The Observer view on the cost of Brexit being huge. Just ask the Northern Irish
On Christmas Eve, the prime minister heralded the Brexit trade agreement he had signed with the EU as the start of a new “giant free trade zone”. He ignored all the trade experts warning of new frictions at the UK border, declaring that it was a deal that “should allow our companies and exporters to do even more business with our European friends”.
A few weeks later, those words are ringing hollow. Businesses were promised frictionless movement of goods between the UK and the EU and between Northern Ireland and the rest of the UK. Instead, non-tariff export barriers – new rules and regulations and hugely bureaucratic and costly processes – are threatening the future of many small British exporters and are interrupting the supply of food and agricultural products into Northern Ireland from the rest of the country. On the one hand, senior ministers have been forced to acknowledge that Brexit will lead to significant disruption for some businesses. On the other, Boris Johnson continues to gaslight businesses by pretending things are “going so smoothly” in the face of significant evidence to the contrary.
The situation in Northern Ireland is the greatest cause for immediate concern. The Good Friday agreement was predicated on a delicate equilibrium that, through the absence of a border on the island of Ireland, allows the citizens of Northern Ireland to embrace an Irish or British identity – or both – as they wish. That equilibrium, in turn, hinged on both the UK and Ireland being members of the EU’s single market and customs union. In order to maintain that absence of a border after Brexit, the Northern Ireland protocol established the need for customs checks on goods moving into Northern Ireland from the rest of the UK.
Rather than confront the issues that this would create – and make preparations to reduce the disruption – ministers chose simply to deny that there would be any checks. Last year, Johnson told businesses they would “absolutely not” have to fill in forms to send goods across the Irish Sea, suggesting that he either does not understand the withdrawal agreement or that he has no qualms about misrepresenting it.
Brandon Lewis, the Northern Ireland secretary, has consistently insisted there would be no border in the Irish Sea. These interventions flatly contradict the government’s own analysis: just four days after Johnson signed the withdrawal agreement, a government report warned that the resulting administrative costs for goods moving from Great Britain to Northern Ireland
would hit small businesses hardest, while a leaked Treasury presentation cautioned that it “has the potential to separate Northern Ireland in practice from whole swaths of the UK’s internal market” and that this could lead to unionists perceiving a “symbolic” separation from the rest of the union.
And so it has come to pass. There have been empty supermarket shelves in Northern Ireland as even large chains have struggled with the administrative burden of getting some goods through the new checks. The bureaucracy has forced some UK businesses to stop selling goods to customers in Northern Ireland altogether. Just over a week ago, the EU took the incendiary step of triggering article 16 of the Northern Ireland protocol with no consultation or prior notification as part of its row with AstraZeneca over vaccine supply. It rightly retracted this almost immediately – but not before it had further damaged trust between the EU and the UK, lowering the bar for threats to trigger article 16 in future disputes.
The UK has now written to the EU with a list of demands, threatening to use “all instruments at its disposal” if the EU does not meet its terms, while the Democratic Unionist party has called for the suspension of the protocol altogether. Inspections at Northern Ireland’s two busiest ports were stopped last week after threats were made to staff running checks. This is a delicate but entirely foreseeable situation, created by Brexit.
British exporters sending goods into the EU have been similarly hit by border frictions. For a small exporter, the costs of the regulatory checks, filling in long and complex forms and meeting new rules around VAT can be crippling. Some businesses have simply had to stop exporting to the EU because of these costs, putting jobs at risk. New rules for shellfish and livestock have led to a dramatic drop in trade. The Road Haulage Association reports that export loads to the EU have been reduced by as much as 68% and that there are only around 10,000 of the 50,000 customs agents who are needed to cope with the flow of goods to the EU. This will have a detrimental impact on the viability of the road haulage industry, also affecting businesses that rely on imports of goods coming into the UK: six in 10 firms are already reporting delays in shipments coming from the EU.
Ministers have responded with claims that these are just “teething problems”. They are ignoring industry voices who point out that many are structural problems that will not go away within weeks, or even months, without a significant renegotiation. Little wonder that business representatives say the biggest problem they have with the government at the moment is denial of reality. Calls for meaningful engagement from the government to find solutions go unheeded, even as government trade advisers are encouraging exporters to set up separate companies inside the EU to get around export charges. Ministers simply continue to claim that Brexit is going well.
This is the inevitable cost of Brexit. People have spent their lives painstakingly building up a livelihood, only to find it wiped out almost overnight by a government that has eagerly embraced new barriers to trade. They are existing in a warped reality, where it suits neither the government nor the opposition to acknowledge the gravity of their situation. And so, even as jobs disappear and incomes plummet, there will be little political accountability for the flawed political choices that have brought us here.