Customs checks at the border after the UK leaves the EU could cost £1bn (€1.1bn) a year and cause delays for goods being shipped in both directions, according to a report by Oxera, an economic consultancy.
The estimate assumes low regulation but high levels of enforcement and is based on World Trade Organisation (WTO) data on the cost of trading across borders, Andrew Meaney, a partner at the Oxford-based policy analyst, said.
It comes as Taoiseach Leo Varadkar publicly stepped up the Government’s warnings about the threat of Britain erecting a Brexit “economic border” across Ireland.
If the UK fails to strike a trade deal with the EU, Britain must rely on normal WTO trade rules to access EU markets, and there will be no free movement of people in the absence of bilateral agreements and tariffs may be imposed, according to Chartered Accountants Ireland. The UK’s exit from the EU is scheduled for the end of March 2019. Mr Meaney described the figure as “extremely conservative”.
He said the estimate does not take into account the economic costs of uncertainty involved, extra staff, traffic congestion or land on which to conduct the checks, and said the actual number would likely be much higher.
He called on the UK government to prioritise the issue when it returns from its summer recess in September. “Business in both the UK and the EU needs to know very soon the customs rules under which they will be trading,” he said.
“The decision cannot be part of a last-minute deal on the eve of Brexit, due to the time it will take to get trade moving under the new arrangements,” he said.
Mr Meaney’s report outlines four possible scenarios, ranging from low levels of regulation and enforcement, which is most similar to the current system, to high levels of both — something the port of Dover has described as “Armageddon”.
While the British government still seems determined to leave the single market and customs union that currently give Britain free trade with the EU, it has signalled it is moving toward agreement to seek a transition period of up to three years.
Bloomberg and Irish Examiner staff
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