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Brexit impact ‘will get worse’ with supermarket shop to cost more and some EU products vanishing from shelves

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The full impact of Brexit on both businesses and consumers will not be felt until next year with shortages set to worsen in sectors ranging from food to building materials, a leading customs expert has claimed, writes David Parsley.

Simon Sutcliffe, a partner at tax and advisory firm Blick Rothenberg, believes Government delays in implementing post-Brexit customs laws have “softened the impact” of the UK’s exit from the European Union, and that “things will get worse” when they are finally brought in from January 2022.

Despite leaving the EU on 1 January 2020, the Government has delayed many of the customs laws that were due to come into force last year.

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The requirement for pre-notification of arrival in the UK of agri-food imports will be introduced on 1 January 2022 as opposed to the already delayed date of 1 October this year.

The new requirements for Export Health Certificates will now be introduced even later, on 1 July next year.

Controls to protect animals and plants from diseases, pests, or contaminants will also be delayed until 1 July 2022, as will the requirement for Safety and Security declarations on imports.

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When these laws, which also include the customs declaration system, are brought in Mr Sutcliffe believes the food and raw material shortages already experienced to some extent – especially in Northern Ireland – will worsen on the mainland with some products disappearing from supermarket shelves for the foreseeable future.

Sutcliffe, who was among the first to predict the truck driver shortage and border issues in Northern Ireland, said: “Once these extra extensions come to an end we’re going to be in a whole world of pain until importers get to grips with it just like the exporters from the UK to the EU have had to already.

“The cost of the bureaucracy involved will mean many retailers will simply not stock some products from the EU any longer.

If you know your fruit delivery is stuck in a UK port for 10 days waiting to be checked, then you’re not going to bother importing it as it’ll go off before it even reaches the store.

“We’re looking at all kinds of products disappearing from supermarkets, from salami to cheeses, because they will just be too expensive to ship in. While a few boutique delicatessens may stock these products, they will become a more expensive and be harder to find.”

He added that the supermarket shop will also face steep price rises as the cost of importing even basic products such as fresh meat, milk, eggs and vegetables will cost retailers more.

“The retailers will not have much choice but to pass on at least some of the increased costs to the consumer,” said Sutcliffe. “In other words, consumers will have less choice and will have to pay more for their weekly shop.”

A spokesman for No 10 said: “We want businesses to focus on their recovery from the pandemic rather than have to deal with new requirements at the border, which is why we’ve set out a pragmatic new timetable for introducing full border controls.

“Businesses will now have more time to prepare for these controls which will be phased in throughout 2022.”

Brexit

French minister Beaune: French fishermen must not pay for UK's Brexit failure

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Fishing trawlers are docked at Boulogne-sur-Mer after Britain and the European Union brokered a last-minute post-Brexit trade deal, northern France, December 28, 2020. REUTERS/Charles Platiau

French European Affairs Minister Clement Beaune said today (8 October) that French fishermen must not pay for the failure of Britain's exit from the European Union, writes Dominique Vidalon, Reuters.

"They failed on Brexit. It was a bad choice. Threatening us, threatening our fishermen, will not settle their supply of turkey at Christmas," Beaune told BFM TV.

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"We will hold firm. The Brits need us to sell their products," he added.

Earlier this week, Prime Minister Jean Castex said France was ready to review bilateral cooperation with Britain if London continues to ignore the agreement reached over fishing rights in its post-Brexit trading relationship with the European Union. Read more.

Paris is infuriated by London's refusal to grant what it considers the full number of licenses due to French fishing boats to operate in Britain's territorial waters, and is threatening retaliatory measures.

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French fishermen have also said they could block the northern port of Calais and Channel Tunnel rail link, both major transit points for trade between Britain and continental Europe, if London does not grant more fishing licences in the next 17 days.

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Brexit cold turkey - UK tries to kick 25-year imported labour habit

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The United Kingdom's 25-year-old model of importing cheap labour has been up-ended by Brexit and COVID-19, sowing the seeds for a 1970s-style winter of discontent complete with worker shortages, spiralling wage demands and price rises, writes Guy Faulconbridge.

Leaving the European Union, followed by the chaos of the biggest public health crisis in a century, has plunged the world's fifth-largest economy into a sudden attempt to kick its addiction to cheap imported labour.

Prime Minister Boris Johnson's Brexit experiment - unique among major economies - has further strained supply chains already creaking globally for everything from pork and poultry to medicines and milk.

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Wages, and thus prices, will have to rise. Read more.

The longer-term impact on growth, Johnson's political fortunes and the United Kingdom's on-off relationship with the European Union is unclear.

"It's really a big turning point for the UK and an opportunity for us to go in a different direction," Johnson, 57, said when asked about the labour shortages.

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"What I won't do is go back to the old failed model of low wages, low skills, supported by uncontrolled immigration."

He said Britons had voted for change in the 2016 Brexit referendum and again in 2019, when a landslide election win made Johnson the most powerful Conservative prime minister since Margaret Thatcher.

