Brexit disruption is more than "teething problems" - the full impact is still to come

The government should be open about the widespread disruption caused by the UK’s exit from the Brexit transition period and do more to help businesses prepare for changes still to come, says a new Institute for Government paper.

Published today, The end of the Brexit transition: Was the UK prepared? examines how businesses have coped, the adequacy of the government’s preparations, and the changes still to come under the terms of the EU–UK Trade and Cooperation Agreement (TCA).

The paper warns that the full impact of Brexit has not yet been felt because:

• The Covid pandemic has disguised and delayed some of the consequences of the government’s Brexit deal
• Firms are still adjusting how they trade with the EU
• The government has decided to delay some Brexit changes, including the introduction of full border checks

Despite the worst predictions of border disruption being avoided - in part due to government preparations - the end of the transition period has been difficult for business and government. Firms have had to adjust to new costs and delays when trading with the EU, while government has had to introduce new IT systems, build new infrastructure and take on new functions – all while grappling with the devastating effects of the pandemic. Ministers’ reluctance to make clear the trade-offs involved in their Brexit deal undermined preparations, while the last-minute-nature of the deal – the full 1,246-page TCA was only published five days before it took effect – made it even more difficult for firms to adjust.

Covid has delayed some of the most obvious impacts of the Brexit deal – at least until lockdowns lift and borders re-open. Only when travel restrictions are eased will businesses and individuals feel the full effects of new limits on business travel and the end to the free movement of people.

While trade flows have been hit hard – with exports to the EU down 40% between December 2020 and January 2021 – these figures are in part shaped by pre-Brexit stockpiling and changes in trader behaviour. But ministers were wrong to dismiss initial disruption as “teething problems”, and many firms are still struggling to adapt to a fundamental shift in how they do business.

And there are still further changes to come. The government has decided to phase in changes to regulatory regimes in areas like chemicals and product standards, and recently delayed the introduction of full import checks at the border yet again, with many controls  now not due to come un until the end of this year. Ministers must do more to explain what this complex patchwork of deadlines means for business – and consider what additional support might be needed to ensure firms are ready.

Maddy Thimont Jack, Associate Director and co-author said: “Now the transition period is over, the government must prioritise making new arrangements work over political point-scoring. The latest bust-ups between the UK and the EU over the vaccine rollout and the UK’s approach to implementing the Northern Ireland Protocol have highlighted the fractious nature of the relationship and risk creating yet more uncertainty for business.”

Joe Marshall, Senior Researcher and co-author said: “While ministers might want to present Brexit as ‘done’, the reality is that the Covid pandemic and decisions to phase in many Brexit changes mean that the full impact of leaving the EU is yet to be felt. Businesses and government – still adjusting to the huge changes introduced at the start of the year – have much left to prepare.”

Notes to editors

1. The Institute for Government is an independent think tank that works to make government more effective.
2. For more information, including data to reproduce any charts, please contact press@instituteforgovernment.org.uk / 0785 031 3791.