Backlash: UK Economy still struggling with consequences of Brexit –Report

*The UK Government is still is unable to overcome the telling consequences of Brexit, as the country reportedly struggles to come to terms with the ‘painful impacts of leaving the European Union’ January 2020, resulting in increasing costs on businesses, trade, investment, and economic growth

Isola Moses | ConsumerConnect

The United Kingdom (UK) Government is still struggling to come to terms with the painful consequences of leaving the European Union (EU) January 2020, which has piled costs on the country’s businesses and weighed on trade, investment and, ultimately, economic growth.

ConsumerConnect learnt the development in terms of “foot-dragging”, has delayed health and safety checks on food imports from the EU for the fifth time in three years amid fears that the extra controls would push up food prices and disrupt vital supplies in the economy.

Brexit has already contributed to Britain’s particularly high inflation by introducing friction into the country’s most important trading relationship, and hitting the value of the pound, which has made imports more expensive, reports CNN.

A recent study by the London School of Economics (LSE) found that Brexit was responsible for about a third of UK food price inflation since 2019, adding nearly £7 billion ($8.8 billion) to Britain’s grocery bill, report said.

It is also noted that the UK Government is anxious to avoid doing anything that makes matters worse in this regard.

The announcement Tuesday, August 29, 2023, also highlighted long-running concerns that border checks on food imports from the EU — which supplies 28 percent of the food consumed in Britain — could choke off supplies, according to report.

The government disclosed  that extending the deadlines would “give stakeholders additional time to prepare for the new checks.”

Britain’s inflation rate cooled more than expected to the lowest level in over a year, a sign that soaring interest rates may be starting to curtail the worst wage-price spiral in the Group of Seven nations.

Report further indicates the country’s inflation slows to 6.8 percent, but services are getting even more expensive.

In the announcement Tuesday, under the revised timetable, health certification for “high-risk food” and “medium-risk” animal and plant products, which was previously due to be introduced at the end of October, will be pushed back to January 2024.

Physical inspections have been pushed back to the end of April, with the final controls on EU imports — safety and security declarations — postponed to October 2024, report said.

Some UK industry groups welcomed the latest delays to border checks, which, they said, will add costs and friction to supply chains.

Shane Brennan, Chief Executive Officer (CEO) of the Cold Chain Federation, said: “These Brexit checks will fuel food price inflation whenever they are brought in, and so the longer they are held off the better.”

The association — representing businesses that deliver perishable produce, which needs chilled storage — is worried that some smaller EU suppliers may simply stop exporting their products to the United Kingdom in the face of new and costly bureaucracy.

However, industry groups also urged the UK Government to provide certainty for businesses, which have repeatedly prepared for checks only to see deadlines deferred.

Although the delay was the “right decision,” Brennan said it was “yet another blow” to the government’s credibility, and “this confusion at the top” would make it even more difficult to ensure EU businesses were ready to abide by the new rules.

Andrew Opie, Director of food and sustainability at the British Retail Consortium, a trade association good said: “We need to ensure EU exporters, who have already seen multiple postponements of (UK) checks, will thoroughly prepare for January and April checks in the belief that controls will be implemented.”

On supply fears in markets

UK food producers have been subject to full border controls on products heading into the EU countries since January 2021, when Britain exited the EU’s vast internal market and customs union.

In turn, checks on EU food coming into the UK were supposed to come into effect simultaneously, but were first delayed in the middle of the pandemic.

The UK economy remains in a fragile state, after Covid-19 was swiftly followed by the twin ills of high inflation and rising interest rates, according to report.

Inflation makes ‘Britain’s debt the costliest among rich economies’

The UK inflation rate is the highest in the G7, with consumer prices rising 6.8 percent July this year, compared with a year ago.

UK Prime Minister Rishi Sunak has pledged to halve inflation this year to around 5 percent.

In the government’s statement Tuesday, it stated that the latest timetable for border controls took into account “the small potential impact on inflation” and the government’s “firm commitment to bring the rate down.”

By its estimates, new checks are expected to add less than 0.2 percentage points to the rate of food inflation over three years.

Beyond inflation, food supply disruptions remain a lingering concern in the UK, which imports just under half of all the food it consumes.

Earlier this year, major UK supermarkets had to ration some fruit and vegetables after poor weather in key growing regions led to a collapse in imports, report said.

A spokesperson for the Food and Drink Federation, which represents UK food manufacturers, said the latest delays to border checks were “unfortunate but necessary, to ensure that the appropriate infrastructure is in place so that supplies of food and drink from the EU aren’t disrupted.”

In an analysis published earlier this month, the FDF found that UK-EU trade in food and drink dropped substantially in the first quarter of 2021 and took nearly two years to recover in the economy.

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