Rotting fish, lost business and piles of red tape. The reality of Brexit hits Britain

24/01/2021 1:43:00 AM

Brexit might be done and dusted, but its specter will loom over Britain for a long time yet.

.CNN ANALYSIS: Brexit might be done and dusted, but its specter will loom over Britain for a long time yet.

Brexit might be done and dusted, but its specter will loom over Britain for a long time yet.

For all the fanfare made when Prime Minister Boris Johnson struck a trade deal with Brussels on Christmas Eve, the inescapable reality of leaving the European Union's customs and regulatory territory has already started to bite.Less than a month after the UK finally left the European Union’s single market, warnings of trade disruptions by those who wanted to remain a member of the trade bloc are becoming reality for some businesses.Jan 22, 2021 10:25 PM PHT Nissan will source more batteries from Britain to avoid tariffs on electric cars after the United Kingdom's trade deal with the European Union, which a senior executive told Reuters turned Brexit from a risk into an opportunity for its factory in northeast England.Jan 26, 2021 9:00 PM PHT Reuters At Tricker's, a 192 year-old maker of English luxury shoes beloved by Prince Charles and Japanese fashionistas, relief at averting a no-deal Brexit quickly turned to dismay at the new price of doing business with the European Union.

The fact that the deal was only agreed one week before it came into effect meant that dangerous disruption to countless businesses that relied on seamless supply chains was inevitable.Despite Johnson's repeated claims that Brexit is a great opportunity for British exporters and would lead to some kind of revival for free trade, the reality is very different: freshly caught fish are reportedly being left to rot as exporters cannot get them to the European Union while logistics firms are skeptical that both importing and exporting is going to be viable for many businesses in the long term.That impact is so profound that even UK’s Department for International Trade has encouraged exporters to open offices in the EU to sidestep cumbersome and costly customs regulations, according to reports by The Observer newspaper and BBC.Fallout from Brexit and the coronavirus pandemic is pushing the UK economy into a sharp contraction in the first quarter, according to data published Friday by IHS Markit, meaning a double-dip recession is now on the cards.Japan's Nissan makes about 30,000 Leaf electric cars at its Sunderland factory, most with a locally-sourced 40 kilowatt-hour battery.While it should be a source of embarrassment for the PM that his deal has made life very difficult for many of the industries that he has championed post-Brexit, Johnson's public statements on the matter suggest he is oblivious to the reality that many are facing.“But secondly the shortage of trucks willing to make the journey is also putting huge pressure on the supply chain.When asked for comment on the immediate consequences of the trade barriers implemented as a result of the deal, a UK government spokesperson told CNN Business: "From the outset we were clear that we would be leaving the customs union and single market which meant that there would be new processes after the end of the Transition Period.British exporters must now comply with different VAT rates across the bloc's 27 member states.

These were widely communicated through our public information campaign.“It is with great sadness we must stop sending our cheese to the EU,” the company tweeted."It will take a few months," Gupta told Reuters." The starkest example of what Brexit is doing to British business comes from Scotland's fishing industry.Despite the government's claims during Brexit negotiations that the fishing industry was very near the top of its priority list, there is a real fear that the entire industry could collapse in a matter of weeks.” Co-founder Simon Spurrell told the BBC the company was now looking to set up a hub in France, and abandoned its plans to build a warehouse in Macclesfield in the north of England that would have employed 30 people."We had an entirely new system for exporters to get their heads around that hadn't been tested prior to use..The result, somewhat inevitably, was that it started going wrong straight away," says James Withers, chief executive of Scotland Food and Drink.Prime Minister Boris Johnson’s government reached a last-minute deal on Christmas Eve with Brussels on an EU-UK Trade Cooperation Agreement, avoiding an immediate and damaging crash-out with full tariffs..

"This isn't as simple as an IT glitch that needs fixing.In a matter of days, we went from being able to send fresh food to Madrid with a single cover sheet of paperwork.The agreement also still needs to be approved by the European Parliament." Asked about trade disruption, Gupta told reporters:"When I look at how Nissan has come out from the crisis of [a] tsunami, earthquake, flood, last week snow, tornadoes.Now there are roughly 26 steps for each transaction." The real-world impact of this means that some exporters have had the European market cut off overnight.Last week, Scottish seafood exporters drove their trucks to Westminster to protest having to leave their scallops and langoustines to rot in port.Almost every day, pictures circulate on social media of virtually empty fish markets and boats tied up.the startup problem which we are seeing in the ports is peanuts."To deal with Brexit on top of what we've been experiencing with coronavirus has been certainly a double whammy.

