Rotten fish, lost business, and loads of red tape. The reality of Brexit hits Britain

(CNN) – Brexit might be done and dusted, but its specter looms over Britain for a long time yet.

Despite all the fanfare when Prime Minister Boris Johnson struck a trade deal with Brussels on Christmas Eve, the inescapable reality of leaving the customs and regulatory territory of the European Union has already started to affect us. The fact that the deal was agreed only a week before it took effect meant that a dangerous disruption was inevitable for countless companies that relied on fluid supply chains.

Despite Johnson’s repeated assertions that Brexit is a great opportunity for British exporters and would lead to some kind of revival of free trade, the reality is very different: freshly caught fish are reported to be left to rot as the Exporters cannot bring it to the European Union while Logistics companies are skeptical that both import and export are viable for many companies in the long term. The fallout from Brexit and the coronavirus pandemic is pushing the UK economy into a sharp contraction in the first quarter, according to data released Friday by IHS Markit, meaning a double dip recession is now looming.

While it should be a source of embarrassment to the prime minister that his deal has made life very difficult for many of the industries he has championed after Brexit, Johnson’s public statements on the matter suggest that he is unaware of reality. that many face.

When asked for comment on the immediate consequences of the trade barriers put in place as a result of the deal, a UK government spokesperson told CNN Business:

“From the beginning we were clear that we were going to leave the customs union and the single market, which meant that there would be new processes after the end of the Transition Period. These were widely communicated through our public information campaign.”

The clearest example of what Brexit is doing to British companies comes from the Scottish fishing industry. Despite the government’s claims during the Brexit negotiations that the fishing industry was very close to the top of its priority list, there is a real fear that the entire industry could collapse in a matter of weeks.

“We had a completely new system for exporters to understand that it had not been tested before use. The result, somewhat unavoidably, was that it immediately began to fail,” says James Withers, CEO of Scotland Food and Beber.

“This is not as simple as an IT problem that needs to be fixed. In a matter of days, we went from being able to send fresh food to Madrid with a single cover of paperwork. There are now approximately 26 steps for each transaction.”

The real-world impact of this means that some exporters have had the European market cut off overnight. Almost every day images circulate on social media of practically empty fish markets and moored boats. Withers has heard stories of Scottish vessels sailing 48 hours to process catches in Denmark, only to bring their stocks to the single market. In an industry where profit margins are often tight, every hour spent working in the bureaucracy is critical to both product freshness and business productivity.

When pressed on the matter, Johnson has said that he believes these are simply initial problems and not blame for his deal or the barriers it has created. Its spokesperson explains that the government is providing £ 23 million ($ 31.4 million) for the industry to facilitate the process.

When asked specifically about the fishing industry earlier this week, Johnson once again denied that the problems facing exporters had anything to do with their deal, but were due to restaurant closings due to the pandemic.

However, Withers believes that the money will “run out quickly” and without reaching some new kind of agreement with the European Union, “this type of export might not be sustainable” and “will almost certainly lead to the same people who [Prime Minister] said he was struggling to lose his jobs. “

The scenes in Scotland may not be as dramatic as the food shortages and backlogged truck lines many predicted after Brexit, but the damage is already showing up in the economic data. Brexit woes are exacerbating a slowdown caused by pandemic restrictions, IHS Markit said on Friday, and lengthening supplier lead times. While 33% of manufacturers reporting a drop in exports linked the drop directly to the pandemic, about 60% linked the drop to Brexit, according to IHS.

ForagePlus, a Wales-based horse nutrition company, received dozens of European-bound packages returned this week due to flaws in its shipping company’s new systems for processing customs information. “It’s basically a disaster,” ForagePlus founder Sarah Braithwaite told CNN Business, adding that it had been almost a month since the company was able to ship something to Europe due to the pandemic and Brexit.

There is a real concern among trucking companies and logistics companies that things are going to get a lot worse in the coming months.

Several sources within the affected sectors told CNN Business that British consumers will not feel much of a disruption just yet, as January is a typically quiet month in ports and the UK stockpiled products to prepare for a potential no-deal Brexit. But that could change as trade volumes increase in the coming months, putting additional pressure on border systems.

