‘Substantial’ rise in trading costs after Brexit, Scottish Government claims

Scotland’s Brexit Secretary accused the UK Government of having imposed “extra burdens” on businesses at a time of “unprecedented challenge”.

Constitution, Europe and External Affairs Secretary Mike Russell hit out at the Conservative administration in Westminster over their “bad Brexit deal”, claiming it would be “very damaging to the economy and for jobs”.

His attack came as a new paper by the Scottish Government warned that trading costs for those firms doing business with Europe would “increase substantially due to additional customs and borders paperwork” with this making them less competitive.

Scottish Government research has already raised fears the deal struck by Prime Minister Boris Johnson could see GDP north of the border fall by 6% by 2030 – a potential loss to the economy of some £9 billion compared to staying in the European Union.

This latest Scottish Government paper suggests that “new delays at the border including new customs formalities are expected to cost Scotland and rest of the UK businesses £7 billion annually”.

It adds: “Just-in-time supply chains of perishable products such as seafood may be jeopardised.

“Premium Scottish products such as salmon, beef and lamb will require new export health certificates for exporting into the EU.”

Meanwhile Scottish exports to Northern Ireland will also face new controls, the paper states, warning that as a result “consumer prices may rise and jobs across sectors will inevitably be affected”.

And the key financial services sector – which makes up almost 10% of Scotland’s economy employing some 62,000 people – now faces “ongoing uncertainty under a patchwork of partial and temporary equivalence decisions about their access to EU markets”.

This could result in “further costly restructuring” by the industry, the paper states.

The Scottish Seafood Association, which represents processors, has already told how exports to the EU are being hit by unnecessary delays, resulting from the full impact of Brexit being felt from January 1 onwards.

Mr Russell meanwhile insisted the Brexit deal agreed just days before that was “utterly unacceptable and very damaging to the economy and for jobs”.

He stated: “The problems that we are seeing at various borders now are exactly the sorts of issues that Scottish Ministers have been raising since the Brexit referendum.

“The customs and border compliance requirements, that have long existed for ‘third countries’, were always going to burden shippers and traders if UK membership of the Customs Union ended.

“We repeatedly pointed out the need for businesses to have time to prepare, given the complexity of the rules and IT systems involved.”

He said the Scottish Government was “doing all we can to mitigate the impact of Brexit” – saying the UK’s departure from the EU had come “during the Covid-19 pandemic which is having such a significant impact on business and the economy”.

But Mr Russell said: “The UK Government chose not to extend the transition period and only completed the Brexit deal days before the end of the transition period, making it impossible for businesses to properly prepare.

“The warnings against pursuing Brexit during a pandemic were ignored. The UK Government, with their bad Brexit deal, chose to impose these extra burdens on business at a time of unprecedented challenge – which is utterly unacceptable and very damaging to the economy and for jobs.”

UK Cabinet Minister Michael Gove said: “I’d like to thank hauliers, traders and our key industry partners for the hard work they have been putting in to make sure that they are compliant with the new rules.

“The preparations they have made have paid dividends and disruption has been minimal so far, but the real challenge and potential for significant disruption starts next week when we expect that the number of lorries heading to the border may return to normal levels.

“We have always been clear there would be changes now that we are out of the customs union and single market, so full compliance with the new rules is vital to avoid disruption, and the best way to ensure readiness is to follow the guidance on gov.uk and use the ‘Check an HGV’ service.

“We stand ready to help keep goods flowing smoothly as we adjust to our new relationship with the EU.”