Withers has heard stories of Scottish boats sailing 48 hours to process catches in Denmark, just to get their stock into the single market.Exporters need to complete seven documents just to send a single truck of goods across the English Channel.In an industry where profit margins are often thin, every hour spent working around red tape is critical to both the freshness of the product and the productivity of the business.When pushed on the matter, Johnson has said that he thinks these are merely teething issues and not the fault of his deal or the barriers it's created.The fishing community had been keen supporters of Brexit with the promise they could take back control of the waters around the UK..His spokesman explains that the government is providing £23 million ($31.4 million) for the industry to ease the process.Even the world of showbiz has joined the chorus of protests over Johnson’s Brexit deal with international stars like Elton John, Sting and Ed Sheeran crying foul over the UK’s refusal to allow visa-free music tours to the EU.Martin Mason, managing director of British luxury shoemaker Tricker's, discusses European Union customers affected by new tax costs and an increase in product returns, in Northampton, Britain, January 25, 2021.

When asked specifically about the fishing industry earlier this week, Johnson once again denied that the problems facing exporters had anything to do with his deal, but instead were due to restaurants being shut because of the pandemic.It's okay.However, Withers believes that money"will run out quickly" and without coming to some new sort of arrangement with the European Union,"this sort of exporting might not be sustainable" and will"almost certainly lead to the very people the [Prime Minister] said he was fighting for losing their jobs.“British musicians, dancers, actors and their support staff have been shamefully failed by their government,” it said." The scenes in Scotland might not be as dramatic as the food shortages and lines of backlogged trucks that many predicted post-Brexit, but the damage is already showing up in economic data.Brexit issues are exacerbating a slowdown caused by pandemic restrictions, IHS Markit said on Friday, and lengthening suppliers' delivery times.” Trade experts said customs checks at borders, and a mountain of new paperwork was the new reality.In contrast, Ford, which imports everything it sells in Britain, has raised some UK prices due to US-sourced content.While 33% of manufacturers reporting a drop in exports linked the decline directly to the pandemic, some 60% linked the drop to Brexit, according to IHS.Other British companies, who opted not to pay the VAT themselves, are now facing a wave of returned goods from disgruntled customers.

ForagePlus, a horse nutrition business based in Wales, had dozens of parcels bound for Europe returned this week due to glitches in its shipping company's new systems for processing customs information.“It is true that, had there been more time to prepare, some of the problems of conforming with the new situation could have been dealt with."It's just a shambles basically," ForagePlus founder Sarah Braithwaite told CNN Business, adding that it had been nearly a month since the company was able to ship anything into Europe due to the pandemic and Brexit.There is real concern among trucking companies and logistics firms that things are going to get much worse in the coming months.It wouldn’t have changed the underlying reality of there being new barriers to trade.Multiple sources within the affected sectors told CNN Business that British consumers won't feel much disruption yet, as January is a typically quiet month at ports and the United Kingdom did stockpile goods to prepare for a possible no-deal Brexit.But that could change as trade volumes increase over the coming months, putting border systems under additional pressure.So far the best news for Downing Street was the Japanese carmaker Nissan’s decision not to pull its manufacturing plant from Sunderland as it had threatened to do if there wasn’t an agreement on tariffs.A deal – which accounts for a third of Tricker's business compared with about 15% which comes from the EU – would be a help and an agreement with the United States might lower its import tariffs.

This could result in a gradual reduction in the variety of fresh produce available to British shoppers.According to a spokesperson for Logistics UK,"in the short term, while supply chains sort themselves out, it may be that we return to a more seasonal approach to shopping or have a more limited range to choose from.“The protocol means that as part of the UK, Northern Ireland is going to have this unique competitive advantage in the world,” Lewis said on the BBC’s Question Time." This could mean that after decades of fresh fruit and vegetables at all times of the year, Brits might have to start seeing strawberries as summer treat, for example.The region where food shortages could fast become a real issue is Northern Ireland, where images of empty supermarket shelves have circulated on social media.” Brexit critics were quick to point out this was an admission that leaving the EU would make the rest of the country poorer.Due to the unique position of Northern Ireland, it has split with the rest of the United Kingdom and remained inside the EU single market, making it a lot harder to import food from Great Britain..

