As concern about a lack of trade deal heightens, Times writers examine how different sectors could be affected
Passports
Britons make almost 60 million trips a year into mainland Europe (Graeme Paton writes). From January 1 the process is likely to get considerably more complicated with little progress so far between UK and EU negotiators on frictionless travel across the Channel. As things stand visa-free travel is practically a certainty in 2021, although British citizens will need at least six months left on their passport.
All UK motorists will also need an international driving permit — in addition to the UK licence — to take to the road in the EU. The documents cost £5.50 and three different types are used in the EU depending on the country. Travelling with pets is very likely to be more onerous with a new four-month process that includes having cat or dog blood samples tested at an EU laboratory.
The City
Almost all hope has faded in the City for a last-minute deal to grant financial firms smooth access to the EU and it is preparing for a hard Brexit (Katherine Griffiths writes).
Many British financial bodies are looking to relocate to Europe after Brexit
Many British financial bodies are looking to relocate to Europe after Brexit
Banks had already shifted hundreds of employees away from London after the 2016 vote. They are now expected to move business that they had hoped they could continue to do from the UK out of London and into Frankfurt, Paris and elsewhere to comply with more restrictive rules due to come in after the transition period.
The City’s main lobbying effort has been for the UK to be granted “equivalence” by the EU, an agreement that because its rules and regulations are likely to remain similar to those of the bloc, there should be easy cross-border access on both sides. A target of making a deal this summer was missed. Without one UK banks, insurers and asset managers must work in the bloc under WTO rules.
Medicines
Last month the government wrote to medicine suppliers warning them that a “reasonable worst case scenario” for Brexit without a trade deal was for “significant disruption” to trade across the Channel for six months with a “particular risk” during the first three months (Oliver Wright writes).
As a large percentage of the UK’s medical supplies come from the EU, ministers urged them to make sure that they had at least six weeks of supplies and to investigate alternative shipping routes. This is easier said than done.
The pharmaceutical industry has told the government that disruption caused by Covid has meant stockpiles have been “used up” and that it might not be possible to replenish them before December. The government recognises “that global supply chains are under significant pressure” but urged drug companies to do everything they can to hold stock in advance.
Ministers are ready to buy capacity on ferries that could be used to ship in medical supplies. There are concerns that patients might hoard medicine, exacerbating supply problems.
Trade deals
As Britain negotiates with the EU, it is also seeking to preserve access to a myriad of the bloc’s agreements with trading partners around the world (Callum Jones writes).
Regardless of whether a deal with Brussels materialises, the future of trade terms with more than two dozen countries — from Canada and Mexico to Turkey and Vietnam — hangs in the balance. Liam Fox, international trade secretary under Theresa May, notoriously declared that “up to 40” of these accords would be ready at “one second after midnight” as Brexit took place. The reality has proved cumbersome.
Whitehall negotiators have made some progress, reaching agreement with economies including South Korea and Switzerland. For weeks, officials have said they are about to roll over the EU deal with Japan. The UK agreement is expected to mirror Tokyo’s pact with Brussels.
Immigration
Hiring skilled workers from the EU is going to become much more bureaucratic for firms under a new points-based system that makes citizens of the bloc seeking to work and study here abide by rules existing for non-EEA applicants (Richard Ford writes).
The Home Office is planning to open a route for those wanting to come to work and study in the autumn in preparation for the full introduction of the new immigration system at the beginning of January.
Britain would be unable to deport migrants to Europe until a bilateral agreement was negotiated
People coming to work will be required to meet a skills and salary threshold for which they will be awarded points. They will also need to have a job offer from a sponsored employer. Employers who are not already a licensed sponsor and think they will need to hire overseas have been encouraged to apply before January 1.
Ministers have yet to reach any agreement on a replacement for the Dublin Regulation, which potentially enables the UK to return cross-Channel migrants who arrive here having previously claimed asylum in an EU state. EU negotiators are understood to have rejected a request for a new migration pact that would allow the government to return migrants after January 1. In the event of no pact, Britain will be unable to return migrants until it negotiates bilateral deals with EU states after the transition period ends.
Law and order
The law enforcement and intelligence community have repeatedly warned of the risks a no-deal Brexit poses (John Simpson writes). Police would lose instant access to the EU database of wanted suspects, convictions, DNA and fingerprints, potentially making the UK a soft target for criminals on the run.
Britain’s access to pan-European criminal databases and shared arrest warrants would be limited in the event of no-deal
TIMES
Chief constables have also raised concerns about losing the European arrest warrant (EAW), which the UK said it was not seeking to maintain access to. This may slow Britain’s ability to return foreign suspects to the continent or bring them back. The forces would have to revert to slower conventions to share intelligence and enable extradition, meaning procedures that take days may take weeks. Lord Evans of Weardale, director-general of MI5 from 2007 to 2013, said there was “no security upside” to Brexit.
