Brexit has forced UK firms to pay tariffs on up to £9.5bn of exports to the EU despite Boris Johnson claiming he struck a “tariff-free” deal, an investigation has found.
More than one in eight traders say they have lost business since it came into force in January – some reporting their exports have disappeared completely, a TV documentary reveals.
More than a quarter of small firms say they are now considering moving some of their European operations out of Britain, while 16 per cent have already done so, Channel 4’s Dispatches programme will report.
The revelations come after the Treasury’s watchdog, the Office for Budget Responsibility, warned the Brexit trade deal will cut GDP by 4 per cent, swiping £80bn a year from the UK economy.
Ministers were also forced to concede that EU withdrawal was a key cause behind the autumn food and fuel shortages – which have put Christmas deliveries at risk.
Last Christmas, Mr Johnson said his deal would “allow UK goods and components to be sold without tariffs and without quotas in the EU market” and that “we will trade as much as ever before, if not more”.
But firms have been hit by complex rules-of-origin requirements, which trigger tariffs if exporters are unable to prove most of the components of goods come from the UK or EU.
Emily Thornberry, Labour’s shadow trade secretary, said: “The government can no longer bury its head in the sand and ignore the impact their botched Brexit deal is having on British business.”
Dispatches will reveal new analysis, from the UK Trade Policy Observatory at the University of Sussex, that:
* Imports from the EU plunged by a quarter in the first 6 months of 2021 (worth £32.5bn) – while exports fell by 13 per cent (£11bn).
* A quarter of all good exports covered by the trade agreement ended up paying tariffs over the first seven months – on trade worth £7.1bn to £9.5bn.
The programme will feature the online retailer British Corner Shop, based in Bristol, which did export 6,000 supermarket products to customers in the EU, representing nearly 50 per cent of its business.
Post-Brexit red tape has forced it to stop selling two thirds of those products – because, as a third-party supplier, it is unable to trace the origins of, for example, the milk that goes into a packet of cheese and onion crisps.
After losing a quarter of a million pounds in just three months, British Corner Shop is moving its entire European operation into the EU, cutting 60 UK jobs and taxes paid.
Mark Callaghan, its managing director, has told Dispatches: “I estimate that, next year, we’ll be employing 100-150 people from within the EU. We have moved jobs over to the EU.
“It is a shame that that we can’t fulfil that business from here. It was never part of our plans to do that. But being an entrepreneurial business, we will find a solution and that’s the only solution that was available to us.”
But a government spokesperson told the programme: “The zero-tariff zero-quota deal we have secured with the EU means we can now regulate in a way that suits the UK economy and UK businesses.”
