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What would a no deal Brexit mean for the UK housing market?

I was recently asked what would happen to law within the private rented sector in the event of a no deal Brexit.

Initially I did not think much of this question but the current situation is making such a possibility more and more likely.

So what will happen? Naturally, there will be wider consequences economically and socially, but what about the legislation relating to residential tenancies?

In fact, most law will not change. Things like the Housing Act 1988 will remain in law as they are.

The potential changes will come in some areas of regulation and consumer protections where we have regulations which sit on top of and implement EU Directives.

A number of these potential changes would also affect the UK sales market.

The Withdrawal Act
In principle, there should be no change at all. Section 2 of the European Union (Withdrawal) Act 2018 ensures that any legislation which is made to implement an EU Directive under the European Communities Act 1972 will continue to have effect. So, even in a “no deal” scenario there should be no changes, at least initially.

But what about the hardest of hard Brexits where all EU legislation is immediately eliminated?

Energy Efficiency
Well, the entire requirement to have an EPC is based on EU directives. So they would no longer be required.

That also means that the new requirement to have a minimum energy efficiency standard in residential rental property would also go. As would the requirement to serve an EPC in order to be able to serve an S21 notice.

Consumer Protection and Rights
This is the main area of change. Unfair Terms are directly incorporated in UK law in the Consumer Rights Act 2015. But the Consumer Protection From Unfair Trading Regulations 2008 (CPRs) rely on EU legislation.

This would impact the entire sector as it is the CPRs which require that both estate and lettings agents do not provide misleading or inaccurate advertising of residential property, the Property Misdescriptions Act 1981 having been repealed some time ago on the basis that the CPRs were a complete and more substantial replacement.

Likewise the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, which do not apply to tenancies but do apply to estate and letting agents’ terms of business, would also go, so rights to cancel these agreements at an early stage would disappear.

GDPR
The General Data Protection Regulations would actually remain as they are directly incorporated into UK law by the Data Protection Act 2018. How well they will operate if we are not going to use European guidance and do not have a good relationship with Europe in this area is open to doubt.

Heat Networks
This affects fewer people but the Heat Network (Metering and Billing) Regulations 2014 which require landlords who are engaged in the supply of energy to their tenants to give information about those costs and allow elements of control over that cost are based on EU law entirely. This will affect those residing in blocks with district heating schemes and some HMOs as well.

HMOs and Licensing
The EU Provision of Services Directive and the consequent Provision of Services Regulations 2009 would also not be relevant any more. This would mean that the decision in R(Gaskin) v Richmond would be largely irrelevant and local authorities would be less restricted in the charging of HMO licensing fees.

Money laundering
The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 apply to estate agents but not to letting agents. However, they are made in part based on EU law and rely heavily on EU guidance and the EU sanctions regime. Therefore their ongoing operation is open to some doubt.

Conclusion
So at a basic level nothing changes. An AST would still be an AST. But the substantial overlays added over the years to improve rights and consumer protections would all be put at risk. But as they say, it will never happen!

By David Smith, a housing lawyer at Anthony Gold, and is also policy director at the Residential Landlords Association

Source: Property Industry Eye

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No-deal Brexit could lead to transfer values being cut

Leaving the European Union without a deal could lead trustees to cut transfer values to protect defined benefit pension schemes, experts have warned.

Malcolm McLean, senior consultant at Barnet Waddingham, told FTAdviser recent estimates had correctly predicted a no-deal Brexit would increase pension deficits by billions of pounds.

This in turn could have an adverse effect on transfer values, he suggested.

He said: “Crashing out of the EU without any sort of deal would almost certainly increase market volatility and continued uncertainty as to the future direction of travel for the economy as a whole.

“This could impact on gilt yields and inflation expectations, all of which could have a damaging effect on DB funding levels and transfer value rates.

“In a more extreme scenario, trustees could be forced to cut transfer values in the interests of protecting the fund and holding on to the employer covenant.”

According to analysis from Colombia Threadneedle, UK DB schemes would see their deficit increase by £35bn if the UK leaves the EU without an agreement.

