The Cabinet Office has warned hauliers that Britain’s border controls are about to face their sternest test since the Brexit transition period ended on December 31.
Government modelling indicates that cross-Channel freight will begin to return to normal in the coming days, raising the prospect of tailbacks at ports and other disruptions if lorry drivers continue to arrive without adequate paperwork or negative Covid-19 tests, a source close to the Cabinet Office said.
At the same time a leading investment bank has warned the all-important UK services industry faces increased tariff-like costs of more than a quarter because of greater bureaucracy after the end of the transition period.
The source said at the worst point in the past month, one in five lorries bound for the EU was turned back from the UK border because of incorrect paperwork or because the driver could not produce a negative Covid-19 test.
Freight traffic fell below normal levels either side of December 31 because companies had stockpiled goods in anticipation of a hard Brexit. This meant there was only minor disruption at ports after New Year’s Day.
However, stockpiles have been depleted and cross-Channel trade is picking up. This has prompted officials at the Cabinet Office’s border and protocol delivery group to put logistics groups on high alert.
Stephen Bartlett, chairman of the Association of Freight Software Suppliers, said: “We’ve been lucky so far. Traffic volumes through ports have been quite low. But the next couple of weeks are going to be the main test.
“There could be more disruption as trucks come through that aren’t prepared with paperwork or drivers who haven’t been tested for Covid. There will be more issues. Then we could see some of these lorry parks starting to fill up.”
The Cabinet Office’s border operations centre in London is monitoring ports. The centre has been tracking lorry “turn-backs”, where vehicles bound for the EU are stopped at the UK border and refused permission to continue their journey. About half of turn-backs occur when a driver fails to produce the correct paperwork and the other half, when they do not return a negative Covid-19 test, it is understood. Turn-backs have fallen to about 4 per cent in recent days, a source said.
Separately, UBS said the mountain of post-Brexit bureaucracy facing the services sector could be equivalent to imposing tariffs of as much as 26 per cent.
Anna Titareva, an economist at UBS, said: “The increased administrative burden, to some extent softened by a number of provisions, poses risks to companies’ long-term investment and employment plans. Disruption to services trade stemming from non-tariff barriers could be equivalent to a tariff of anywhere between 6 per cent and 26 per cent depending on the sector. The financial services sector in particular . . . is likely to face significant changes.”
The services industry is the engine of the British economy. It accounted for 80 per cent of economic output in 2019 and about the same proportion of jobs.
Boris Johnson’s last-minute Brexit agreement provided for zero-tariff trade with the EU but did not exempt British companies from customs controls, paperwork and other red tape.
Services companies face new restrictions depending on the type of service they provide and the EU country they are dealing with. Further, the UK and the EU have yet to agree on new equivalence rules for Britain’s financial services sector, which is worth £132 billion a year, or 6.5 per cent of GDP.
UBS estimated that, in time, the hit to the services sector from non-tariff barriers could knock about one percentage point from Britain’s growth. In addition the impact of non-tariff barriers on the goods trade could knock an extra half a percentage point from growth, it said.