Stagnant wages, he said, would have to rise - for some, the economic logic behind the Brexit vote. Johnson has bluntly told business leaders in closed meetings to pay workers more.

"Taking back control" of immigration was a key message of the Brexit campaign, which the Johnson-led "Leave" campaign narrowly won. He later promised to protect the country from the "job-destroying machine" of the European Union.

Johnson casts his Brexit gamble as an "adjustment" though opponents say he is dressing up a labour shortage as a golden opportunity for workers to increase their wages.

But restricting immigration amounts to a generational change in the United Kingdom's economic policy, right after the pandemic triggered a 10% contraction in 2020, the worst in more than 300 years.

As the EU expanded eastward after the 1989 fall of the Berlin Wall, Britain and other major European economies welcomed millions of migrants from countries like Poland, which joined the bloc in 2004.

No-one really knows how many people came: in mid-2021, the British government said it had received more than 6 million applications from EU nationals for settlement, more than double the number it believed were in the country in 2016.

After Brexit, the government stopped giving priority to EU citizens over people from elsewhere.

Brexit prompted many eastern European workers - including around 25,000 truckers - to leave the country just as around 40,000 truck licence tests were halted due to the pandemic.

Britain is now short of about 100,000 truckers, leading to queues at gas stations and worries about getting food into supermarkets, with a lack of butchers and warehouse workers also causing concern.

"Wages will have to go up, so prices for everything we deliver, everything you buy on the shelves, will have to go up too," said Craig Holness, a British trucker with 27 years experience.

Wages have already soared: a heavy goods vehicle (HGV) Class 1 driver job was being advertised for £75,000 ($102,500) per annum, the highest the recruiter had ever heard of.

The Bank of England said last month that CPI inflation was set to rise to 4% late this year, "owing largely to developments in energy and goods prices", and that the case for raising interest rates from historic lows appeared to have strengthened.

It cited evidence that "recruitment difficulties had become more widespread and acute", which the Bank's agents had attributed "to a combination of factors, including demand recovering more quickly than expected and a reduction in the availability of EU workers".

Johnson's ministers have repeatedly dismissed the idea that Britain is heading for a "winter of discontent" like that which helped Thatcher to power in 1979, with spiralling wage demands, inflation and power shortages - or even that Brexit is factor.

"Our country has been running at a comparatively low rate of wage growth for a long time - basically stagnant wages and totally stagnant productivity - and that is because, chronically, we have failed to invest in people, we have failed to invest in equipment and you've seen wages flat," Johnson said on Sunday.

But he did not explain how wage stagnation and poor productivity would be solved by a mixture of lower immigration and higher wages that fuel inflation which eats into real wages.

It was also unclear how higher prices would affect an economy that is consumer-driven and increasingly reliant on supply chains whose tentacles wind across Europe and beyond.

For some observers, the United Kingdom has come full-circle: it joined the European club in the 1970s as the sick man of Europe and its exit, many European politicians clearly hope, will lead it back into a cautionary dead-end.

Johnson's legacy will depend on proving them wrong.

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EU ministers authorize the start of negotiations on Gibraltar

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The Council today (5 October) adopted a decision authorizing the opening of negotiations for an EU-UK agreement in respect of Gibraltar, as well as the negotiating directives. This will be the basis for the European Commission’s negotiations with the UK.

The most contentious issue will be freedom of movement and border management, more than 15,000 people live in Spain and work in Gibraltar, making up around 50% of Gibraltar’s workforce. The territory welcomes around 10 million tourists per year, and accounts for around a quarter of its economy.

Chief Minister Fabien Picardo (Socialist Labour Party) was meant to be hosting an evening at this week’s Conservative Party conference, but was unable to attend because he has contracted COVID-19. Nevertheless, he thanks the British Prime Minister Boris Johnson for giving “a barnstorming speech in support of ‘The Rock!’”.

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Gibraltar was not included in the scope of the EU-UK Trade and Cooperation Agreement. The European Commission presented its proposal for negotiating guidelines on 20 July. At the time, then Foreign Secretary Dominic Raab, said that he could not negotiate on this basis as it would undermine the UK's sovereignty over Gibraltar: "We have consistently showed pragmatism and flexibility in the search for arrangements that work for all sides, and we are disappointed that this has not been reciprocated. We urge the EU to think again."

The UK’s Chief Negotiator with the EU, Lord Frost, has recently threatened to trigger Article 16 of the Ireland/Northern Ireland Protocol (NIP) in early November, if proposals the UK has made in a “command paper” do not lead to a renegotiation of the NIP. The Commission is unlikely to respond positively to the UK’s hectoring approach, which also adds tensions to UK-EU relations even before negotiations with Gibraltar commence.

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It is foreseen that Spain, as the neighbouring Schengen member state, will be responsible as regards the European Union for the implementation of the Schengen agreement. The Commission acknowledges that with regard to external border control, member states can require technical and operational support from Frontex. Spain has already expressed its full intention to ask Frontex for assistance. The territory's Chief Minister has already said that this is how the border entry and exit points will likely be managed.

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