LONDON (Bloomberg) - While the mile-long lines of trucks have dissipated at ports, UK businesses are waking up to less visible forms of friction at the border with the European Union that may cause more enduring damage.
From health certificates to new taxes and additional paperwork, the cost of moving goods across the English Channel is rising due to Britain’s exit from the EU. Just 6% of firms told the Bank of England they were fully prepared for what was to come, and the headaches are just starting less than two weeks into the new system.
While each one of the new rules marks a minor shift from the border-free trade Britain enjoyed for four decades as a member of the EU, together they add up to a significant constraint. That’s already starting to upend supply lines and limit shipments for companies of all size. Those hit hardest are the UK’s 5.9 million small- and medium-sized businesses, which employ about three-in-five of those working in the private sector.
All told, Brexit may cost British exporters 25 billion pounds ($34 billion) this year as a result of weak demand and more red tape, shaving 1.1% off gross domestic product, according to a report Tuesday by the trade insurance company Euler Hermes Group SAS.
British firms post Brexit must show where their goods were made -- and where the components in those products come from -- to determine whether tariffs are levied on goods into the EU. Those regulations don’t exist for trade within the EU, making the old system far simpler. In addition, VAT is now payable on all imports from the UK into the EU.