The UK’s final post-Brexit border checks will cost food importers hundreds of millions of pounds under the government’s own internal estimates, adding to upward pressure on inflation.
(Bloomberg) — The UK’s final post-Brexit border checks will cost food importers hundreds of millions of pounds under the government’s own internal estimates, adding to upward pressure on inflation.
British officials told industry executives to expect the new draft Target Operating Model, which includes proposals on how food and fresh produce from the European Union is evaluated when it enters the country, will cost importers up to £400 million ($498 million) a year, according to two people at the meetings who asked not to be identified.
The estimate highlights how frictions in the trading relationship with the European Union will linger as the UK rolls out its final and much-delayed border checks on the bloc’s imports from October. Prime Minister Rishi Sunak’s government is also trying to smooth passport checks for British people visiting the EU and the arrangements at Northern Ireland’s land border.
Higher costs will pile more misery on shoppers who are already suffering the worst cost-of-living crisis in generations and the fastest increase in grocery bills in more than 45 years. It also adds to headaches for the Bank of England, which is trying to reduce inflation.
“Everything about this is massively inflationary on food costs,” Shane Brennan, chief executive of the Cold Chain Federation, said in an interview. Brennan was at one of the Cabinet Office meetings but said he was unaware of the cost estimate.
Politico was first to report the £400 million cost estimate.
Food industry officials have warned the proposals for the UK’s final stage of post-Brexit border checks mean “significant” parts of the supply chain for restaurants and grocery stores will be cut off, adding to an upward spiral in prices.
The UK government released a draft of its Target Operating Model on import controls earlier this month. That included checks affecting animal and plant imports, which will face different levels of scrutiny depending on the risk they’re judged to pose.
“The actual direct cost will be significant and, assuming there is a significant retraction of the businesses that are willing to supply the UK, then there’s a reduction in supply which will create inflationary pressure,” Brennan said.
Government officials told executives at meetings organized by the Cabinet Office in recent weeks that the measures will cost £400 million more than the current arrangements. This differs from the published TOM documents, which said the new checks would reduce costs for businesses by £400 million relative to its original post-Brexit import model.
A Cabinet Office spokesperson said it is engaging with industry on the proposals to explore the costs of implementing the new model.
The new border rules “will create a new world-class system to provide protection from security and biosecurity threats, while preventing delays at the border through a reduction in the need for physical checks and by ensuring that checks take place away from ports where this is needed to allow traffic to flow freely,” the spokesperson said.
“Many low-risk goods will not require any certificates or physical checks, which will make them significantly easier to import than under the previously proposed model or the EU model.”
The government delayed the introduction of the final set of controls on EU imports for a fourth time in April 2022. Jacob Rees-Mogg, who at the time was the Brexit opportunities minister, promised to harness technology to smooth the new checks. The EU has already imposed full checks on imports of British goods.
Industry bosses warned that the measures will be too onerous for many smaller EU importers, ramping up costs and threatening to damage supply to the supermarket shelves. One industry leader said the blow from the changes is likely to be much higher than even the government expects.
Brennan warned that the “veterinary control requirement on all medium risk goods will collapse significant proportions of the supply chain.”
“The thing about medium risk is that basically means anything that’s meat or dairy,” he said. “If you are in the meat industry or someone who wants to buy and trade product of animal origin, then you’ve got major disruption coming.”
Read more:
- Sunak Wants EU Passport Checks Deal After Post-Brexit Chaos
- Surging UK Prices Defy Efforts by Sunak, BOE to Tame Inflation
–With assistance from Andrew Atkinson.
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