Brexit has become the ghost that haunts every room in the United Kingdom, and it continues to scare some of its inhabitants while others—politicians, mainly—play to pretend that it no longer exists. Brexit is behind inflation that has taken longer to fall than in the rest of Europe, or a languid economy that still does not know if it is advancing or regressing. And above all, behind a poisoned debate on irregular immigration and the Sunak Government's determination to deport new arrivals to Rwanda at all costs. Three years have passed since December 24, 2020 in which London and Brussels finally closed a Trade and Cooperation Agreement (CCA) that prevented the United Kingdom from abruptly leaving the European Union. The uncertainty of the new scenario did not disappear with a signature. Quite the contrary.
José Sol has been living in British territory for years. His sign Spanish Ham Master, dedicated to the import and sale of acorn-fed Iberian ham and to cutting courses and demonstrations at events—some as select as the Ascot horse races or boxes in the Premier League—it has been a success. It is a small company, but it serves as an example to see how the majority of Spanish companies that trade with the United Kingdom are subject to a constant exercise of prevention and damage reduction. “For months now I have had a manager working on the new documentation that they are going to require from 2024,” explains Sol. “My day to day life is overwhelming me and I can't pay attention to the paperwork, but that's why I have someone working in it,” he says.
On January 31, one of the obligations that the ACC imposed on the parties will finally come into force: sanitary and phytosanitary controls on agricultural and livestock products that travel to both sides of the English Channel. The EU immediately applied them to all products coming from the island. The United Kingdom has already delayed the entry into force of these controls up to five times, aware of the chaos that could be caused to its importers, and above all due to the fear that the products in the shopping basket, already inflated this year due to runaway inflation, they will skyrocket.
Sources from the Spanish Economic and Commercial Office in London point out that what happens in just over a month will be very important when it comes to verifying, once again, whether or not the obstacles created by Brexit can be overcome.
At the end of August, the British Government presented its new Border Target Operating Model (Operational Model for Border Control Objectives), an apparently more simplified method for carrying out security and health controls on imports and exports, which includes smart seals and GPS locators on many of the products.
The new controls will be rolled out in phases over the next year. From January 31, health certificates for medium-risk animal and plant products from the EU will be introduced. It will not be until April 30 – if the announced deadlines are finally met – when British customs officials will begin to carry out physical and identity checks on many of these products, along with claiming the mandatory documents from the importer.
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Finally, it will not be until October 31 when all the security declarations imposed by the Brexit Trade Agreement will finally be claimed at customs.
Every year, more difficult
“Until now, EU companies have been able to ship goods to the UK in the same way as they did before Brexit. From next year that will change, and we could face serious disruption again,” warns Shevaun Haviland, director general of the British Chambers of Commerce (BCC). “Rules and regulation are never going to be static. Both the EU and the UK will be making significant changes over the next few years, all of which could have major repercussions. We will have to be flexible so that the impact of these alterations is minimal, because no one is interested in the commercial relationship between the two blocks being even more damaged,” warns Haviland.
The BCC has carried out a very extensive study, in which it has consulted more than 730 small and medium-sized companies, about the impact of Brexit, three years after its entry into force. The conclusions are not optimistic. 60% of firms believe that trading with the EU is more complicated and difficult today than a year ago. Half of them, 49%, disagree with the idea defended by the Conservative Government that the departure of the European club would help increase sales. “We have found that the UK has experienced a very significant contraction in its trading capacity, in terms of the range of products exported to the EU since the trade deal came into force. We estimate a loss of between 20% and 42% of exported varieties only in the first fifteen months,” says the report on the impact of Brexit carried out by economist Jun Du for the Aston Business School and cited in the BCC study.
Waiting for Labor
Along with new sanitary and phytosanitary controls planned for 2024, British companies face other equally onerous changes. The EU has begun to apply the Carbon Border Adjustment Mechanism since October, in a transitional phase. British exporting companies will be required to report the greenhouse gas emissions incorporated during the production of their products. And there will be new taxes starting in January 2026.
The BCC has also discovered, through its study, that almost 87% of the companies consulted were unaware of the new EU VAT (VAT) rules. “If you are a chef living in the United Kingdom and teaching EU students, even virtually, you will have to pay VAT in the State where your clients reside from January 2025,” explains William Bain, director of Trade Policies of the BCC.
The trade agreement signed between London and Brussels contemplates a review of its clauses starting in 2025. The leader of the Labor opposition, Keir Starmer, has promised a renegotiation with the EU if he reaches the Government. The general election is due to be held later this year, and all polls point to a possible Labor victory. Community institutions, however, have already made clear the lack of appetite to reopen a treaty that cost blood, sweat and tears to carry out. Paradoxically, on the continental side of the English Channel the page has already been turned —Get Brexit Done— while on the island Brexit continues to be a source of constant uncertainty.
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