fell as companies bypassed Britain by taking direct routes to Europe, as launched Monday between Dublin and Amsterdam. And that’s likely to get worse when Britain introduces its own customs controls in June.

Cabinet Secretary Michael Gove said this week that goods are “effectively” flowing. Where there are problems, the government will “pull out all the stops to help them adapt.”

Outside the ports there was also a shock to the consumer. British shoppers buying online in the EU faces import duties. That may fuel inflation concerns: households’ prospects for price increases are already high.

Price Panic

Inflation expectations of British consumers remain high

Source: Citigroup, YouGov

For Britain, the urge to leave the EU was to escape bureaucracy and crushing rules, and Prime Minister Boris Johnson got the chance this week to show the benefits. With the EU’s Covid-19 vaccination campaign lagging far behind that of the UK, Johnson pointed to a “speed and agility” that would not have been possible in the bloc.

“We’ve been able to do things differently and better in a way,” he told lawmakers.

The UK left almost without any trade deal, not reaching an agreement until Christmas Eve. Even then, some industries are in the dark about their future.

Finance was not involved in the discussions and is now counting on a separate agreement that could take years. In the meantime, the City of London is seeing parts of its business – such as stocks and shares derivatives trading – slipping.

Vacancies disappearing

Since the Brexit vote, vacancies in London have fallen every year

Source: Morgan McKinley

In the first month, problems were especially acute for Northern Ireland, which was a major stumbling block in Brexit talks. Images of empty supermarket shelves appeared in early January, and J Sainsbury Plc was forced to stock rival products.

The Northern Ireland Border Controversy unexpectedly surfaced late Friday when the EU said it would trigger a Brexit clause as part of new vaccine export controls, before subsequently rolling back.

Even fishing, which became a symbol of Britain’s struggle to ‘take back control’ and a bottleneck in negotiations, fell victim early on, despite pro-Brexit lawmaker Jacob Rees-Mogg insisting that the fish are happier now in British waters’. “

The trade agreement regained rights to far fewer British waters than hoped for. Some fishermen will eventually get smaller quotas for the fish that are popular at home, such as the fry with cod and haddock. Exporters are particularly hard hit because their shipments tend to group different products that require the most different new papers: customs, health and catch certificates.

Ultimately, the UK took a gamble and trade with its largest and closest commercial partner in the hope it will be able to enforce new and better trade deals with other countries. For companies shuttling goods between the EU and the UK, the consequences are only starting to become apparent.

“Proximity matters,” said the former British trade negotiator David Henig. “Seamless trade is a thing of the past.”

– With help from Dara Doyle and Alex Morales