With or without a deal, the UK faces a long negotiation through which it intends to replicate these intelligence sharing tools and the EAW, which police and security services say are vital.
Food supply
Even with a deal all food and agricultural products crossing between Britain and Europe will be subject to new veterinary and food safety checks, which could lead to long delays at the border (Oliver Wright writes).
But without a deal they will also be subject to tariffs, and EU tariffs on most agricultural products can be very high — dairy products average about 35 per cent and for some meat products, such as lamb, they are more than 40 per cent.
Given that exports of food and drink to Europe are worth £13.2 billion a year this could have a devastating impact on the sustainability of the sector in the long run. The Food and Drink Federation believes that no deal would result in tariffs averaging 23 per cent or more on goods, meaning that the £35 billion of imports would become more expensive.
The timing of the UK’s exit, December, is widely seen by retailers as one of the worst dates possible as they will have only just made it out of peak Christmas trading and there will not be as much time to replenish warehouses that are already fairly full at that time of the year. The seasonality of food production means that the UK will also be more reliant on imports than in the spring and summer, when British farm production is higher.
Ian Wright, chief executive of the Food and Drink Federation, said: “While our industry has demonstrated remarkable resilience during the Covid-19 pandemic, businesses will have used up the stockpiles they acquired for a no-deal Brexit to cope with increased demand, redeployed their Brexit staff to manage the crisis and crucially now have less cash and time to prepare.”
Data
It might sound technical but one of the most profound potential impacts of a no-deal Brexit would be on the data that flows between Britain and the EU every day powering everything from shopping to banking to the back-office functions of businesses (Oliver Wright writes).
If there is no deal it will become illegal for EU servers to send personal data to the UK. There are ways for companies to get round this, and many larger operators have contingency plans. But the government does not know how widespread this is and how strictly Brussels will try to police the rules. The extent of the problem was revealed last year in an audit revealing that Whitehall relied upon servers based in Ireland that could be switched off in the event of a no deal. This has subsequently been rectified.
Manufacturing
Tariffs are the most immediate risk to factories but the other consequences of no deal, such as a blizzard of red tape and threats to supply chains, would present a litany of further issues (Callum Jones writes).
Major players have quietly but diligently maintained their previous no-deal stockpiles to try to avoid significant disruption in the event of border friction. Sourcing European parts would become more costly without a deal, due to the default tariffs the UK will collect on imports from all countries with which it has not struck a trade agreement.
In turn, finished products shipped to the EU would have levies of their own. More than half of the one million cars Britain exported last year were bound for EU markets — under WTO terms, these would face a duty of 10 per cent. “What we’re trying to do now is about damage limitation,” one executive said earlier this year.
Hospitality
The hospitality industry is in a very different state than it was this time last year, when contingency planning was underway for a no-deal Brexit (Dominic Walsh writes). The social and economic impact of Covid-19 means that businesses are far less resilient and less able to withstand further economic disruption.
Kate Nicholls, chief executive of the trade body UK Hospitality, said: “Billions have been wiped off the sector’s value, cash reserves have run dry, and most hospitality businesses will be operating at no better than break-even for the foreseeable future.”
With most businesses still in survival mode, contingency planning is unlikely to be a priority, especially as many head office personnel who would usually deal with such issues have been furloughed.
One of the biggest threats from no deal is food supply and prices, raising the spectre of food inflation. The other critical factor facing the industry, which before Covid-19 generated an annual turnover of £130 billion, is consumer confidence. “This remains fragile and will be critical to the hospitality recovery,” Ms Nicholls said.
Another big issue is immigration, with worries that the long-term impact of the pandemic will be a loss of talent and skills. No deal will make it more difficult for UK businesses to plug their gaps with European workers.
Freight
Even if there is a deal with the European Union the 10,000 lorries that cross the Channel every day will still face new customs, security and veterinary checks that could cause some disruption to trade (Oliver Wright writes).
If drivers do not have the right paperwork these goods could be turned back at the Calais border causing chaos and long tailbacks. The Road Haulage Association, which represents freight companies, has been particularly critical of the government’s “slow progress” on measures to keep goods moving across the border.
If there is no deal this situation will be exacerbated. This is because there will be restrictions put in place on the number of UK lorries that are allowed to enter the EU altogether. The government will have a limited number of permits to award to UK haulage firms, and about two thirds of firms will not be able to operate in the EU at all. This would have a severe impact on both the haulage industry and all the companies that rely upon it to deliver UK exports to Europe.
– The Times