UK Markets closed

UK faces 'serious' border disruption as government under fire over Brexit planning

Tom Belger
·Finance and policy reporter
·3-min read
MPs are warning of Brexit disruption. Photo: Denis Charlet/Pool via Reuters
MPs are warning of Brexit disruption. Photo: Denis Charlet/Pool via Reuters

MPs have accused the UK government of taking “limited responsibility” for preventing border disruption with just weeks until the end of the Brexit transition period.

Border systems are still being developed and plans to handle potential disruption to key goods remain “unclear” despite the significant changes looming for trade from 31 December.

An influential group of MPs warned on Wednesday: “We remain extremely concerned about the risk of serious disruption and delay at the short Channel crossings.”

Firms will have to adapt to new rules for imports and exports next year even if a trade agreement is struck this month, in a stark reversal of decades of closer economic integration with the bloc.

READ MORE: EU stockpiles UK factory goods amid fears of border disruption

Britain will leave the customs union and single market, marking an end to the ‘frictionless’ trade it has enjoyed as an EU member and during the current transition phase. EU firms have begun stockpiling UK goods in case the changes spark chaos in cross-border supply chains.

But the government “has not provided key information needed by businesses to prepare,” according to industry bodies cited in the public accounts committee’s (PAC) latest report.

MPs said prime minister Boris Johnson’s administration had also not done enough to ensure firms and citizens were ready.

WATCH: Brexit talks continue in London

Meg Hillier, a Labour MP and chair of the committee, said the government must learn the lessons from its “shocking lack of economic planning” for a pandemic, despite its high ranking on official risk lists.

“We’re paying for that approach in the UK’s response to the COVID-19 pandemic and can only hope that we are not now facing another catastrophe, at the border in four weeks’ time.

“A year after the oven ready deal, we have more of a cold turkey and businesses and consumers do not know what to be prepared for.”

READ MORE: Pound in focus as UK minister says fishing rights

MPs sounded the alarm over high staff turnover among those working on Brexit planning, and accused the government of spending “too much” on consultants rather than using and building civil service expertise.

Business secretary Alok Sharma faced further political pressure on Tuesday from another group of MPs over its Brexit planning. Darren Jones, chair of the business, energy and industrial strategy committee, wrote to Sharma expressing “deep regret” the minister had reportedly refused to attend a hearing over business preparedness.

“It sends a dismal signal to British business that their secretary of state isn’t even willing to discuss what his Department are doing to support businesses as they face unprecedented challenges in dealing with the impact of COVID-19 and in preparing for the end of the transition period,” he said.

WATCH: New unit launched to monitor border disruption

A survey of 1,000 UK firms this week found 51% expected international trade to become more difficult over the next year, amid both Brexit changes and the pandemic.

The poll by HSBC, part of its global Navigator report, found an 18 percentage point decline in optimism about overseas trade among UK firms compared to last year. It marked the joint steepest drop in Europe alongside France, where firms are also among the most exposed to Brexit disruption.

68% of British firms said they were positive about international trade, however, higher than in Germany and France.

While prime minister Boris Johnson’s revised withdrawal agreement paved the way for more significant disruption to EU trade than his predecessor Theresa May’s, it also gave more scope for the UK government to negotiate trade deals independently of the bloc.

Negotiations are ongoing this week over a deal to limit the scale of disruption and damage to economic and other ties between the UK and EU member states.

Ireland’s prime minister Michal Martin said on Tuesday he was “hopeful” a deal could be reached this week, but cabinet office minister Michael Gove highlighted continued stumbling blocks including fishing rights.