Why cheese, fish and flowers could all soon cost more because of new Brexit rules
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.
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.
‘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.
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
“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
“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.”
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.”
One of the UK’s last remaining steel companies has been pushed into compulsory liquidation – and will fall into government control.
Speciality Steels UK (SSUK), part of the Liberty Steel empire owned by metals tycoon Sanjeev Gupta, employs nearly 1,500 people at sites in Rotherham and several other locations across South Yorkshire.
Behind Tata Steel and British Steel, it is the third-largest steel producer in the country.
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Sky News reported that negotiations had been underway for a deal to rescue the firm, however, they seem to have been rendered unsuccessful.
The government-run Insolvency Service confirmed it will be acting as the liquidator. It added that Teneo Financial Advisory Limited would be assisting in running the company from now on.
While the GFG Alliance, the holding company, says it is disappointed by the decision, local politicians and unions are highly critical of the group.
The government is taking over – but it doesn’t want to own SSUK
The collapse of Speciality Steel UK (SSUK), the UK’s third-largest steel producer, did not come as a surprise to government officials, who have in recent days been planning for this outcome.
After all, the business has been limping on for some time, weighed down by financial mismanagement and a mounting debt pile. Problems began in 2021 for GFG Alliance – the holding company, which is a conglomerate run by the metals magnate Sanjeev Gupta. Its main lender, Greensill Capital, collapsed with £3.7bn of loans to GFG still outstanding. Administrators for Greensill are still trying to recover the money.
There have been legal claims and probes since then, although GFG denies any wrongdoing. The true scale of SSUK’s financial woes are not even known because the company has not filed audited accounts for more than five years. Sanjeev Gupta is being prosecuted for failing to file accounts for many of his other businesses too.
SSUK’s creditors pushed for the company’s liquidation, but the government was braced to step in. However, the development does little to provide certainty for the business’s 1,500 workers in South Yorkshire.
The government will cover wages and costs for now but, as a letter sent by the Department for Business and Trade made clear earlier this month, the government has no intention to “own SSUK”. As with British Steel, which collapsed back in April (albeit for different reasons), the government is stepping up, but is hoping a new buyer will be found soon.
The government says wages will continue to be paid by the liquidator. A spokesperson adds that the government is still “committed to a bright and sustainable future for steelmaking and steel-making jobs in the UK”.
Financial assistance was not able to be given to SSUK by the government due to its existing financial and corporate challenges, including ownership and management.
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In a statement today, GFG’s chief transformational officer, Jeffrey Kabel said: “The decision to push Speciality Steel UK into compulsory liquidation, especially when we have support from the world’s largest asset manager to resume operations and facilitate creditor recovery, is irrational.
“The plan that GFG presented to the court would have secured new investment in the UK steel industry, protecting jobs and establishing a sustainable operational platform under a new governance structure with independent oversight.
“Instead, liquidation will now impose prolonged uncertainty and significant costs on UK taxpayers for settlements and related expenses, despite the availability of a commercial solution.
“Liberty has pursued all options to make its SSUK viable, including efficiency improvements, reorganisations, customer support, several attempts to find a buyer for the business and intensive negotiations with creditors to restructure debt liabilities. Liberty’s shareholder has invested nearly £200m, recognising the vital role steel plays in supplying the UK’s strategic defence, aerospace and energy industries.
“GFG will now continue to advance its bid for the business in collaboration with prospective debt and equity partners and will present its plan to the official receiver. GFG continues to believe it has the ideas, management expertise and commitment to lead SSUK into the future and attract major investment. GFG’s other significant business interests in the UK remain unaffected.
“Despite many challenges facing the group and the difficult market conditions, GFG has invested over £2bn into the UK economy since 2013, ensuring the survival of many GFG businesses despite operating losses and safeguarding thousands of jobs that would otherwise have been lost.”
Sanjeev Gupta in front of a the Liberty Steel Group sign. File pic: PA
Sarah Champion, the Labour MP for Rotherham, said GFG’s statement was “full of hollow promises”.
She added: “We know Liberty is a golden goose, but one they have starved for years.
“The speciality steel we make is unique and in high demand, it makes no financial sense that GFG furloughed the plant for nearly two years.
“Strategically, the government cannot allow Liberty Steel to fail. I am confident they will do all in their power to let it flourish.”
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Charlotte Brumpton-Childs, the national officer for the GMB union, also attacked GFG.
She said: “This is another tragedy for UK steel – and the people of South Yorkshire – this time brought on by years of chronic mismanagement by the owners.
“But this represents an opportunity for the UK government to take decisive action – as it did with British Steel – to protect this vital UK industry.”
A government spokesperson said: “We know this will be a deeply worrying time for staff and their families, but we remain committed to a bright and sustainable future for steelmaking and steel-making jobs in the UK.
“It is now for the independent Official Receiver to carry out their duties as liquidator, including ensuring employees are paid, while we also make sure staff and local communities are supported.”
Prices in the UK rose even faster than expected last month, reaching the highest level in 18 months, according to official figures.
Inflation hit 3.8% in July, data from the Office for National Statistics (ONS) showed.
Not since January 2024 have prices risen as fast.
It’s up from 3.6% in June and is anticipated to reach 4% by the end of the year.
Economists polled by Reuters had only been expecting a 3.6% rise.
More unwelcome news is contained elsewhere in the ONS’s data.
Train tickets
Another metric of inflation used by government to set rail fare rises, the retail price index, came in at 4.8%.
It means train tickets could go up 5.8% next year, depending on how the government calculate the increase.
This year, the rise was one percentage point above the retail price index measure of inflation.
These regulated fares account for about half of rail journeys.
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Inflation up by more than expected
Why?
Inflation rose so much due to higher transport costs, mostly from air fares due to the school holidays, as well as from fuel and food.
Petrol and diesel were more expensive in July this year compared to last, which made journeys pricier.
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Coffee, orange juice, meat and chocolate were among the items with the highest price rises, the ONS said. It contributed to food inflation of 4.9%.
What does it mean for interest rates?
Another measure of inflation that’s closely watched by rate setters at the Bank of England rose above expectations.
Core inflation – which measures price rises without volatile food and energy costs – rose to 3.8%. It had been forecast to remain at 3.7%.
It’s not good news for interest rates and for anyone looking to refix their mortgage, as the Bank’s target for inflation is 2%.
Whether or not there’ll be another cut this year is hotly debated, but at present, traders expect no more this year, according to data from the London Stock Exchange Group (LSEG).
Economists at Capital Economics anticipate a cut in November, while the National Institute of Economic and Social Research (NIESR) expect one more by the end of the year.
Analysts at Pantheon Macroeconomics forecast no change in the base interest rate.
Political response
Responding to the news, Chancellor Rachel Reeves said:
“We have taken the decisions needed to stabilise the public finances, and we’re a long way from the double-digit inflation we saw under the previous government, but there’s more to do to ease the cost of living.”
Shadow chancellor and Conservative Mel Stride said, “Labour’s choices to tax jobs and ramp up borrowing are pushing up costs and stoking inflation. And the Chancellor is gearing up to do it all over again in the autumn.”
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