Brexit has become the specter that haunts every corner of the UK, and it continues to frighten some of its residents while others – especially politicians – act as if it no longer exists. Brexit is the reason for inflation that has taken longer to fall than in the rest of Europe, or for a sluggish economy that still doesn't know whether it is advancing or declining. And above all, behind a toxic debate over 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, when London and Brussels finally reached a Trade and Cooperation Agreement (CCA) that prevented the United Kingdom's abrupt exit from the European Union. The uncertainty of the new scenario did not disappear with a signature. Quite the opposite.
José Sol has lived in British territory for years. His company Spanish Ham Master, which specializes in the import and sale of acorn-fed Iberian ham as well as cutting courses and demonstrations at events – some as select as Ascot horse racing or Premier League boxing – has been a success. Although it is a small company, it serves as an example of how the majority of Spanish companies trading with the UK are subject to an ongoing prevention and mitigation effort. “I have had a supervisor for months who has been working on the new documents that will be required from 2024,” explains Sol. “My everyday life is overwhelming and I can’t take care of the paperwork, but that’s why. I have someone who works in it,” he says.
On January 31, one of the obligations imposed by the ACC on the parties will finally come into force: sanitary and phytosanitary controls for agricultural and animal products transported on both sides of the English Channel. The EU immediately applied it to all products coming from the island. The UK has already delayed the entry into force of these controls up to five times, aware of the chaos that could cause its importers and, above all, out of fear that the products in the basket this year are already inflated if inflation gets out of control they will skyrocket.
Sources at the Spanish Economic and Trade Office in London indicate that the events in just over a month will be very important to re-examine whether or not the obstacles created by Brexit can be overcome.
In late August, the British government unveiled its new Border Target Operating Model, an apparently simplified method of conducting safety and health checks on imports and exports that includes smart stamps and GPS tracking devices on many products.
The new controls will be phased in over the next year. From January 31st, health certificates will be introduced for medium-risk animal and plant products from the EU. Only on April 30 – when the announced deadlines are finally met – will British customs officials begin carrying out commodity and identity checks on many of these products, as well as requesting the mandatory documents from the importer.
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Ultimately, it will not be until October 31st that all security declarations required by the Brexit trade agreement will finally be requested from customs.
More difficult every year
“Until now, EU companies have been able to ship goods to the UK in the same way as before Brexit. “From next year that will change and there could be serious disruption again,” warns Shevaun Haviland, director general of the British Chambers of Commerce (BCC). “Rules and regulations will never be static. Both the EU and the UK will be making significant changes over the next few years, all of which could have a significant impact. “We have to be flexible so that the impact of these changes is minimal, because no one has any interest in further damaging the commercial relationship between the two blocs,” warns Haviland.
The BCC has carried out a very extensive study on the impact of Brexit three years after it came into force, surveying more than 730 small and medium-sized businesses. The conclusions are not optimistic. 60% of companies believe that trading with the EU is more complicated and difficult today than it was a year ago. Half of them, 49%, disagree with the idea put forward by the Conservative government that the departure of the European club would help increase sales. “We have found that since the trade deal came into force, the UK has experienced a very significant decline in its trading capacity in terms of the range of products exported to the EU. “We expect a loss of between 20% and 42% of exported varieties in the first fifteen months alone,” says the report on the impact of Brexit, prepared by economist Jun Du for Aston Business School and in the study by BCC quoted .
Waiting for work
In addition to the new health and phytosanitary controls planned for 2024, British companies face other equally stressful changes. The EU began applying the CO2 border adjustment mechanism in a transitional phase in October. UK exporters will be required to report the greenhouse gas emissions caused by the production of their products. And from January 2026 there will be new taxes.
As part of its study, the BCC also found that almost 87% of companies surveyed were unaware of the new EU value added tax (VAT) rules. “If you are a chef living in the UK and teaching EU students, including virtually, from January 2025 you will have to pay VAT in the state where your customers live,” explains William Bain, director of trade policy at the BCC.
The trade agreement signed between London and Brussels provides for a review of its clauses from 2025. Labor opposition leader Keir Starmer has promised a renegotiation with the EU if he wins government. The general election is due to take place later this year and all polls point to a possible Labor victory. However, the Community institutions have already made it clear that they are not prepared to reopen a treaty that has cost blood, sweat and tears to implement. Paradoxically, on the continental side of the Channel the tide has already been turned – Get Brexit Done – while on the island Brexit remains a source of constant uncertainty.
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