Johnson says lots of Brexit teething problems, employers fear worse to come

By William Schomberg

LONDON (Reuters) - Prime Minister Boris Johnson said there were lots of "teething problems" with the country's adjustment to life outside the European Union's single market and business groups warned things might get worse soon.

"Of course there are there are teething problems in lots of areas and that's inevitable because this is a big change," Johnson said when asked about the problems faced by the fishing sector on a visit to Scotland on Thursday.

"But be in no doubt, over the medium term and much more over the long term, the changes are very, very beneficial for Scottish fishing," he said, adding that eventually Britain would be able to fish all the stocks in its territorial waters.

Scotland's fishing industry has been hit hard by delays in getting shellfish and other fresh produce to markets in the EU since the introduction of post-Brexit checks on Jan. 1.

Britain's government has promised an extra 23 million pounds ($31.6 million) of funding to compensate the sector.

Other industries have also felt the impact of longer delivery times and tax changes.

The government said businesses overall had adapted well to the new trading relationship with border traffic increasing daily and no longer any disruption at British ports.

Compliance was very high with vehicles turned back at the border - for failing to meet customs requirements or lack of a negative coronavirus test - accounting for less than 5% of traffic.

Michael Gove, a senior minister in Johnson's cabinet, pledged to "work hand in hand" with businesses.

But after a meeting with Gove, the heads of five big employers' groups issued a joint statement highlighting the "range and scale of the challenges" for business caused by Brexit and they said the disruption might intensify soon.

"It was recognised by all parties that the level of activity remained low post-Christmas and that further problems might appear as volumes begin to increase once stockpiled supplies were exhausted," the statement said.

"Concerns were also raised on further disruption to trade flows when grace periods fall away in the coming months."

Last month, Britain and the EU struck a deal which avoided the imposition of tariffs and quotas, but London's decision to leave the bloc's customs union and single market has led to more paperwork and other hindrances to exports and imports.

Brexit supporters say the new barriers to business with the EU will be offset by trade deals that London wants to strike with other countries around the world.

But the government's economics forecasters have estimated that Britain's economy will be 4% smaller in 15 years' time than it would have been had it stayed in the EU.

(Reporting by William Schomberg in London; Additional reporting by Guy Faulconbridge; editing by Grant McCool)