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News & Press: International Trade News

Post-Brexit customs chaos could cost UK economy billions

31 July 2017  
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uk customs control

A new report from Europe-wide consultancy Oxera has claimed that post-Brexit customs chaos could cost the UK economy more than £1bn, echoing research from the Institute of Export & International Trade that has also shown that leaving the customs union would drastically alter the UK’s trading situation.

The report, titled Brexit: The implications for UK ports, stated that should no trade deal be reached upon the UK leaving the EU, the customs checks that would be bought in as a result could cause lengthy border delays for goods going to the continent. The report also suggests that lorry parks would have to be built in the south east of England to deal with the longer motorway queues caused by introduced customs controls.

The Independent quotes the report as saying:

“We estimate the impact of such a scenario to be at least £1bn per year. This is an extremely conservative estimate – it does not account for the economic costs of the uncertainty involved, the extra staff needed (for hauliers, ports and customs officials), the congestion associated with calling Operation Stack [which would see the M20 used as a makeshift lorry park], the land required for the additional customs checks [in the form of lorry parks], or of the wider economic impacts of jobs moving overseas due to uncertainty over the operation of just-in-time logistics”.

Earlier in the year, we undertook similar research into how many goods going out of the UK would begin to be classed as customs controlled exports should the UK leave the customs union. Our research estimated that the number would grow from 90 million to 300 million.

We also found that HMRC typically pull out 4% of transactions for random inspection from shipments of agricultural, textiles, chemical and other goods that require control certificates. If 4% of the additional 210 million cargoes are inspected, the costs in demurrage and other delays could increase to up to £3.4 billion.

The Oxera report warns that a “no deal’ between the UK and the EU on the customs union would have “extremely serious” consequences for the country’s exporters:

“Business in both the UK and the EU needs to know very soon the customs rules under which they will be trading. The decision cannot be part of a last-minute deal on the eve of Brexit, due to the time it will take to get trade moving under the new arrangements. The costs to logistics businesses and their customers, users of the road network and, eventually, jobs in the UK of a relatively limited increase in friction will be considerable.”

Source: ‘UK could be hit with post-Brexit customs chaos costing businesses more than £1bn a year, report warns’ – the Independent, 30/07/17