In what must rank as one of the most humiliating U-turns of all time, Michael Gove had to issue a statement yesterday delaying the introduction of import controls yet again. He has essentially added another six months so pre-notification for SPS now starts October 1st and more or less everything else by 1st January 2022. I don’t believe it was a shock, most people expected it since most of the infrastructure isn’t ready and won’t be for some time. It wouldn’t surprise me in the least if another extension is needed.
You can read the full statement HERE.
The government insists the delay is needed to allow time for business to prepare for the new rules, apparently ignoring the fact that they repeatedly refused any extension to the transition period when it was offered in 2020.
The blame is put squarely on covid-19 as if none of that was foreseen last year. Gove says:
Last June, we announced a timetable for the phased introduction of controls on imports from the EU into Great Britain, to ensure businesses could prepare in a phased way. This timetable was based on the impacts of the first wave of COVID. We know now that the disruption caused by COVID has lasted longer and has been deeper than we anticipated. Accordingly, the Government has reviewed these timeframes.
Although we recognise that many in the border industry and many businesses have been investing time and energy to be ready on time, and indeed we in Government were confident of being ready on time, we have listened to businesses who have made a strong case that they need more time to prepare. In reviewing the timeframes, we have given strong weight to the disruption which has been caused, and is still being caused, by COVID, and the need to ensure that the economy can recover fully.
This doesn't explain how EU countries managed to prepare for imports and be ready for 1 January while we who kicked it all off are not. Covid doesn't explain that, which is I'm afraid down to incompetence and wishful thinking.
For a laugh, have a look at the announcement from Gove last June which proudly stated:
"New border controls and procedures confirmed for 2021 as the Chancellor of the Duchy of Lancaster, Michael Gove, formally notifies the EU that the UK will neither accept nor seek any extension to the Transition Period.
"From 1 January 2021 the UK will have the autonomy to introduce its own approach to goods imported to GB from the EU.
"Recognising the impact of coronavirus on businesses’ ability to prepare, and following the announcement in February that the UK would implement full border controls on imports coming into GB from the EU, the UK has taken the decision to introduce the new border controls in three stages up until 1 July 2021. This flexible and pragmatic approach will give industry extra time to make necessary arrangements."
They had almost nine months to request/negotiate/announce an extension and have waited until three weeks before the deadline to realise covid was worse than they anticipated and that nothing was likely to be ready on time. Stunning.
Of course it puts many of our businesses at a big disadvantage, particularly in the hard hit food sector.
Shane Brennan, CEO of The Cold Chain Federation, is quoted in the FT saying the delay created “ongoing unfairness” for UK food exporters, while their EU equivalents benefited from “de facto unfettered access” to the UK domestic market.
Others welcomed the delay which could have resulted in food shortages since EU suppliers are just as unprepared as ours were in December.
Adam Marshall, director-general of the British Chambers of Commerce, called for the two sides to start negotiating again, a forlorn hope I fear and as someone said, it's hard to see what incentive there is for the EU side to offer any further concessions.
Marshall told the FT that the six-month delay could only be a “temporary solution” and should not distract from the need to focus on improving border issues that were an “existential” threat to some businesses.
“The UK and the EU must get back around the table and thrash out the remaining structural problems” in the Brexit deal, he added.
Don't hold your breath for that while Lord Frost is at the helm.
These are huge numbers and the asymmetry is consistent with figures released by France, Italy and Germany. It’s always our exports which fall the most, demonstrating we are far more reliant on the EU member states than they are on us.
Bizarrely, the total trade deficit in January actually narrowed! This was because of a fall in imports due to stockpiling at the end of last year in the run up to the end of the transition period. The ONS say over three months to the end of January, the deficit widened by £6.7 billion to £12.8 billion as imports increased by £2.4 billion while exports decreased by £4.3 billion. This seems a more reliable indicator although the ONS say "trade has not been typical in recent months and, because of the practical challenges and temporary factors." You can say that again.
In a sign that the government is yet to acknowledge the scale of the damage Brexit is likely to inflict and the permanent added costs to an already uncompetitive economy, they are claiming in a press release that things are getting back to normal:
"The hard work already put in by traders and hauliers has already seen overall freight volumes between the UK and EU rebound after an expected dip in January as a result of Covid-19 restrictions, pre-January stockpiling, and some initial teething problems as businesses adapted to new rules for trade with the EU. The very latest management information shows that overall freight volumes between the UK and the EU have been back to their normal levels since the start of February."
We shall see.