This could result in a gradual reduction in the variety of fresh produce available to British buyers. According to a Logistics UK spokesperson, “In the short term, as supply chains work out, we may revert to a more seasonal purchasing approach or have a more limited range to choose from.” This could mean that after decades of fresh fruits and vegetables at all times of the year, the British might have to start looking at strawberries as a summer treat, for example.

The region where food shortages could quickly become a real problem is Northern Ireland, where images of empty supermarket shelves have circulated on social media. Due to Northern Ireland’s unique position, it has separated from the rest of the UK and remained within the EU single market, making it very difficult to import food from Great Britain. Simon Coveney, Ireland’s foreign minister, said the images showing empty shelves in Northern Ireland supermarkets were “clearly a Brexit issue” and “part of the reality” of the UK’s exit from the European Union. .

Trade experts are concerned about the gradual decline in EU-UK trade. “The slow decline is in a way more dangerous than sudden food shortages,” says David Henig, UK director of the European Center for International Political Economy. “I am particularly concerned that exporters will not be able to fulfill orders and lose customers or just give up altogether. The long-term message it sends could be very detrimental to internal investment,” he adds.

There are legitimate questions as to why things have gone so bad, despite the UK having years to prepare for the brink. “We know the risks of being unprepared for five years,” says Anna Jerzewska, founder of Trade and Borders, which helps exporters and importers across Europe.

Jerzewska says his clients are reporting numerous complaints, but most concerning is the lack of support from the UK government to solve their problems. “Getting an answer to a technical question could take 48 hours, which is obviously a problem for fresh produce. People in call centers can only really point to one guide, but the guide is currently not fit for purpose.”

And even though everyone involved worked hard to resolve the initial problems, Jerzewska fears this is not enough to save struggling British exporters. “Right now it is a shock, but the underlying costs are not going to go away. And for traders working on low profit margins, a couple of extra percentage points could be the end.”

Many of Johnson’s conservative lawmakers are struggling with how to respond to their constituents. “The party gave us lines to read when the agreement came in presenting it as a great success, but as time goes on, it is clear that there are many unpleasant surprises in Pandora’s box,” says a conservative member of parliament who is not allows you to officially speak about government policy outside of your mandate.

Others say local small businesses are furious to find that if they want to visit Europe to sell their products, they may need a work permit from foreign governments or paperwork that allows them to move products to the European Union.

There is not much optimism that things will improve in the near future among moderate conservatives. Many are extremely concerned that the gradual decline caused by Brexit will eventually lead Europe to try to lure Britain’s goose that lays the golden eggs to the continent: the City of London, which is home to many of the world’s largest banks. .

“Once the Covid fog clears, financial and professional services companies looking to expand globally will see London and realize that we have given up much of our competitive advantage,” says the Conservative Member of Parliament.

The trade deal Johnson signed strangely did not address any of these, even though they make up a large part of the UK economy. London banks and merchants are now waiting for the European Union to grant them “equivalency,” a designation that would allow them to continue serving EU customers with limited disruption.

“If no agreement is reached on the equivalence of financial services or data, that could put pressure on the city from EU regulators and leave companies wondering what is the benefit of settling in London if wants to serve the European market, “says Henig. .

The European Union and the UK are supposed to reach an agreement in March on financial services, but ambient music from London and Brussels at this time suggests that the UK is unlikely to re-enter the EU regulatory sphere. in the short term.

Many pro-Brexit lawmakers felt vindicated when the world did not turn off its axis immediately after Brexit, as many of the Brexiters’ worst nightmares did not materialize. However, if the current path of gradual decline continues, the landslide could become uncontrollable.

Those politicians will have to explain to voters why they encouraged their prime minister to pursue such a tough Brexit despite warnings of its consequences. They have a couple of months before things get really bad to pressure Johnson to start getting a little more involved with the reality of Brexit.

The question that matters most to those struggling is how bad things must get before those who most openly supported Brexit are willing to break ranks and admit the truth: that leaving the world’s largest trading bloc has immediate consequences.

This story was first published on CNN.com ‘Rotten fish, lost businesses and lots of red tape. The reality of Brexit hits Britain ‘