Friday

18th Jan 2019

Traders warned of red tape, people of new costs in UK's Brexit advice

  • The UK notes explained what might happen in a disorderly Brexit (Photo: Peter Teffer)

UK businesses could face an avalanche of red tape and citizens might have difficulties with their banking services if Britain leaves the EU without a deal, the UK government has said.

Citizens would see an increase in cost of card payments between the US and the EU, according to the first batch of the UK's preparatory notes on Brexit released on Thursday (23 August).

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The cost of using card payments, and, with that, of online shopping, could go up for UK customers because an EU ban on firms charging extra for credit card payments will not apply.

Brexit secretary Dominic Raab introduced the notes saying a no-deal scenario was "unlikely" and that he was "confident" that a "good deal" was within reach.

"I am still confident that getting a good deal is, by far, the most likely outcome," he said.

But the UK still needs to prepare for the possibility of it crashing out of the EU next March, with barely a few months left to negotiate a divorce agreement, amid major disputes, such as how to avoid a hard border between Northern Ireland and the republic of Ireland.

Raab said the UK wanted a deal, but added: "We must be ready."

Meanwhile, hardline Brexiteers have been supporting the idea of not agreeing to what they see as a rigid EU stance on key issues and want a "clean break" with the bloc.

Staying close

But according to Thursday's notes – with more to come by the end of September – the UK is preparing to align some rules and regulations with the EU.

The UK will transpose EU rules on workplace rights, "so workers will continue to be entitled to the rights they have now", Raab said.

Britain will also put EU state aid rules, making sure that taxpayer money is not propping up private ventures illegally, into UK domestic legislation in all sectors, saying the "government will create a UK-wide subsidy control framework to ensure the continuing control of anti-competitive subsidies".

The UK plans to recognise EU standards for medicines, so that drugs from the bloc will not have to be re-tested in the UK.

London would also continue to accept some EU regulatory requirements to make trade and business smoother, for example on medical devices.

Britain will need to set up a variety of regulatory bodies to fill in the role currently played by EU agencies.

The UK also plans to continue funding British research and academic programs that have received EU money, which would be cut off in a no-deal scenario.

The same thing is to be done for the UK's farmers who might lose EU funding from the common agricultural policy.

But not everybody is so lucky.

For instance, organic farmers will not be able to export to the EU unless the bloc accepts UK standards, which could only happen after Brexit. UK producers will not be able to use the EU logo for organic products.

Cigarette packaging will change as well because the EU holds the rights to those photos of cancerous lungs and sick smokers which are printed on the packs.

Hire more people

The UK also plans to hire 9,000 more staff to boost the civil service's capacity to deal with Brexit.

There are already more than 7,000 people working on preparing for the UK's departure from the EU.

Business will face a huge array of bureaucracy and the government advises those in trade to employ customs brokers and logistics experts, to acquire appropriate software and to develop customs warehousing – a big set of challenges for smaller firms.

For trading goods with the EU, "an import declaration will be required, customs checks may be carried, out and any customs duties must be paid," according to Thursday's document.

The notes also point out that Britain will allow EU financial services firms "passporting" rights to operate in the UK for up to three years, even if no reciprocal agreement on these services is reached with the EU.

If the UK companies will not be allowed the same rights by the EU, British pensioners in Europe could have trouble accessing their pensions.

Ask Dublin

The 25 notes released on Thursday touched on the issue of Northern Ireland, admitting that there will be "very significant challenges" in trading cross-border, but offered no new proposals.

The UK government instead tells Northern Ireland businesses to ask Dublin what they should do in the event of no deal on Brexit.

The notes were released as a new report by KPMG found that most British people believe the UK will leave the EU without a deal, that many are planning to cut costs, and to shy away from investments.

According to the survey, 54 percent of respondents thought it was now likely that Britain would leave the bloc without a deal.

Nevertheless, negotiators meet again next week in Brusselsto hammer out compromises on the key hurdles, as 80 percent of the withdrawal deal has already been agreed to.

'Dealbreaker' issues multiply in Brexit talks

As chief negotiators Raab and Barnier meet again in Brussels on Friday, UK demands for guarantees on the future relationship have put chances of no-deal Brexit over 50 percent.

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