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New Brexit border controls will leave British consumers and businesses facing more than £500m in increased costs and possible delays – as well as shortages of food and fresh flowers imported from the European Union.

The new rules are intended to protect biosecurity by imposing controls on plant and animal products considered a “medium” risk. These include five categories of cut flowers, cheese and other dairy produce, chilled and frozen meat, and fish.

From 31 January, each shipment will have to be accompanied by a health certificate, provided by a local vet in the case of animal produce, and, from 30 April, shipments will be subject to physical checks at the British border.

From Paul Kelso Flowers new EU Brexit measures VT

The government’s modelling says the new controls will cost industry £330m, while the grocery industry has warned that £200m could be added to fresh fruit and vegetable prices should checks be introduced in the future.

There is also the prospect of delays caused by inspections of faulty paperwork, which could derail supply chains that rely entirely on fast turnaround of goods.

British importers have told Sky News that the new rules, which have already been delayed five times in three years, will add up to 17% to shipping costs, leading to higher prices for consumers.

European companies and industry groups say the controls are unnecessary as they replicate checks already made in the EU, and that Brexit is adding bureaucracy and cost to dealing with the UK.

The new import controls are a consequence of Britain having left both the single market and the customs union when the trade and co-operation deal with the EU came into force in January 2021.

While UK exporters to Europe were immediately subject to customs rules, the British government waived import controls to avoid damaging the economy and food supply.

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On five occasions since 2021 ministers planned and then cancelled their introduction, in part because of fears that interrupting food supplies from the EU would exacerbate the cost of living crisis.

Almost 80% of UK vegetable imports and 40% of fruit comes from Europe.

In the Netherlands, the horticulture industry has called for a further delay to controls that will impact its £1bn-a-year trade with the UK, the second largest in Europe behind Germany, which accounts for around 90% of our cut flower and plant imports.

From Paul Kelso Flowers new EU Brexit measures VT

‘We’re going back in time’

Dutch flower wholesaler Heemskerk has been exporting to the UK since before it joined the common market.

The UK now requires that five types of flowers, including orchids and carnations, be checked in factories by a local inspector for two species of leaf mites that destroy foliage.

Managing director Nick van Bommel points out that the checks replicate the same processes made at the Dutch border if the plants are imported to Europe, and by his staff for trade within the EU.

Dutch flower wholesaler Heermskerk Managing director Nick van Bommel From Paul Kelso cheese new EU Brexit measures VT
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Managing director of Dutch flower wholesaler Heemskerk Nick van Bommel

“We’re going back in time. They want to have health inspections that we haven’t carried out for more than thirty years, and now from next week on we start again,” he said.

“It won’t help anybody, but it will make an awful lot of costs and somebody has to pay the bill at the end. I’m 100% sure that the last customer, the British consumer, has to pay for this.”

The Dutch association of floriculture wholesalers has asked the British government to delay the changes by another year.

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Its spokesperson Tim Rozendaal told Sky News: “If Brexit was about cutting down Brussels’s red tape and bringing down costs, I don’t see the point.

“Anything that our industry has been facing since Brexit is longer red tape, additional costs and bureaucracy.”

At New Covent Garden Market in London, which receives shipments from the Netherlands within hours of flowers being cut, wholesalers are equally sceptical.

Freddie Heathcote, owner of Green & Bloom, calculates his shipping costs will rise by up to 17% – and the knock-on to consumers could be increases of 20% to 50% once the physical inspection regime is in place.

Freddie Heathcote, owner of Green & Bloom From Paul Kelso 26 Jan VT on new Brexit controls
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Freddie Heathcote, owner of Green & Bloom

“We have been told the charge for consignments crossing at Dover or Folkestone will be £20 to £43 per category item listed on the consignment.

“We imported 28 different consignment lines tonight from one supplier, which would be £560 to £1,204 to clear the border control point on a total invoice of £7,000. That’s between 8% and 17% additional cost on an average import for us.”

The food industry is concerned too.

