New post-Brexit border checks are expected to add billions of increased costs for UK firms doing business with the EU.

The new checks apply to medium-risk goods such as meat, dairy and plants. One flower company owner told the BBC that the extra costs related to checks on his imports from Europe will cost an extra £225,000 a year – costs that he will have to pass on to customers.

The checks kicked in from midnight and are designed to help secure the UK’s borders from biohazards and threats such as disease and pests. When inside the EU, these checks were already being conducted on the continent and meat, dairy and agricultural goods could pass into the UK unchecked.

Health certificates were already introduced in January this year for plants and food, though now physical checks must be carried out. Low-risk items such as canned goods can pass through unchecked though.

UK importers are also facing charges for consignments that arrive into the UK even if they’re not stopped for inspection.

The government has suggested that the increased beurocracy will cost businesses around £330, a year and add 0.2% to food inflation – figures which some specialists believe are optimistic.

The Cold Chain Federation told Sky News: “We think there’s going to be a billion pound’s worth of extra cost put onto food coming through Dover port alone, if you expand that to the rest of the country you’re looking at all sorts of money, so it won’t be 0.2%, it will be substantially more than that and the consumer will see that increase.

“Restaurants, delicatessens, fish and chip shops could well be affected by what’s currently happening today and the consumer, in the very near future will start to see some of those food products going up in price.”

Read more: Brexit has made the UK harder to invest in, and less productive too

A cabinet office minister said that: “It is essential that we introduce these global, risk-based checks to improve the UK’s biosecurity. We cannot continue with temporary measures which leave the UK open to threats from diseases and could do considerable damage to our livelihoods, our economy and our farming industry.”

The economic landscape of the UK has shifted massively since both Brexit and the pandemic. A nation that once used to build and manufacture its GDP now relies heavily on a financial services heart as trade with our closest major market becomes increasingly difficult post-EU departure. 

And this has led to difficulties around productivity, and a slowdown in inwards investment too. 

The productivity puzzle

The introduction of customs checks and the need for additional paperwork have slowed down the process of international trade, impacting industries that rely on just-in-time supply chains in particular. Furthermore, the uncertainty surrounding the UK’s future relationship with the EU has made it difficult for businesses to plan for the long term, stifling investment in productivity-enhancing measures.

Brexit has also had a tangible impact on the workforce too. The end of free movement has led to labour shortages in key sectors such as agriculture, healthcare, and hospitality. These shortages not only hinder operational capacity but also place upward pressure on wages, further squeezing businesses’ ability to invest in productivity-enhancing technologies and training.

Investment challenges

The sentiment around investing in the UK has notably shifted post-Brexit, as highlighted by Jeffrey Sprecher, the founder and chief executive of Intercontinental Exchange. Once a proponent of the UK’s decision to leave the EU, Sprecher has observed a decrease in the UK’s value as a trading centre since its exit from the single market. The ambiguity surrounding post-Brexit regulations has made it increasingly difficult for international companies to commit to investments in the UK.

Sprecher’s comments reflect a broader trend among international investors, who now view the UK with caution due to the compounded uncertainties of Brexit. The perception of the UK as a gateway to Europe has diminished, making investments in the US and other regions appear more straightforward and less risky.

Moreover, the UK’s historical reputation as a global trading centre has been complicated by Brexit. The shift in regulatory frameworks and the potential for divergence from EU standards pose additional hurdles for businesses looking to operate across borders. 

This complexity not only deters investment but also challenges the UK’s ability to maintain its position on the international stage.

A post-Brexit reality 

Brexit has undeniably transformed the UK’s economic landscape, making it a more challenging environment for productivity and investment. The combined effects of trade disruptions, labour shortages, and regulatory uncertainties have contributed to a decline in the UK’s economic performance. 

As the UK continues to navigate its post-Brexit reality, the need for clarity and stability becomes ever more critical to regain the confidence of investors and businesses alike. The path forward will require a balanced approach, one that addresses the immediate challenges while setting the foundations for long-term growth and productivity.

And there are, of course, opportunities to be grabbed too – especially in emerging international markets, for businesses who are brave enough to shift their focus away from the EU and to the global marketplace instead. 

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