200,000 firms STILL not ready for No Deal, Cabinet warned

A NO DEAL Brexit would lead to food shortages, border delays and hit major industries, an official report said last night.

The review warned supermarket shelves could be left empty because almost a third of food comes from the EU.

The Government said there might be delays at the border and especially shortages of fresh produce that is out of season.

Officials warned panic buying could fuel shortages in foods that are shipped across the Channel. They also admitted that 200,000 firms that trade with the EU are not ready for a disorderly departure.

A study found almost a third of the most critical projects to prepare for the possibility of the country leaving the EU without a deal are behind schedule. But the Government blamed businesses and citizens for failing to heed the advice of an advertising campaign urging them to get ready.

The document drawn up for the Cabinet on

‘Prices are likely to increase’

the implications of a No-Deal Brexit warned food supply was one of the most visible ways the UK would be affected.

Potential disruption ‘would lead to reduced availability and choice of products’ but would not result in an ‘overall shortage of food’, it said. ‘However, at the time of year we will be leaving the EU, the UK is particularly reliant on the short Channel crossings for fresh fruit and vegetables,’ the review stated.

‘In the absence of other action from Government, some food prices are likely to increase, and there is a risk that consumer behaviour could exacerbate, or create, shortages in this scenario.

‘Many businesses in the food supply industry are unprepared for a No-Deal scenario.’

It warned that panic buying could make the situation worse.

UK travellers could find themselves subject to extra checks when travelling to the EU, with longer waits at the border and exclusion from the use of e-gates for passport checks, the Government document said.

Despite an advertising campaign telling people to renew passports, apply for foreign car insurance and register for international driving permits, officials warned there had not been a ‘noticeable behaviour change’.

Around 240,000 companies that trade only with the EU would be caught up in customs processes if there is no deal, with a total administrative burden on business from customs declarations of around £13billion a year.

However, the review found ‘little evidence that businesses are preparing in earnest for a No-Deal scenario’, with only 40,000 of the firms signed up to declare duties.

Goods exports would not enjoy the current ‘fully free-flowing border’ in place at present, with delays expected at the French border for paperwork checks, the document warned. ‘The Government’s worstcase planning assumption is that, as a result of French checks and lack of businesses readiness, the flow of goods through the short Channel crossings (Dover and Eurotunnel) could be very significantly reduced for months,’ it said.

‘However, French willingness to facilitate cross-border flows means that the Government does not currently expect “day one” disruption to be at the most severe end of its planning assumptions.’

The document repeated an analysis suggesting No Deal could leave the economy 6.3 per cent to 9 per cent smaller after 15 years than it would otherwise have been, with the worst-hit areas being Wales (-8.1 per cent), Scotland (-8.0 per cent), Northern Ireland (-9.1 per cent) and the North East (-10.5 per cent).

It stated that the introduction of tariffs and non-tariff barriers to trade could have a ‘ very severe’ impact on some industries.

The EU would introduce tariffs of around 70 per cent on beef, 45 per cent on lamb exports and 10 per cent on motor vehicles.

It concluded that it was ‘impossible to accurately predict the ability of businesses to adapt’, but the risk of No Deal was ‘of major concern’ for the car industry, both because of tariffs and disruption to just-in-time supply chains.

The document stated that ‘the cumulative impact from a No-Deal scenario was expected to be more severe in Northern Ireland than in Great Britain, and to last for longer’.

The Bank of England would slash its forecasts for the economy if there is a No-Deal Brexit, its governor Mark Carney said yesterday.

He told MPs that most firms were not ready for the consequences of leaving the European Union with no agreement in place.

The Bank already expects sluggish economic expansion of just 1.2 per cent this year.