[ad_1]
Another deadline has been set for Brexit, this time for Sunday. With large gaps remaining, both parties caution against the risk of a no-deal outcome. Whatever happens, there will be disruptions and changes on January 1, but if there is no trade deal, it would be significantly worse.
1. What would it be like in January if there was no trade agreement?
We are likely to see television footage of long queues at ports as the new EU-UK trading system is introduced. This can happen even if there is a deal, but it is likely to be worse without one as it would introduce the need for more controls and medium cooperation between the two parties to smooth things over is less likely. UK ports like Dover as trucks are heading to the mainland as they will face new controls when leaving and entering continental ports. Combined with the need for new controls at Irish ports, the impact of this could lead to major collapses leaving Irish ports and heading for major routes such as Dublin’s M50 road. “If there are delays in France, you will see it sooner or later on the M50 in Finglas,” observed an Irish source. In the event that no agreement is reached, would the EU try to find some way around it and prolong the talks? Legally, this would be difficult and would require the UK to sign an extension, which it has said it will not do. But you would be surprised if somewhere, in silence, this was not being examined.
2. Has the EU not published plans today to try to deal with a no-deal scenario?
Yes. But they are pretty basic. Because the airline safety and regulation regime for flights between the EU and the UK would fall if there is no deal, the Commission has agreed to a six-month extension to allow something to be resolved. The same applies to the rules covering carriers and coaches moving through the English Channel. But there is no suggestion of any margin on the implementation of new Brussels customs or tariff rules, save for an agreement to introduce changes to movements between Great Britain and Northern Ireland agreed under a separate protocol (read our explainer on the Northern Ireland protocol here). And it’s the customs and tariff changes between the EU and the UK that will complicate things for businesses and lead to costs and delays. The EU has also proposed continuous reciprocal access to fishing waters on both sides for a period. It remains to be seen if new contingency measures could emerge if there is no agreement.
3. So will there be delays in deliveries to Ireland and empty shelves?
In fact, there could be an outage for a period, and this is likely to be worse if there is no trade agreement. Major companies, including those in time-sensitive sectors like the grocery trade, have been planning for this, supply chains have been reorganized, and warehouses are full of stored goods. But you can’t store fresh food and many other products have a shelf life. Hopefully this is temporary and new direct ferry routes from Ireland to the mainland should help, although additional time and cost is an issue in many cases. There could also be problems in some specific food areas due to regulatory issues, for example for some prepared foods.
4. What about prices?
This is an area where there is a significant difference in a no-deal scenario. This is because it would lead to the imposition of tariffs, or special import duties, on products entering Ireland from Great Britain, particularly food and groceries. An ESRI report has estimated that if these tariffs are passed on to consumers, and generally the tariffs, in addition to the costs of new delays and customs procedures, grocery bills could rise to 1,360 euros a year, an increase of more than 3 percent in prices. The least well-off households, who spend proportionally more on groceries, would suffer the most. There would be increases in the price of cereals, meat, processed foods, jams, confectionery, chocolate, coffee, and a variety of other items. There are also tariffs on clothing and footwear, driving up UK import prices here, even for those shopping online at UK outlets.
5. And the economy?
The unprecedented nature of Brexit makes it difficult to judge, but the government estimates that in a no-deal situation growth next year would be three percentage points lower than it would be, mainly because exports to the UK would be lower. The government budget for 2021 is based on a no-deal case. This cost is around € 10.5 billion in cash terms and estimates from the Tax Advisory Council of Ireland indicate that the long-term costs could be roughly double.
Brexit will affect specific sectors, including agri-food and, in particular, the beef sector. Tariffs will be applied to Irish goods entering the UK, reducing profits and in some cases taking Irish goods off the market. Tariffs on beef can exceed 70 percent in some cases. The Department of Agriculture believes that the impact on jobs will be largely limited to the agri-food sectors and some manufacturing sectors, although it is difficult to say. Some companies rely heavily on UK supply chains, so disruption here could come at a cost, too.
6. What will the government do?
The government will release its no-deal contingency plans soon enough unless talks are underway. Tánaiste Leo Varadkar has said that plans are being put in place to help the affected companies, although he has not yet said what they are. An extension of wage subsidies paid to companies affected by the pandemic seems certain, and other supports will also be implemented. The government will also try to seize a share of a € 5 billion EU Brexit fund. Expect to hear a lot from food, fisheries and agriculture representatives seeking state help.
[ad_2]