Border controls being implemented later this month could cost UK importers of EU food and drink up to £2bn ($2.5bn), according to research from insurance group Allianz.
The insights, published today (11 April), also suggest the checks could cause inflation to jump by +0.15 percentage points over the next year.
Dairy, meat and fish would be the most affected by the inflationary hike, said Allianz.
According to the report, the “Physical checks, health certificates and identification” will apply to UK imports valuing at around £21bn, equating to 3% of all national imports and nearly 8% of all imports from the EU.
New “documentary and risk-based identity checks” on “medium-risk” agri-food imports come into play at the UK border from 30 April.
Such products coming under the “medium-risk” category include meat goods like minced meat, poultry, rabbit, game and their chilled or frozen products.
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By GlobalData
They also include processed dairy such as chilled milk, cheese containing raw, non-pasteurised raw milk, and eggs. Certain types of “wild-caught fish” also sit in the classification, including fresh, chilled or frozen tuna, herring, mackerel and anchovy, because of their histamines content.
These will apply to animal-based products from the EU and European Free Trade Association regions, and to plant products from the EU, Switzerland and Lichtenstein.
Allianz also highlighted that the UK’s two-year tariff suspension, announced today would help to ease inflation, which “could cut total import costs by £7bn”.
According to Reuters, the suspension will apply to over 100 products that “aren’t produced in sufficient quantities in Britain”, such as fruit juice.
When it comes to inflation however, the proposed initiative will only ease inflation by -0.6 percentage points.
The incoming border checks mark another update in the UK’s post-Brexit Border Target Operating Model (BTOM), which was launched at the start of 2024 and is being implemented in stages.
Some sector representatives have called for a delay in the roll-out of the BTOM. In a statement released today, Phil Pluck, chief executive of the Cold Chain Federation said: “Even before its full implementation, it’s becoming evident that BTOM is a broken model”.
He added: “Without listening to the experts, the Government will seriously damage business confidence in the UK and add costs to consumers’ weekly shop.
“Temperature-controlled logistics operators are working hard to adapt to BTOM but we need better collaboration with Government and EU partners to ensure a smooth transition that safeguards food safety, minimises disruption, and protects consumer interests.”
Concerns over the BTOM’s potential impact on food prices in the UK were also raised by agri-food representatives last week.
This followed the government’s announcement of the introduction of the Common User Charge for a range of animal, plants and plant products entering or transiting through Great Britain.
Like the border checks, these charges are also due to come into play at the end of April.
At the time of the announcement, managing director at Scottish dairy group Graham’s Family Dairy, Robert Graham, said the charges would “cost UK food and drink firms hundreds of thousands of pounds”, and force the business itself to “have different packaging between UK and export lines, leading to higher costs across stock, production, branding and operations”.
Graham added: “It feels like the UK government is using a sledgehammer to crack a nut…The food industry understands the complexities of politics but we can’t help but feel this legislation will do nothing for the industry but confuse consumers, increase complexity and heighten costs by millions for the sector.”
