British businesses probably didn’t expect to start 2021 worrying about wooden pallets after a year of grappling with the coronavirus and a meltdown in the economy.
Yet as they start a new relationship with the European Union, securing a supply of heat-treated platforms—baked to 56 degrees Celsius for at least 30 minutes—is now one of the myriad issues they face.
The 1,200-page trade deal struck by Prime Minister Boris Johnson after a little over nine months of negotiations ended the uncertainty that the UK would crash out of the bloc in chaos.
While the zero-tariff, zero-quota accord is a relief for British companies, it only marks the next stage in the evolution of the Brexit process—and potentially the most difficult one.
Be it wooden pallets for shipping goods, customs paperwork, new fish quotas or the recognition of professional qualifications, the next few months will be a case of figuring out the consequences of not just what’s in the historical agreement, but also what’s not. “It’s going to be a marathon, a very long marathon,” said Mark Price, former deputy chairman of retailer John Lewis Partnership and a former UK trade minister. “This is why trade deals normally on average take about seven years to agree as they are hugely complex.”
Bloomberg Economics estimates that UK growth will be half a percentage point lower per year for the next decade compared with if the country had stayed in the now 27-member single market. It forecast the economy will expand 6 per cent this year, though that was before the latest tightening of England’s Covid restrictions.
In the meantime, businesses have to contend with paperwork before more complex issues can be resolved, such as the financial services industry’s future in the EU. There are also regulations around rules of origin determining what goods can be exported to the EU that need to be navigated.
“There are likely to be a thousand separate unintended consequences from a trade deal of such scale,” said Will Hayllar, a partner in the consumer goods practice at OC&C Strategy Consultants While “many things will get flushed out in time,” there will be uncertainty for businesses “in the intervening period when they have to decide if they will comply with everything or not.” Britain’s food and drink industry alone could face an additional $4 billion of extra costs a year from increased bureaucracy, the group estimates. Indeed, when disruption comes, it comes quickly. Dover, Britain’s busiest port, has only just cleared a backlog of thousands of trucks after France shut its border for two days in December because of the new strain of the coronavirus that’s forced much of Britain into another lockdown.