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Brexit Bulletin: Percy Pig howls in pain

Brexit Bulletin
Bloomberg

What's happening? Percy Pig, the pink chewy sweet, has become an unlikely early symbol of the impact of Britain's departure from the European Union.

Dover was gray and misty on New Year's Day. At the entrance to the eastern docks, the crowd of reporters far outnumbered the few trucks trying to the get into the port. Britain's life outside the European Union had begun without the predicted disruption.

Brexiters were quick to claim victory. By Thursday, long-time euro-skeptic John Redwood was calling on the naysayers to apologize. While the government may have avoided chaos at the border (if you discount the long lines of trucks getting lost in this Kent village) the pain is already being felt at factory gates and depots across Britain.

Trucks near Ashford, U.K., on Friday, Jan. 1, 2021.

Photographer: Chris Ratcliffe/Bloomberg

Take Marks and Spencer Group Plc: On Friday, the company warned that supplies of Percy Pigs to Ireland are under threat. The sugary treats pose a problem because they are made in Germany and the retailer receives the deliveries in Britain. Sending them on to Ireland without any further processing or alteration may trigger tariffs under the new rules of origin, Deirdre Hipwell reports.

The firm will have to find "an expensive workaround" to avoid the new duties, M&S Chief Executive Officer Steve Rowe told reporters. The retailer isn't alone in its struggle with the new terms of trade. Debenhams temporarily switched off its Irish e-commerce site, while delivery firm DPD said Friday it would pause services to the EU.

This is all a direct consequence of Boris Johnson's trade deal, as trade expert David Henig notes: While the British prime minister may have secured a tariff-free arrangement for life after Brexit, the U.K. is now outside the EU single market and customs union. That means firms must now meet new requirements, such as rules of origin and customs paperwork, that introduce new frictions to trade.

Fishermen have been told to land to fewer fish because trucks heading to the EU face a four-hour wait for their paperwork to be processed. Yet they are purported to be beneficiaries of the deal. As Joe Mayes reports, the evidence from logistics firms is that most companies are unprepared. The only thing preventing chaos is that traffic is unusually light because companies stockpiled goods in December or have delayed deliveries until February.

The question for the U.K. government is whether these are just teething troubles — or the final incentive for businesses to shift large parts of their supply chain out of the U.K., with all the painful economic consequences that follow. On a call with 250 business leaders this week, Johnson spoke in optimistic tones about the opportunity to shred burdensome regulations after Brexit. For many businesses, though, he is the author of the most onerous set of new rules in a generation.

Edward Evans

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