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25 January 2021updated 05 Oct 2023 7:59am

How Boris Johnson’s Brexit deal is proving a nightmare for UK businesses

Far from providing the “frictionless” trade that was promised, the deal is hampering British firms with forests of red tape.

By Martin Fletcher

“Fuck business,” Boris Johnson told a private gathering of diplomats back in 2018. It turns out he was deadly serious.

On Christmas Eve the Prime Minister secured a trade deal with the EU. He proclaimed it a triumph for “cakeism” that would liberate the UK from the dead hand of European regulation while maintaining access to the single market. It would ensure that “there will be no non-tariff barriers to trade”. 

A month on those claims have proved to be yet another Johnsonian fantasy. Far from providing the “frictionless” trade that he promised, the deal is hampering British business with forests of red tape that never existed when we were EU members: border inspections, health checks, customs duties, VAT payments, administration fees, “groupage” restrictions, rules of origin conundrums, conformity assessments and reams of complex paperwork.

Our seafood and meat industries see their produce rotting while it is held up at ports. Our musicians and artists complain that they can no longer tour Europe without multiple visas and work permits. Hauliers howl in anguish as their lorries run gauntlets of exceedingly complex paperwork at the EU’s frontiers, and some have abandoned the unequal struggle.

The City of London is losing billions of euros’ worth of EU share dealing. Car companies have cut production because of port delays and supply chain interruptions. Many small and medium-sized firms of the sort the Tories claim to champion have ceased exporting to the EU altogether. Supermarket chains struggle to supply their outlets in Northern Ireland because of the new border in the Irish Sea. Even online commerce has been hit by punitive new charges.

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British businesses will spend £7.5bn a year handling customs declarations alone, and will have to fill in an additional 215 million import and export declarations, HM Customs and Excise officials told the House of Commons Public Accounts Committee last week. 

[See also: Brexit is no cause for celebration – this is a moment of national shame]  

Things have reached such a pass that Nissan’s announcement last week that the future of its Sunderland plant was secure was hailed as very good news – pre-Brexit, its future was never in doubt. And on Sunday came the revelation that the government’s own trade advisers are telling struggling businesses to set up separate companies inside the EU to circumvent the new barriers. 

Johnson and his ministers seek to dismiss those barriers as “teething problems”, “temporary difficulties” and “bumpy moments”, but they are nothing of the sort. They are embedded deep in the 1,246-page deal which – despite it being the most important legislation to come before parliament in decades – the government gave MPs and peers one solitary day to scrutinise.

Indeed it was obvious from the outset that the EU was never going to allow us unimpeded access to the single market after Brexit. As Dutch border officials told a British lorry driver after confiscating his ham sandwich a few days ago: “Welcome to the Brexit”

But I’m being a gloomster and a doomster. None of the above matters because we have regained the Holy Grail – our nation’s sacred sovereignty. 

We will get our blue passports back (and we will have plenty of time to admire them as we queue at EU frontiers). Our fish may no longer be exportable but, as Jacob Rees-Mogg pointed out, “they’re now British fish and better and happier fish for it”. More importantly we have the freedom finally to implement a brand new national economic strategy to replace the old one, which was to make the UK the most attractive destination for foreign investors seeking access to the EU’s giant single market.

[See also: How Boris Johnson’s government “took a wrecking ball” to the music industry]

And what is the new strategy for ensuring that Britain will, in Johnson’s words, “prosper mightily”? It’s a very good question. To the extent that one exists at all it seems to consist of turning the UK into a nimble, low-tax, low regulation Singapore-on-Thames, but there are serious problems with that.

First, fully four-and-a-half-years after the EU referendum, that strategy is still at an embryonic stage. Last week Kwasi Kwarteng, the Business Secretary, launched a review of workers’ rights, including the working time directive that Conservatives detest, while Johnson held a call with 250 business leaders inviting ideas for regulatory and legislative reforms to promote economic growth. Liz Truss, the International Trade Secretary, has managed to secure some 60 bilateral free trade deals, but most are rollovers of EU trade agreements that replicate the status quo ante while the chances of negotiating a speedy US deal have all but vanished with Donald Trump’s departure.

Second, deregulation is not what British business leaders really want. The more the UK diverges from the EU’s labour market and environmental standards the more barriers to free trade Brussels is entitled to erect under Johnson’s Christmas Eve trade deal – and the European single market, with its 440 million people, presently accounts for around 43 per cent of British exports.

Third, a rolling back of employment rights is the last thing the blue-collar workers of the so-called “Red Wall” constituencies of the Midlands and north of England want – and they are the voters who propelled Johnson to victory in last December’s general election.

This lack of a coherent economic strategy helps explain why sterling is weak, UK equities lag behind their US and European counterparts, and the “pent-up tidal wave of investment into our country” that Johnson promised in the Conservatives’ 2019 general election manifesto has singularly failed to materialise. 

Meanwhile our government seems more concerned with fighting childish ideological battles than ensuring the economic health of the nation. Blithely disregarding the fact the UK sends ambassadors to several international organisations, including the United Nations and the World Trade Organisation, it is refusing to grant ambassadorial status to the head of the EU delegation in London. 

At a time when it is manifestly in our interest to start rebuilding relations with Brussels, a more petty, petulant and counterproductive move is hard to imagine.

[See also: Brexit emptied so many serious political minds of sense, on both sides of the issue. Now let it be]

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