Brexit border checks to ‘add billions’ to consumer bills

Published

3 weeks ago

April 30, 2024

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Border checks on food and plant imports will add billions of pounds to the cost of doing business with the European Union, industry figures have warned.

From today European imports considered a “medium risk” to UK biosecurity will face physical inspection as part of a new border regime introduced almost eight years after the Brexit vote, and delayed five times in two years.

Plant and animal inspectors will examine a proportion of imported goods including fresh meat, fish, and dairy produce, a process that importers fear will disrupt supply chains, particularly for time-critical fresh goods.

The physical checks come three months after the introduction of new documentation for imports, including health certificates that require vets and plant inspectors to sign off consignments.

With importers also facing a charge for each consignment that comes into the UK irrespective of whether it is stopped for inspection, the government admits it will add more than £330m to annual business costs, and add 0.2% to food inflation over three years.

The Cold Chain Federation, which represents cold and frozen goods importers, believes government estimates are low, and puts the cost in billions.

“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,” chief executive Phil Pluck told Sky News.

“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.”

The government insists the checks are necessary to keep food and plant-borne diseases including African swine fever out of the UK, and the cost of introducing the checks is “negligible” compared to the impact of a major disease outbreak.

Christine Middlemiss, the UK chief veterinary officer, said: “Now that we’re out of the EU and we can have our own biosecurity regime, we treat independently with other countries around the world so it’s important we’re managing our own biosecurity risks at the moment we’re at medium risk of incursion of a disease called African swine fever which is present in Germany and Italy and a number of countries in Europe.”

Smaller independent food importers fear they will be disproportionately affected by the new border regime as they lack the scale to mitigate costs or set up European subsidiaries to handle the process.

Stefano Vallebona came to the UK 40 years ago from Sardinia and began providing London’s top restaurateurs with high-quality European produce. He says the new red tape will discourage small suppliers from doing business with the UK and ultimately reduce choice.

“All the pasteurised cheese, they already have extra European certificates, and when you talk to suppliers they’re not so keen, probably because they’re too small, because it’s new and it’s time consuming, so we’re going to have less speciality products.

“We will have less interesting cheeses, less interesting meats, and probably more power to the supermarkets and less to independents because it’s going to be harder.”

European importers say the health checks are of limited value as they replicate the EU processes that the UK helped create for four decades, and have lived with for the last eight years without any additional processes.

Piotr Liczycki, managing director of Polish haulage firm Eljot International Transport, which specialises in meat imports, estimates his customers will pay around £1m in fees to the UK government this year.

“Nobody can explain what’s the difference between midnight and when the Brexit rules start up. It’s completely the same stuff, from the same factory, with the same quality, nothing has changed,” he told Sky News.

“Polish groups and poultry plants are wondering why the UK government didn’t enforce a solution like we have with Japan, or South Korea. You send us a couple of officials from Defra, they check the plant, do inspection, and say this plant is compliant with all our regulations so we give you permission to send goods for six months or a year.”

Cabinet Office minister Baroness Neville-Rolfe said: “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.”

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£4.7bn spent on EU border checks but some costs ‘unnecessary’ and timetable unclear, says new National Audit Office report

Published

11 hours ago

May 20, 2024

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£4.7bn spent on EU border checks but some costs 'unnecessary' and timetable unclear, says new National Audit Office report

Traders are facing increased costs and more paperwork due to Brexit border controls, according to a new report from the independent public spending watchdog.

The government is estimated to have spent £4.7bn so far but some of that spending was not necessary, the National Audit Office (NAO) has said.

Despite the UK voting to leave the European Union in 2016 – and officially exiting in 2020 – many border control checks are yet to be implemented.

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It is “not clear” when the checks will be fully in place, said Parliament’s spending authority in its trade border report, and there is no timetable for government to achieve its “world’s most effective border” target.

This lack of certainty, as well as “repeated delays” in bringing in import controls, resulted in spending on infrastructure and staff that was “ultimately not needed”, according to the NAO.

Those delays and the associated uncertainty have also impacted businesses by adding extra cost and admin burdens, the watchdog added.

Late policy announcements have reduced the ability of businesses and ports to prepare for changes, the report said.

After five delays, the first phase of border barriers – requiring additional certification – came into force on 31 January this year, with a second phase having started on 30 April when physical checks were introduced at ports.

A third phase, requiring safety and security declarations, is scheduled for 31 October. These phases are partial import controls.

‘Increased biosecurity risk’

The UK is at “increased biosecurity risk” due to the phased implementation approach and having lost access to EU surveillance and alert systems after Brexit, the NAO said.

There is reduced awareness of “impending dangers”, such as African Swine Fever, it added.

Customs declaration work borne by businesses had been estimated to cost organisations a collective £7.5bn, according to HM Revenue and Customs (HMRC) figures in 2019, which the NAO notes has not been updated despite 39m customs declarations being made on goods moving between Britain and the EU in 2022.

The government’s £4.7bn figure is an estimate of post-Brexit border management and does not factor in the full, eventual cost.

Strategy ‘lacks clear timetable’

It has not specified when a full regime will be in place but said it intends to introduce most of the remaining import controls during 2024.

The NAO said the 2025 UK border strategy “lacks a clear timetable” and cross-government delivery plan, with individual departments leading and implementing different parts.

It added that annual reports on progress will not be published until 2025 “at the earliest”, despite the government saying in its border strategy in 2020 that it would publish yearly progress reports.

The NAO recommended full border controls operate at all ports “as soon as possible”.

