Boris Johnson has defended exorbitant post-Brexit costs of trading with Europe by saying they’re comparatively small compared to the cost of coronavirus.
British companies trading with Europe will have to absorb a post-Brexit bureaucracy burden and fill in an extra 215 million customs declarations at a cost of about £7 billion a year, a 206-page government document revealed today in the FT shows.
The plans, laid out by Michael Gove, included an admission that “customs declarations are complicated”.
But despite concerns that new IT, customs experts and lorry parks will not be ready by the end of the year, Mr Gove and prime minister Boris Johnson insisted that the “Project Fear” warnings of anti-Brexit campaigners would turn out to be ill-founded.
Mr Johnson claimed that the Covid-19 crisis had put the costs associated with Brexit “very much into perspective”.
The deadly coronavirus crisis is expected to cost the government more than £300 billion this financial year, according to the Office for Budget Responsibility (OBR).
Spending on measures to support public services, businesses and individuals amid the coronavirus has risen to nearly £190 billion, figures released by the Treasury show.
This includes the Job Retention Scheme, where struggling employers can put their workers on furlough. This means they temporarily stop working, the government pays them 80 per cent of their wages, and their employers can stop paying them for a few months instead of getting rid of them altogether.
The government will also raise less tax than it hoped because of the crisis. Unemployed or furloughed workers pay less income tax, businesses pay less tax if their profits are lower, and shoppers pay less VAT if they buy less.
A report by accountants BDO and the Centre for Economics and Business Research (CEBR) has forecast four more years of pain before the economy recovers to pre-crisis levels.
The analysis states that GDP will fall 11 per cent this year – on the proviso that there is no large-scale second wave of coronavirus or another national lockdown.
It warns that another peak in the pandemic and lockdown would send Britain’s GDP tumbling 19 per cent this year and see exports fall by 23 per cent.
The study cautions that the “dual threat” of the pandemic and Brexit to international trade will hammer the UK’s export industry in either scenario.
It raises the question; why do it at all?