UK businesses have run out of time to prepare for the consequences of Britain leaving the European Union in March without an exit deal, a government audit showed on Wednesday (24).
The findings by the National Audit Office, the government’s spending watchdog, were published with London and Brussels at loggerheads in Brexit talks.
They threaten to deal a political blow to Prime minister Theresa May, who has made the phrase that “no deal is better than a bad deal” her mantra.
The audit said uncertainty over the course of the negotiations has delayed preparations for a no-deal scenario, with organised crime gangs potentially stepping in to smuggle goods across the new EU-UK frontier.
“Businesses do not have enough time to make the changes that will be needed if the UK leaves the EU without a ‘deal’,” it said.
Over the long term, “organised criminals and others are likely to be quick to exploit any perceived weaknesses or gaps in the enforcement regime,” it added.
The audit estimated that between 145,000 and 250,000 traders will need to make customs declarations for the first time should Britain break away without coming to terms with the EU.
“Government papers from July 2018 stated that it was already too late to ensure that all traders were properly prepared for ‘no deal’,” the report wrote.
The number of customs declarations as a whole will grow from 55 million to 260 million, putting existing government management systems under immense strain.
The audit found that 11 out of 12 government projects replacing or upgrading existing border systems to prepare for more rigorous customs checks were as of September at risk of not being delivered on time to “acceptable quality”.
The Financial Times reported on Tuesday (23) that realising the potential chaos, the government was drawing up plans to charter ships to bring in food and medicine in case there was no deal.
The newspaper said a meeting of May’s cabinet on Tuesday was told that a heavily used trade route between the British port of Dover and the French one in Calais would quickly become blocked if no customs arrangements were made.
Britain would then ferry in ‘critical supplies’ and possibly also car parts.
Robert Peston, the political editor of the private channel ITV, wrote on Facebook that transport minister Chris Grayling told ministers that freight coming into UK from Calais would be reduced by 85 per cent.
National Audit Office chief Amyas Morse said the government openly admits that trade between Europe’s second-largest economy and the rest of the 27-nation bloc would be ‘sub-optimal’ in a no-deal scenario.
“It is not clear what sub-optimal means in practice, or how long this will last,” Morse said.
The report suggested that “it may take some time” for trade to return to normal.
“Individuals and businesses will feel the impact of a sub-optimal border to varying degrees,” it said.