Brexit: The UK is delaying border controls to soften the blow to a declining economy

The UK government on Friday withdrew plans to introduce full border checks on EU imports on 1 January 2021 in hopes of easing pressure on companies already strayed from coronavirus and uncertainty terms of trade with the largest export market in the country.
Since February run days after Brexit came into force, he said full control would be established for the start of the new year. It is now planned to be phased out, under pressure from the collapsing UK economy and businesses that cannot afford another body strike.
The UK has also confirmed that it will not extend it post-Brexit a transitional period with the European Union after the end of the year, which means that businesses and traders may still have to face the shock of new tariffs and other trade barriers if a new trade agreement with Brussels is not completed in the next few months.

Under the new border arrangements, companies in the UK importing standard goods from the European Union, such as electronics and clothing, will have the option of postponing full customs declarations and any tariff payments for a maximum of six months. Plant and animal products, such as meat, honey, milk and eggs, will be subject to customs inspections starting in April. By July, companies will have to give a full declaration and pay tariffs at the point of import.

The government said in a statement that its approach would “give the industry more time to reach the necessary arrangements”.

The reversal of the policy comes after business groups in the UK in recent weeks have pushed for more clarity about border agreements and terms of future trade with the European Union, warning that companies already weakened by coronavirus outbreaks will not be able to withstand another shock.

“The logistics industry is extremely grateful for the measures announced by the British government to launch the introduction of new trade arrangements,” said Elizabeth de Jong, policy director at the Freight Transport Association. “They have listened to us and worried us and enabled our sector to recover from the Covid-19 pandemic and plan effectively so that we can continue to trade effectively with Europe,” she added.

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The government has also announced that it will build new border facilities, including in ports and inland locations, so that customs checks can be carried out, and unveiled a £ 50m ($ 63m) package to better facilitate customs brokers, such as brokers, cargo ships, freight forwarders and package operators, for preparation

Trucks pass through the port of Dover in Great Britain.
The stakes are high at the border: the UK is currently enjoying frictionless trade with the European Union, and any delay from new customs checks at border crossings would lead to the chaos that manufacturing companies in Britain – like carmakers – rely on.

The biggest crossing point is expected to be the crossing of the English Channel between Dover and the French city of Calais. The Port of Dover overflowed 2.5 million trucks in 2018, and another 1.7 million passed through the nearby Eurotunnel below the canal.

Industry groups have warned of this food and medicines they may not reach the shelves if there are long delays at the border. The European Union is the UK’s largest trading partner accounting for 45% of total UK exports in 2018 and 53% of imports, the National Statistics Office said. Europe is also the leading foreign supplier of food in the UK, accounting for more than a quarter of the value of food consumed in the UK.

Double the joy ahead?

Britain is in a precarious economic position.

The country is already heading for the worst coronavirus decline of all large economies, according to the Organization for Economic Co-operation and Development. GDP collapsed by about 20% in April, the first full month of closure.

British companies have so far borrowed almost £ 35bn ($ 44.4bn) under government coronavirus relief programs, according to data released by the UK Treasury on Tuesday. And nearly 9 million people – about 27% of the workforce – rely on the state to pay all or part of their salary at a cost of £ 19.6 billion ($ 22.2 billion) so far.

Britain's largest companies are cutting tens of thousands of jobs. Millions more are at risk

There is now a growing fear that companies could face two blows from the coronavirus and sever remaining ties with the European Union without a trade defense agreement. Talks on a new trade agreement have made little progress.

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“Negotiators appear to be stuck and lagging behind on key issues such as governance, equal rules, fishing and, critically, the Northern Irish border,” economists at Berenberg Bank said in a note Friday.

The Organization for Economic Co-operation and Development expects the British economy to shrink by 11.5% this year, even if a basic free trade agreement is reached with the European Union and a second wave of contagion is avoided.

A sharp rise in coronavirus cases, coupled with an expensive final exit from the European Union, would only create a deeper decline.

– Luke McGee contributed to the reporting.

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