Extra bureaucracy for businesses if UK leaves EU without a deal, Brexit secretary warns

28 August 2018


Instructions for businesses, which could face extra bureaucracy at borders, are among "practical and proportionate" warnings set out by Brexit secretary, Dominic Raab, in case the UK leaves the EU without a satisfactory negotiated agreement.

Other details in a series of documents include contingency plans to avoid medicine shortages and the fact that Britons visiting the EU could face extra credit card charges.

While Dominic Raab says he believes that a negotiated deal is the most likely outcome, he warns that "short-term disruption" is possible without one.

Immediately after the Brexit secretary released the guidance, chancellor of the exchequer, Philip Hammond, wrote to the Treasury Committee reiterating a warning from a provisional analysis in January that a ‘no-deal’ exit, or the UK having to operate under World Trade Organisation (WTO) rules, would lead to a 7.7 per cent reduction in the UK’s GDP during the next 15 years.

The chancellor’s letter adds: “Under a no deal/WTO scenario, chemicals, food and drink, clothing, manufacturing, cars, and retail were estimated to be the sectors most affected negatively in the long-run, with the largest negative impacts felt in the North East and Northern Ireland.

“GDP impacts of this magnitude, were they to arise, would have large fiscal consequences. The January analysis estimated that borrowing would be around £80 billion a year higher under a no deal/WTO scenario by 2033-34.”

However, pro-Brexit MP, Jacob Rees-Mogg, said the Treasury was trying to stop Brexit, and was painting a bleak picture "because it is frightened of taking responsibility for managing the economy without the crutch of the EU.”

The 24 documents issued by Mr Raab cover the consequences of ‘no deal’ for sectors including medicine, finance and farming. Among the main points are:

  • The cost of card payments between the UK and EU will "likely increase" and won't be covered by a ban on surcharges.
  • Businesses trading with the EU should start planning for new customs checks and might have to pay for new software or logistical help.
  • Britons living elsewhere in Europe could lose access to UK banking and pension services without EU action.
  • UK organic food producers could face new hurdles to exporting to the EU.
  • Pharmaceutical companies have been told to stockpile an extra six weeks' worth of medicine to ensure a "seamless" supply.
  • The UK would continue to accept new medicines tested in the EU.
  • Low-value parcels from the EU would no longer be eligible for VAT relief.
  • New picture warnings will be needed for cigarette packets as the EU owns the copyright to the current ones.

The UK will cease to be a member of the EU on 29 March 2019 whether a negotiated agreement has been achieved or not.


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