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.
The report 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).
It 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.