Patricia Michelson, founder of London cheese chain La Fromagerie, has been importing artisan cheese from across Europe for more than 40 years. She is concerned that the cost and hassle of sourcing veterinary checks in Europe will dissuade some suppliers.

Patricia Michelson, founder of London cheese chain La Fromagerie From Paul Kelso VT on new Brexit controls
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Patricia Michelson, founder of London cheese chain La Fromagerie

“We deal with suppliers who are one or two guys in a dairy with 50 or 100 sheep or 20 cows. Do they want to be paying for this new certificate to send to us?

“I assure you that most of them will say no. So the onus is on us… that means another extra cost, on top of all the costs so far to bring the produce in.”

 From Paul Kelso cheese new EU Brexit measures VT
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La Fromagerie

‘Disturbing confusion’

After months of preparation this week the Department of Environment, Food and Rural Affairs added a host of common fruit and vegetables to the list of medium risk produce.

It initially said the produce would only face physical checks from October, but 48 hours later changed the rules again, saying they would give three months notice when health declarations and physical checks are required.

The late change attracted criticism from leading trade body the Institute of Export and International Trade.

“The confusion caused by the announcement… is disturbing, particularly at a point when significant changes are being planned for the general operation of the UK border,” said its general secretary Marco Forgione.

A government spokesman said: “We are committed to delivering the most advanced border in the world. The Border Target Operating Model is key to delivering this, protecting the UK’s biosecurity from potentially harmful pests and diseases and maintaining trust in our exports.

“We are taking a phased approach – including initially not requiring pre-notification and inspections for EU medium risk fruit and vegetables and other medium risk goods – to support businesses and ensure the efficient trade is maintained between the EU and Great Britain.”

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Bank chiefs to Reeves: Ditch ring-fencing to boost UK economy

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Bank chiefs to Reeves: Ditch ring-fencing to boost UK economy

The bosses of four of Britain’s biggest banks are secretly urging the chancellor to ditch the most significant regulatory change imposed after the 2008 financial crisis, warning her its continued imposition is inhibiting UK economic growth.

Sky News has obtained an explosive letter sent this week by the chief executives of HSBC Holdings, Lloyds Banking Group, NatWest Group and Santander UK in which they argue that bank ring-fencing “is not only a drag on banks’ ability to support business and the economy, but is now redundant”.

The CEOs’ letter represents an unprecedented intervention by most of the UK’s major lenders to abolish a reform which cost them billions of pounds to implement and which was designed to make the banking system safer by separating groups’ high street retail operations from their riskier wholesale and investment banking activities.

Their request to Rachel Reeves, the chancellor, to abandon ring-fencing 15 years after it was conceived will be seen as a direct challenge to the government to take drastic action to support the economy during a period when it is forcing economic regulators to scrap red tape.

It will, however, ignite controversy among those who believe that ditching the UK’s most radical post-crisis reform risks exacerbating the consequences of any future banking industry meltdown.

In their letter to the chancellor, the quartet of bank chiefs told Ms Reeves that: “With global economic headwinds, it is crucial that, in support of its Industrial Strategy, the government’s Financial Services Growth and Competitiveness Strategy removes unnecessary constraints on the ability of UK banks to support businesses across the economy and sends the clearest possible signal to investors in the UK of your commitment to reform.

“While we welcomed the recent technical adjustments to the ring-fencing regime, we believe it is now imperative to go further.

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“Removing the ring-fencing regime is, we believe, among the most significant steps the government could take to ensure the prudential framework maximises the banking sector’s ability to support UK businesses and promote economic growth.”

Work on the letter is said to have been led by HSBC, whose new chief executive, Georges Elhedery, is among the signatories.

His counterparts at Lloyds, Charlie Nunn; NatWest’s Paul Thwaite; and Mike Regnier, who runs Santander UK, also signed it.

While Mr Thwaite in particular has been public in questioning the continued need for ring-fencing, the letter – sent on Tuesday – is the first time that such a collective argument has been put so forcefully.

