12:59 GMT08 March 2021
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    The UK government is not ready to respond to inquiries by British exporters and business lobbies over significant issues at the borders following Brexit, says economist Dr Sheikh Selim, suggesting that Britons should brace themselves for another full year of low economic growth and low productivity.

    The UK government has announced it doesn't recognise data from the Road Haulage Association (RHA) indicating that loads to the EU have reduced by as much as 68% in comparison to the same period last year. On the contrary, London is emphasising that freight flows were “up to 95% or even 100% of normal levels on some days in January”. 

    The RHA was not the only organisation that blamed "complex bureaucracy" for post-Brexit trade disruptions: the British five (B5) major business lobby groups also warned the government about "significant difficulties" at UK ports. The groups expressed fears that the situation might worsen when the EU grace period ends. British small business owners have also raised their voices complaining about red tape issues at the border and suggesting that the EU is punishing Britons for leaving the bloc.

    War of Words Between UK Gov't and Business Groups

    "We wrote to Mr Gove on 1 February setting out our concerns", says the Road Haulage Association, referring to its letter to Cabinet Office Minister Michael Gove that urged the ministers to intervene and "address the enormous challenges facing critical supply chains as a result of the new trading relationship with the European Union. The RHA underscored that "the current situation should not be considered a consequence of COVID": "If anything, the absence of the pandemic would have made it worse, because volumes would be greater".

    ​However, Mark Simmonds, head of policy and external affairs at the British Ports Association, argues that the situation is not that dire and is improving steadily.

    "Volumes at UK ports are slowly returning to normal as stockpiles run down and traders adjust to new rules", he asserts. "There have not been any serious or sustained issues reported at UK ports so far. We may have to wait to see what the impact has been on exporting industries although we have been concerned at reports of issues that some are experiencing".

    According to Simmonds, UK ports that handle significant EU traffic are focused on preparing for additional import controls which are being phased in for the first six months of this year.

    ​Trade Issues Were Caused by Last-Minute UK-EU Deal

    The war of words between government officials and business groups is unlikely to solve the post-Brexit dilemma: UK businesses failed to make necessary arrangements because the EU-UK trade deal was a last minute action, according to Dr Sheikh Selim, a programme director for economics at the University of Birmingham. 

    "The Brexit deal was closed very late and after numerous iterations, which did not leave sufficient time and scope for businesses to prepare well enough to adapt to new trading arrangements, including new systems for companies and officials in the British province of Northern Ireland", he says.

    ​The pandemic and lockdowns caused by a new COVID variant have complicated UK companies' "struggle" with new customs declarations and health certifications, according to the economist. In a word, the government’s "extensive iteration over the Brexit [trade] deal and finally settling one so late left the exporters under-prepared to tackle the revised port regulations", the academic stresses. On the other hand, although the government allowed a six-month adjustment window for import regulations to take effect, exporters have not had a similar space to adapt their export plan.

    ​"Another intuitive reason may be the quest for British companies to move entirely or partly off shore, to the EU (mainly the Netherlands), in pursuit of avoiding the complications and the costs of the new export regulations", Selim notes, suggesting that it might leave them "with little incentive to invest in adaptation of export plans under the new regulations’ regime". As a result, the decline in UK exports to the EU may become irrecoverable and even permanent, the academic believes. 

    How Could British Gov't Prevent Red Tape and Border Hurdles?

    In its letter to Gove, the RHA notes that in the run-up to 31 December 2020, it had repeatedly warned the government of potential challenges and called upon the authorities to act in order to lessen difficulties. However these calls apparently fell on deaf ears, according to the business group.

    "I believe Michael Gove’s preparation for the new year under the new arrangements is nothing different than the UK exporters’ preparation, because the delayed and rather confusingly iterated Brexit deal did not leave enough time and scope for the government (too) to actually predict such a consequence, and more importantly, the magnitude of the consequence", suggests Dr Sheikh Selim.

    It is unlikely that the British government has a response to this shock, which is why the queries are put on hold, he explains. The delay in striking a trade deal inflicted major damage on the UK as well as the inability to prepare a simpler algorithm of the export and import arrangements keeping the key stakes consistent throughout the negotiation process, according to the economist. "Since these were missing in the process, it was difficult to set out an achievable plan for the adaptation of new export regulations", says Selim.

    Apparently, a more practical and efficient way to cope with the emerging problem could have been to allow the six-month settlement window both ways, which could help the government buy some time to come up with a more comprehensive and resilient set of FAQs for British exporters, he believes.

    Britons should prepare themselves for "another full year of low economic growth, low productivity, prolonged trade deficits and loss of local businesses and value chains", the academic forecasts, warning that "unless the government acts swiftly and efficiently, and without any vested interest, some of the losses may be irrecoverable, or too costly to recover".

    Related:

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    Tags:
    Boris Johnson, trade deal, red tape, Brexit, ports, United Kingdom
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