A no-deal Brexit would lead to food shortages, higher prices in the shops and cost UK firms billions of pounds, a new analysis from the Government has revealed.
Ministers also admitted that up to a third of “critical” infrastructure projects were now behind schedule, partly due to firms failing to view a no-deal scenario as “sufficiently credible”.
Members of the public are also failing to prepare for a no-deal Brexit, according to the 15-page document, which warned that industries like the automotive sector would be “severely” impacted by new tariff and non-tarriff barriers if the Commons does not back the Withdrawal Agreement negotiated by Theresa May.
“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. As of February 2019, many businesses in the food supply industry are unprepared for a no deal scenario.”
The stark analysis warned that harsh new customs arrangements would be implemented if the UK is treated as a third country by the EU in the event that no managed exit is agreed between London and Brussels.
“Every consignment would require a customs declaration, and so around 240,000 UK businesses that currently only trade with the EU would need to interact with customs processes for the first time, should they continue to trade with the EU,” they wrote.
“HMRC has estimated that the administrative burden on businesses from customs declarations alone, on current (2016) UK-EU trade in goods could be around £13bn pa.”
On Whitehall’s preparedness, the document said: “In February, departments reported being on track for just under 85 per cent of no deal projects but, within that, on track for just over two-thirds of the most critical projects.”
According to a Government survey, 55% of British adults did not expect to be impacted by a no-deal Brexit.
They added: “Despite communications from the Government, there is little evidence that businesses are preparing in earnest for a no deal scenario, and evidence indicates that readiness of small and medium-sized enterprises in particular is low.”.
The study also warned that consumers would be hit by rising food prices and shortages due to a “very significant reduction” in the amount of goods able to pass through the Channel crossings which the government say could last for months.
Downing Street had been initially reluctant to release the report but was forced into publishing it after a Commons vote.
The warnings come just hours after Theresa May vowed to give MPs a vote on whether they would be willing to accept a no-deal Brexit or a delay to Article 50 if she is unable to secure their backing for her deal.
She added: “If we have to, we will ultimately make a success of a no-deal.”
Responding to the report, Labour MP Martin Whitfield of the Best for Britain campaign, said: “These are truly shocking admissions by a government looking to abdicate responsibility for the oncoming chaos.
“We’ve known for a while that businesses aren’t ready for Brexit and that it’s disrupting their work already – big or small. Now we know a third of the most critical government projects aren’t ready, while the economy is due to shrink. The government has full ownership of this mess.”
Source: Politics Home