The report warns that the UK’s new post-Brexit border controls, which come into force later this month, will cost British businesses £2 billion and result in damage to UK-EU trade, adding to the risk of inflation. It is said to encourage growth.
With less than a month to go until new checks for animal and plant products are introduced from April 30, insurer Allianz Trade is one of the first He said import costs could increase by 10% over the year.
Ministers revealed last week that businesses could be charged up to £145 for each shipment imported through Dover, warning that this would drive up food prices and disproportionately hit small businesses. did.
The Allianz report says the checks are part of the government’s Border Target Operating Model (Btom) and will affect 21 billion pounds of agricultural imports, including eggs, live trees and plants, meat and fish. , covering approximately 3% of the UK. Imported goods.
These new costs amount to an additional 10% tariff on these imports, and Allianz suggested EU companies would likely pass these costs on to UK customers.
The report said these items accounted for around 6% of the total basket of goods used to calculate headline UK inflation, and the additional costs could push inflation up by 0.2 percentage points, including dairy products, He said meat and fish are the most affected.
Inflation fell to 3.4% from more than 10% last year due to weak food prices, the sharpest annual rise since the late 1970s. However, food prices are still he 30% higher than three years ago.
In October last year, the government calculated that the extra checks would cost businesses an extra £330m a year and lead to a three-year rise in headline inflation of less than 0.2 per cent.
The Allianz report said inflationary pressures from the new checks would be eased by a two-year suspension of tariffs on goods not covered by free trade agreements, reducing import costs by £7bn. This includes some agricultural products, but also cars, fuel, metals, and other non-food items.
The report says these products account for 45% of the UK’s total imports and will have the effect of reducing overall inflation by 0.6 percentage points over the next 12 months.
In response to the Allianz report, Phil Plack, chief executive of the Cold Chain Federation, said that even before its introduction, “it became clear that the Btom model was broken.” He said: “If the government does not listen to the experts, it will cause serious damage to British business confidence and make it more costly for consumers to make their weekly purchases.”
The report comes as the UK steadily lags behind the introduction of new rules set by Brussels, and British businesses also face the prospect of tougher barriers to exporting to the EU. .
A separate UK study by the academic think tank Changing Europe said British companies had “little choice” but to comply with new EU standards being implemented by the Strasbourg parliament ahead of June elections.
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The report said the EU was embarking on a “legislative surplus drive” to complete reforms by the summer, while the UK government’s agenda was “almost depleted” as the general election approached.
It warned of a growing chasm between UK and EU rules on supply chains, digital competition and environmental standards, warning that many of the changes would be “effectively It also applies in the UK.” .
Joel Ryland, UK researcher in a changing Europe, said: ‘The UK lives next door to regulatory giants and cannot afford to ignore them. Even after Brexit, the EU remains Britain’s main export market. UK companies have little choice but to comply with the EU’s new regulations.
“The main difference is that the UK government currently has no means of influencing EU policy-making from within.”
The Department for the Environment, Food and Rural Affairs has been contacted for comment.
