Business groups slam government plans to slash no-deal Brexit tariffs to zero
Business groups criticised government proposals to slash tariffs to zero in a no-deal Brexit this morning, with the CBI warning it could prove to be “a sledgehammer for our economy”.
The government said its measures should avert a £9bn hit to consumers and businesses if the UK crashes out of the EU without a deal on 29 March, which is expected to hurt the value of sterling.
Read more: Brexit vote live: Government to slash tariffs in no-deal Brexit
The new tariff schedule would mean 82 per cent of EU imports will face no tariffs, the government said, less than the 100 per cent of EU goods now.
Meanwhile 92 per cent of imports from the rest of the world would be allowed into the UK duty-free.
'Sledgehammer blow'
The business lobby group’s chief executive, Carolyn Fairbairn, told BBC Radio 4’s Today programme that the changes represent “everything that is wrong with a no-deal scenario”.
“What we are hearing is the biggest change in terms of trade this country has faced since the mid-19th century being imposed on this country with no consultation with business, no time to prepare,” she added.
“This is no way to run a country. What we potentially are going to see is this imposition of new terms of trade at the same time as business is blocked out of its closest trading partner. This is a sledgehammer for our economy.”
The government’s plan means manufacturers will face stiffer competition from cheaper imports that could undercut the price of their own products.
The changes were unveiled this morning ahead of MPs’ vote on whether to reject a no-deal Brexit this evening.
Sterling climbed from yesterday’s one per cent drop from $1.309 against the dollar this morning to $1.315 as markets expected the UK to push towards ruling out no-deal and instead seek a Brexit delay in a vote due tomorrow.
The UK’s car industry would still benefit from some protections, but the Society of Motor Manufacturers and Traders (SMMT) came out against the proposals.
'Devastating'
“Today's announcement does not resolve the devastating effect a no-deal Brexit would have on the automotive industry,” said Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT).
“No policy on tariffs can come close to compensating for the disruption, cost and job losses that would result from no deal. It’s staggering that we are in this position with only days until we are due to leave.”
He added: “Every day no deal remains a possibility is another day companies pay the price in expensive contingency measure. No deal must be taken off the table immediately and permanently.”
British producers of pork, beef, lamb and poultry, as well as dairy farmers, would continue to benefit from tariff protections.
'Extend Article 50'
Meanwhile, the wine and spirits industry warned that yesterday’s vote to reject Prime Minister Theresa May’s Brexit deal throws the industry into “yet deeper uncertainty”.
“Whatever happens next it’s clear that an extension to Article 50 is required, which the UK government and the EU should agree as soon as possible,” said Miles Beale, chief executive of the Wine and Spirit Trade Association.
“We welcome the decision that there would be a temporary suspension of tariffs on wine and most spirits under no deal, which the WSTA called for earlier this year. But far more than this would be required to ensure that wine and spirit businesses can deliver a free flow of trade.”
‘A disgrace’
Matthew Lesh, head of research at the free market think tank the Adam Smith Institute, labelled some of the tariff changes “a disgrace”
“The government’s announcement about reducing tariffs in case of a no-deal Brexit is a welcome shift toward free trade – but fails to go far enough,” he said, arguing for full abolishment.
“These reductions are essential to ensure prices do not skyrocket after applying duties to European Union imports which are currently tariff-free,” he added.
“However, Brits are set to pay substantial import taxes on meat. We’ll be paying more for Spanish chorizo, New Zealand lamb and Danish pork. This is a disgrace. It’s economics 101: tariffs are a tax on British consumers that make food more expensive and industry less efficient, pushing down wages.”