Business

Online fashion giant Shein approaches Sajid Javid ahead of blockbuster IPO

Published

13 hours ago

May 20, 2024

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Online fashion giant Shein approaches Sajid Javid ahead of blockbuster IPO

Sajid Javid, the former chancellor of the exchequer, has been approached about taking a role at Shein, the online fashion giant which is progressing plans for London’s biggest stock market float for years.

Sky News has learnt that Mr Javid is among a number of senior City figures who have held talks with Donald Tang, Shein’s executive chairman, in recent weeks.

City sources said that if the appointment of Mr Javid proceeded, it could see him either join Shein’s board or become an adviser to the Chinese-founded company.

They added that Baroness Fairhead, the former BBC Trust chair, was also on a list of candidates drawn up by headhunters advising Shein.

One person close to the company said the identities of those being approached reflected both the seriousness with which Shein was taking the issue of corporate governance and the extent of its focus on a London listing.

Since leaving the government, Mr Javid has taken a role with Centricus, an investment firm which tried unsuccessfully to structure an offer for Chelsea Football Club in 2022.

A spokesman for him, who had insisted that Mr Javid would stand for re-election in his Bromsgrove seat a week before publicly announcing the opposite, did not respond to a request for comment from Sky News.

In recent weeks, several reports have repeated Sky News’ revelation that Shein has turned its attention to a London flotation amid difficulties in securing approval from US regulators.

An initial public offering would be likely to value Shein at around £50bn or more.

Paris is also understood to have been considered by the company as a possible listing venue.

Earlier this year, Jeremy Hunt, the chancellor, held talks with Donald Tang, Shein’s executive chairman, to persuade the company to commit to what would be one of London’s biggest-ever corporate flotations.

The meeting between Mr Hunt and Mr Tang underlined the importance that British officials are attaching to the idea of trumping the US in an effort to land the Shein IPO.

If it proceeded, Shein could become the London Stock Exchange’s second-largest IPO in history, behind the 2011 stock market debut of Glencore International, the commodities trading and mining group.

Mr Tang has also met executives from the LSE as well as more junior ministers as part of its IPO preparations.

Shein filed documents for a New York listing last year, but has grown concerned that its application may be rejected by the US Securities and Exchange Commission.

Goldman Sachs, JP Morgan and Morgan Stanley are advising on the deal.

Based in Singapore, Shein has become one of the world’s largest online fashion retailers, although its growth has not been untroubled amid mounting concerns about labour standards.

Last year, Sky News revealed that Shein was in talks to buy the British fashion brand Missguided from Mike Ashley’s Frasers Group.

While the transaction itself was worth only a modest sum, retail analysts said that it could pave the way for Shein to build a more meaningful profile in the UK, potentially through a broader collaboration with Frasers.

Founded in China in 2012, Shein was valued at over $100bn last year, at which point it was worth more than H&M and Zara’s parent company, Inditex, combined.

The company’s valuation was slashed to $66bn as part of a share sale last year.

Shein operates in more than 150 countries.

It has also struck an agreement with SPARC Group, a joint venture between the Ted Baker-owner ABG and Simon Property Group, a US shopping mall operator.

Under that deal, SPARC’s Forever 21 fashion brand gained distribution on the Shein platform, which boasts 150m users globally.

Shein acquired a one-third stake in SPARC Group, while SPARC Group also took an undisclosed minority interest in Shein.

The LSE’s efforts to court Shein come during a challenging period for the City as a listing venue for large multinationals, with ARM Holdings, the UK-based chip designer, opting to float in New York rather than London.

Other companies, such as the gambling operator Flutter Entertainment and drug company Indivior, are planning to shift their primary listings to the US, citing higher valuations and more liquid markets.

In recent weeks, however, London has landed the prospective IPOs of Raspberry Pi, the personal computer maker, and AOTI, a medical technology provider.

Mr Hunt last week hosted a summit at Dorneywood attended by technology companies looking at listing in the UK.

Shein declined to comment.

Business

Record profits at Ryanair after costs rise – but ticket price cuts could be on the way

Published

13 hours ago

May 20, 2024

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Record profits at Ryanair after costs rise - but ticket price cuts could be on the way

Ryanair has reported another year of record profits and passenger numbers.

The average fare at the airline, which is Europe’s largest by passenger numbers, was 21% more expensive than 12 months earlier, its annual results showed.

But the company suggested a cut in ticket prices could be on the way after this summer when prices will either be the same or more expensive than last year.

Annual profits reached €1.92bn (£1.64bn), surpassing the previous record of €1.45bn (£1.26bn) made in the year ending March 2018.

Passenger numbers also outpaced previous all-time highs and are now well above pre-pandemic numbers at 184 million – a rise of 23% on the pre-COVID year of 2019.

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Ticket prices

Those passengers paid fares costing an average of 21% more than the year up to March 2023 but Ryanair’s chief executive Michael O’Leary said if the company has to cut fares to have planes 94% full next April, May and June “then so be it”.

While demand is “strong” for summer flights and its summer schedule will operate over 200 new routes, the low-cost carrier said it remained “cautiously optimistic that peak summer 2024 fares will be flat to modestly ahead of last summer”.

Boeing headwinds

The passenger increase has come despite Boeing‘s delays in delivering new planes to the airline.

Ryanair had staked a large part of its financial success on expansion through 300 new 737 MAX 10 aircraft.

But the plane manufacturer has been beset by delays amid regulatory and media scrutiny of safety at its manufacturing sites after a door blew off an Alaska Airlines Boeing 737 MAX 9 jet.

There’s a risk those delays “could slip further”, Mr O’Leary said.

But Ryanair said it would receive “modest compensation” from Boeing for the delays.

The no-frills carrier also said its fuel bill rose 32% to €5.14bn (£4.4bn).