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European Affairs Updates – 14 January

By January 13, 2022No Comments

British Manufacturers issue warning over spiralling costs due to Brexit changes in 2022

UK manufacturing firms are sounding the alarm over the effect of Brexit changes in 2022 leading to soaring costs. Companies are expecting further customs delays and red tape (including rule-of-origin forms and customs declarations) as a result of Brexit to be among the biggest challenges facing their operations in 2022. Manufacturing firm industry body ‘Make UK’ said that the after-effects of the UK departing the EU were undermining any optimism from companies.

A survey of 228 companies showed that two-thirds of industrial company leaders said Brexit had moderately or significantly hampered their business. More than half are expecting further damage customs delays due to import checks and changes to product labelling. For example, new changes regarding imports of products of animal origin could lead to speciality food imports facing a 70% decline. Despite the concerns over Brexit and the pandemic, the Make UK survey showed two-thirds of companies regarded the UK as a competitive location for manufacturing.

Some lorries bringing goods from the EU to the UK have been stuck at the French port of Calais for four days. Logistics bosses have blamed disruption on “terrible” new Brexit red tape. Customs experts have put some of the blame on the UK Government’s new IT system, which means all imports from the EU must be processed using the Goods Vehicle Movement Service (GVMS) managed by HMRC. Some drivers’ reference codes have not been able to be accepted, causing delays at the border.

“Ongoing uncertainty around Omicron is providing a further blow to UK businesses which have already battled a string of supply chain issues, the threat of further COVID restrictions and inflationary pressures this past year”, said Kaley Crossthwaite, a partner at accountants BDO.


Lead negotiator Liz Truss prepared to override Northern Ireland section of Brexit agreement

Foreign Secretary Liz Truss has signalled a willingness to override elements of the Brexit Trade and Co-Operation Agreement deal regarding Northern Ireland. Ms Truss has said she will not accept a deal that leads to checks on British goods entering Northern Ireland.

In July 2020, the UK proposed that goods from Great Britain which are due to stay in Northern Ireland would face minimal paperwork and no checks while there. The EU responded in October with its own proposals that said checks on goods would be substantially reduced, but not eliminated. Looming over the negotiations regarding the Northern Ireland Protocol, which ensures a hard border on the island of Ireland is avoided, is the repeated threat from the UK to trigger the Article 16 mechanism of the protocol. Article 16 sets out “the process for taking unilateral “safeguard” measures if either the EU or UK concludes that the deal is leading to serious practical problems or causing diversion of trade”, said BBC News. The EU’s ambassador to the UK, Mr João Vale de Almeida, has said that the UK’s behaviour regarding Article 16 as a threat in negotiations is not helpful.

Ms Truss said: “I want a negotiated solution, but if we have to use legitimate provisions including Article 16, I am willing to do that”.

Ms Truss is due to meet with her European Union counterpart, Maroš Šefčovič, for two days of talks next week. Also taking place next week is a meeting between Ms Truss and Northern Irish business and political leaders. Democratic Unionist Party (DUP) leader Sir Jeffrey Donaldson has said his meeting with Ms Truss would have a “major bearing” on his next steps.