Boris Johnson’s Brexit problem: An army of workers off work

LONDON: Britain’s flagship job support programme may have dulled the economic pain of the coronavirus crisis, but it is storing up a future problem for Prime Minister Boris Johnson: with many employees furloughed, businesses haven’t got enough staff to prepare for Brexit.

“We can’t contact many of the people we need to,” said Jon Swallow, co-founder of Jordon Freight Ltd, based at Felixstowe, Britain’s largest container port. “The people currently dealing with the paperwork, the systems, they’re on furlough.”

Swallow’s experience highlights a major challenge for the UK as the relationship with its largest trading partner faces a disruptive overhaul at the same time as a severe recession triggered by the pandemic. At the end of the year, about half of Britain’s imports and exports will require new customs documentation and processes due to its departure from the European Union, extra work for which firms are ill-prepared.

Building new warehouses, training staff to file customs entries and installing new IT systems to handle the demands of post-brexit trade have all been hit by staff being furloughed, according to Ross Denton, a trade lawyer at Baker Mckenzie in London who advises FTSE 100 companies and multinationals on their preparations.

“It’s 100% dropped off everybody’s radar,” Denton said. “All of these things will be slowed down.”

It isn’t just about preparing for there being no deal by the end of the year. Companies in the UK face upheaval even if Britain achieves its goal of reaching a free-trade agreement with the EU similar to the one Canada signed withthebloc.

While such a deal would avoid most tariffs on goods, it would still create new non-tariff barriers to trade in the form of red tape and paperwork.

The latest round of talks between the two sides made little progress, and the EU’S chief negotiator Michel Barnier said he is “not optimistic” about a deal. Without an accord, Britain and the EU would trade on terms set by the World Trade Organization, meaning steep tariffs on products including cars, beef and dairy.

Chancellor of the Exchequer Rishi Sunak this month extended the furlough program - which sees the government pay 80% of the wages of employees not working - through to the end of October, though employers will be required to make a financial contribution to the programme from August onwards.