The only notable absentee from the signatories is CS Venkatakrishnan, the Barclays chief executive, although he has publicly said in the past that ring-fencing is not a major financial headache for his bank.

Other industry executives have expressed scepticism about that stance given that ring-fencing’s origination was largely viewed as being an attempt to solve the conundrum posed by Barclays’ vast investment banking operations.

The introduction of ring-fencing forced UK-based lenders with a deposit base of at least £25bn to segregate their retail and investment banking arms, supposedly making them easier to manage in the event that one part of the business faced insolvency.

Banks spent billions of pounds designing and setting up their ring-fenced entities, with separate boards of directors appointed to each division.

More recently, the Treasury has moved to increase the deposit threshold from £25bn to £35bn, amid pressure from a number of faster-growing banks.

Sam Woods, the current chief executive of the main banking regulator, the Prudential Regulation Authority, was involved in formulating proposals published by the Sir John Vickers-led Independent Commission on Banking in 2011.

Legislation to establish ring-fencing was passed in the Financial Services Reform (Banking) Act 2013, and the regime came into effect in 2019.

In addition to ring-fencing, banks were forced to substantially increase the amount and quality of capital they held as a risk buffer, while they were also instructed to create so-called ‘living wills’ in the event that they ran into financial trouble.

The chancellor has repeatedly spoken of the need to regulate for growth rather than risk – a phrase the four banks hope will now persuade her to abandon ring-fencing.

Britain is the only major economy to have adopted such an approach to regulating its banking industry – a fact which the four bank chiefs say is now undermining UK competitiveness.

“Ring-fencing imposes significant and often overlooked costs on businesses, including SMEs, by exposing them to banking constraints not experienced by their international competitors, making it harder for them to scale and compete,” the letter said.

“Lending decisions and pricing are distorted as the considerable liquidity trapped inside the ring-fence can only be used for limited purposes.

“Corporate customers whose financial needs become more complex as they grow larger, more sophisticated, or engage in international trade, are adversely affected given the limits on services ring-fenced banks can provide.

“Removing ring-fencing would eliminate these cliff-edge effects and allow firms to obtain the full suite of products and services from a single bank, reducing administrative costs”.

In recent months, doubts have resurfaced about the commitment of Spanish banking giant Santander to its UK operations amid complaints about the costs of regulation and supervision.

The UK’s fifth-largest high street lender held tentative conversations about a sale to either Barclays or NatWest, although they did not progress to a formal stage.

HSBC, meanwhile, is particularly restless about the impact of ring-fencing on its business, given its sprawling international footprint.

“There has been a material decline in UK wholesale banking since ring-fencing was introduced, to the detriment of British businesses and the perception of the UK as an internationally orientated economy with a global financial centre,” the letter said.

“The regime causes capital inefficiencies and traps liquidity, preventing it from being deployed efficiently across Group entities.”

The four bosses called on Ms Reeves to use this summer’s Mansion House dinner – the City’s annual set-piece event – to deliver “a clear statement of intent…to abolish ring-fencing during this Parliament”.

Doing so, they argued, would “demonstrate the government’s determination to do what it takes to promote growth and send the strongest possible signal to investors of your commitment to the City and to strengthen the UK’s position as a leading international financial centre”.

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Post Office to unveil £1.75bn banking deal with big British lenders

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Post Office to unveil £1.75bn banking deal with big British lenders

The Post Office will next week unveil a £1.75bn deal with dozens of banks which will allow their customers to continue using Britain’s biggest retail network.

Sky News has learnt the next Post Office banking framework will be launched next Wednesday, with an agreement that will deliver an additional £500m to the government-owned company.

Banking industry sources said on Friday the deal would be worth roughly £350m annually to the Post Office – an uplift from the existing £250m-a-year deal, which expires at the end of the year.

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The sources added that in return for the additional payments, the Post Office would make a range of commitments to improving the service it provides to banks’ customers who use its branches.

