Brexit red tape has slashed £17 billion from UK trade with the European Union in just three months as businesses struggle to keep up with new costs, a spending watchdog revealed.
Despite promises from the Leave campaign that red tape would fade after Britain quit the EU, UK companies have had to fill in an astonishing 48 million customs declarations and 140,000 export health certificates in the eight months since the UK quit the single market and customs union , according to the National Audit Office (NAO).
The watchdog’s report also warned that the government could face action for not “complying with international trading rules” – but that when controls are finally introduced, they will bring “significant risks” to traders.
UK exporters ‘at disadvantage’
UK exporters are at a “disadvantage” and there are “extra burdens” at the border and “elsewhere in the supply chain”, it added – a sentiment echoed by exporters unhappy with the costs and barriers erected by Boris Johnson’s deal.
Despite ministers claiming the issues are “teething problems”, the Office for Budget Responsibility suggested Brexit will cause GDP to fall by four per cent – twice the loss from the Covid pandemic.
The NAO blamed Brexit for a sharp decline in trade between the UK and EU this year. “Total trade in goods between the UK and EU was 15 per cent (£17bn) less in Quarter 2 when compared with the equivalent quarter in 2018,” the watchdog’s report said.
By contrast, over the same period, “UK trade with the rest of the world was up one per cent (£1bn)”. In September, it emerged Brexit-related trade barriers rose to £2.2 billion in UK business costs in the first half of this year.
Hilary Benn, the Labour MP who leads the cross-party UK Trade and Business Commission, said: “This report confirms what we have been hearing this year from businesses.
“Far from creating opportunities, Brexit has burdened firms with increased costs and labour shortages, as well as mountains of red tape and pointless form-filling.
“Lost trade means less business, fewer jobs and lower incomes across the UK, so what is the government going to do to remove the barriers to trade with our closest neighbours and biggest market that they have imposed?”
Gareth Davies, the head of the NAO, said: “Much more work is needed to put in place a model for the border that reduces the risk of non-compliance with international trading rules, does not require any temporary fixes, and is less complicated and burdensome for border users.”
Trade barriers and costs
An additional £600 million in costs has hit British importers since January according to HMRC data seen by The Guardian. The cause has been identified as Brexit, because the taxes were not required for EU imports when the Britain was in the single market.
Data from the Insolvency Service shows 1,446 firm insolvencies in England and Wales in September, up from 1,349 in August and 928 from the same time in 2020.
According to the Bank of England, higher borrowing during the pandemic is to blame for putting more businesses at risk.
“As the economy recovers and government support, including restrictions on winding up orders, falls away, business insolvencies are expected to increase from historically low levels,” it said.