Simon Coveney, Ireland's foreign affairs minister, said that images showing empty shelves in Northern Irish supermarkets were"clearly a Brexit issue" and"part of the reality" of the United Kingdom leaving the European Union.Shipping from Ireland’s Rosslare port to Cherbourg in France rose by 500 per cent in the first weeks of January as hauliers sidestepped the faster land bridge route across England to avoid red tape.Trade experts are concerned about the gradual decline in EU-UK trade."The slow decline is in some ways more dangerous than sudden food shortages," says David Henig, UK director at the European Centre For International Political Economy.“The paperwork is complicated, especially if it is around health certificates for plant and animal products."I am particularly concerned about exporters being unable to fulfill orders and losing customers or just giving up completely.The long-term message that sends could be very damaging for inward investment," he adds.” Another trade expert David Henig, from the European Centre For International Political Economy, said “as yet we aren’t able to have a serious conversation about what to do next”.

There are legitimate questions as to why things have been so bad, despite the United Kingdom having years to prepare for the cliff edge."We've known about the risks of not being prepared for five years," says Anna Jerzewska, founder of Trade and Borders, which assists exporters and importers across Europe.“So take the hit? Change policy towards the EU? Encourage as many as possible to come from Hong Kong?” Hopes that the UK would be able to conclude a quick trade deal with the US was crushed with the defeat of Brexit ally Donald Trump in November’s US presidential elections.Jerzewska says that her clients are reporting numerous complaints, but most worryingly a failure of support from the UK government to resolve their issues."Getting an answer to a technical question could take 48 hours, which is obviously a problem for fresh produce.Biden has made it known he did not think Brexit was a good idea.People in the call centers can only really point to guidance, but the guidance isn't currently fit for purpose.

" And despite everyone involved working hard to resolve the early issues, Jerzewska fears this won't be enough to save struggling British exporters.Around 60 other trade deals have been signed, but experts say they mainly rolled over the trading terms the UK enjoyed under EU trade deals with other countries."At the moment it's shock, but the underlying costs are not going away.And for traders who work at thin profit margins, an extra couple of percentage points could be the end." Many of Johnson's Conservative lawmakers are struggling with how to reply to their constituents."The party gave us lines to read out when the deal came through presenting it as a huge success, but as time goes on, it's clear there's quite a lot of nasty surprises in Pandora's box," says one Conservative member of parliament who is not permitted to speak on-the-record about government policy outside of their brief.

Others say that small local businesses are up in arms at finding out that if they want to visit Europe to sell their goods, they might need a work permit from foreign governments or paperwork allowing them to move goods into the European Union.There isn't much optimism that things will improve in the near future among moderate Conservatives.Many are extremely worried that the gradual decline caused by Brexit will ultimately lead to Europe trying to lure Britain's golden goose to the continent: The City of London, which hosts many of the world's biggest banks."Once the fog of Covid lifts, financial and professional services firms looking to expand globally will see London and realize that we have given up quite a lot of our competitive advantage," says the Conservative member of parliament.The trade deal Johnson signed bizarrely didn't address either of these, despite them making up a huge part of the UK economy.

Banks and traders in London are now hoping to be granted"equivalence" by the European Union, a designation that would allow them to continue serving EU clients with limited disruption."If no deal is reached on equivalence for financial services or data, that could kickstart a squeeze on the city from EU regulators and leave businesses wondering what the benefit of setting up in London is if you want to serve the European market," says Henig.The European Union and United Kingdom are supposed to reach an agreement in March on financial services, but the mood music from both London and Brussels right now suggests that the United Kingdom is unlikely to be pulled back into the EU regulatory sphere any time soon.Many Brexiteer lawmakers felt vindicated when the world didn't fall off its axis in the immediate aftermath of Brexit, as plenty of the anti-Brexiteers' worst nightmares failed to materialize.However, if the current trajectory of gradual decline continues, the slide could become uncontrollable.

Those politicians will have to explain to voters why they encouraged their prime minister to pursue such a hard Brexit despite the warnings of its consequences.They have a couple of months before things get really bad to put pressure on Johnson to start engaging with the reality of Brexit a little more.The question that matters most to those struggling is how bad things must get before those who most vocally supported Brexit are willing to break ranks and admit the truth: that leaving the world's largest trading bloc has immediate consequences.This story was first published on CNN.com '.

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