Banks which participate in the arrangements include Barclays, HSBC, Lloyds Banking Group, NatWest Group and Santander UK.

Under the Banking Framework Agreement, the 30 banks and mutuals’ customers can access the Post Office’s 11,500 branches for a range of services, including depositing and withdrawing cash.

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The service is particularly valuable to those who still rely on physical cash after a decade in which well over 6,000 bank branches have been closed across Britain.

In 2023, more than £10bn worth of cash was withdrawn over the counter and £29bn in cash was deposited over the counter, the Post Office said last year.

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A new, longer-term deal with the banks comes at a critical time for the Post Office, which is trying to secure government funding to bolster the pay of thousands of sub-postmasters.

Reliant on an annual government subsidy, the reputation of the network’s previous management team was left in tatters by the Horizon IT scandal and the wrongful conviction of hundreds of sub-postmasters.

A Post Office spokesperson declined to comment ahead of next week’s announcement.

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Trump trade war: How UK figures show his tariff argument doesn’t add up

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Trump trade war: How UK figures show his tariff argument doesn't add up

As Chancellor Rachel Reeves meets her counterpart, US Treasury secretary Scott Bessent to discuss an “economic agreement” between the two countries, the latest trade figures confirm three realities that ought to shape negotiations.

The first is that the US remains a vital customer for UK businesses, the largest single-nation export market for British goods and the third-largest import partner, critical to the UK automotive industry, already landed with a 25% tariff, and pharmaceuticals, which might yet be.

In 2024 the US was the UK’s largest export market for cars, worth £9bn to companies including Jaguar Land Rover, Bentley and Aston Martin, and accounting for more than 27% of UK automotive exports.

Little wonder the domestic industry fears a heavy and immediate impact on sales and jobs should tariffs remain.

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American car exports to the UK by contrast are worth just £1bn, which may explain why the chancellor may be willing to lower the current tariff of 10% to 2.5%.

For UK medicines and pharmaceutical producers meanwhile, the US was a more than £6bn market in 2024. Currently exempt from tariffs, while Mr Trump and his advisors think about how to treat an industry he has long-criticised for high prices, it remains vulnerable.

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The second point is that the US is even more important for the services industry. British exports of consultancy, PR, financial and other professional services to America were worth £131bn last year.

That’s more than double the total value of the goods traded in the same direction, but mercifully services are much harder to hammer with the blunt tool of tariffs, though not immune from regulation and other “non-tariff barriers”.

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The third point is that, had Donald Trump stuck to his initial rationale for tariffs, UK exporters should not be facing a penny of extra cost for doing business with the US.

The president says he slapped blanket tariffs on every nation bar Russia to “rebalance” the US economy and reverse goods trade ‘deficits’ – in which the US imports more than it exports to a given country.

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That heavily contested argument might apply to Mexico, Canada, China and many other manufacturing nations, but it does not meaningfully apply to Britain.

Figures from the Office for National Statistics show the US ran a small goods trade deficit with the UK in 2024 of £2.2bn, importing £59.3bn of goods against exports of £57.1bn.

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Add in services trade, in which the UK exports more than double what it imports from the US, and the UK’s surplus – and thus the US ‘deficit’ – swells to nearly £78bn.

That might be a problem were it not for the US’ own accounts of the goods and services trade with Britain, which it says actually show a $15bn (£11.8bn) surplus with the UK.

You might think that they cannot both be right, but the ONS disagrees. The disparity is caused by the way the US Bureau of Economic Analysis accounts for services, as well as a range of statistical assumptions.

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“The presence of trade asymmetries does not indicate that either country is inaccurate in their estimation,” the ONS said.

That might be encouraging had Mr Trump not ignored his own arguments and landed the UK, like everyone else in the world, with a blanket 10% tariff on all goods.

Trade agreements are notoriously complex, protracted affairs, which helps explain why after nine years of trying the UK still has not got one with the US, and the Brexit deal it did with the EU against a self-imposed deadline has been proved highly disadvantageous.

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