This is because while UK DB funds’ assets would rise in a no-deal scenario, as they are invested overwhelmingly in non-domestic assets, liabilities would increase even further.

If, on the other hand, the government agreed to a softer Brexit, schemes could be in line for a £85bn surplus, as liabilities wouldn’t rise as much.

Mr McLean said a softer Brexit “would bring a degree of certainty to the proceedings, something that markets always like to hear”.

He added: “Whether that would in itself materially affect DB fund holdings and ultimately increase transfer values is not absolutely certain, but it could enable a return to the more stable conditions we have seen in this respect previously.”

Counterbalancing this theory is the possible impact of a no-deal on interest rates.

Sir Steve Webb, former pensions minister and director of policy at Royal London, explained that if the Bank of England felt it needed to cut interest rates again to prop up the economy, then this could also affect long-term interest rates, which could drive up transfer values.

He said: “But the impact on the stock market would also be important. If shares also fell then this could also increase deficits, especially for less mature DB schemes.”

Kay Ingram, director of public policy at national firm LEBC, also believes that transfer values generally would rise in the immediate aftermath of no-deal, due to a weaker sterling combined with low bond yields.

She said: “Schemes with assets invested primarily in global equities would benefit from the continued sterling weakness.

“Using this investment dividend to offload future growing liabilities would make sense for schemes with this asset allocation.

“Those schemes with a reliance on UK fixed interest and domestic stocks would see deficits widen but could benefit if the Bank of England responded to this scenario with interest rate cuts and reintroduction of asset purchases.”

But Ian Neale, director at pensions specialist Aries Insight, cautioned against generalising across all DB schemes.

Mr Neale noted that market factors, including possible tariffs, the proportion of scheme investments dependent on the UK economy, and the business sector in which the scheme sponsor operates will be material for the impact of Brexit for pension schemes.

He said: “The general feeling in the industry seems to be that if UK exit does happen, then it is more likely to depress than enhance scheme valuations.”

By Maria Espadinha

Source: FT Adviser

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Is ‘No Deal’ the Best Deal for UK Construction?

According to a recent report by www.designingbuildings.co.uk just 15% of construction executives favoured a UK exit from the European Union (EU).

In recent times the Bank of England declared a no-deal Brexit could wipe 8% off the UK’s GDP this year – a bigger hit than the financial crisis – potentially taking 30% off house prices, according to a report in www.building.co.uk.

And yet with the prospect of the UK potentially pulling out of the EU with a No Deal Brexit, there are clearly vital potential issues about to affect thousands of businesses around the country – from a lack of clear guidance on regulations, to a shortage of skills, and a potential lack of access to building materials.

One obvious major concern is the ‘divorce’ could potentially result in a lack of free movement which Prime Minister Theresa May is adamant should take place.

Surely this means the skills shortage could worsen and the UK could become a victim of higher development costs whereby labour demand outstrips supply?

Figures from the Office for National Statistics indicate that one-third of workers on construction sites in London are from overseas, with around 28% coming from the EU. This calls into question the range of skills this one-third has acquired given that construction sites need a combination of skillsets to complete work from engineering to bricklaying.

On the one hand the knock on effect of a lack of free movement could result in the decline in the number of houses being built resulting in construction firms failing to meet the government’s housing target thus deepening the crisis of a lack of housing in large cities.

On the other hand, if investors pull out of the UK, house prices could drop – leaving more empty properties available on the market. Either way, it’s difficult for construction firms to know what to prepare for as Britain meanders its way through unknown territory.

A 2010 study by the Department of Business Skills and Innovation estimated that 64% of building materials were imported by the EU. The same report estimated that 63% of building materials were exported to the EU. After Brexit, importers and exporters may face duties or limits on quantities, which could in turn result in an increase in costs, or a shortage of, construction materials.

Brian Berry, Chief Executive of the Federation of Master Builders, says in a recent press release:

‘The single biggest issue keeping construction employers awake at night is the skills shortage. If we’re going to address this skills gap post-Brexit, the whole industry needs to step up and expand their training initiatives. Even Sole Traders can offer short term work experience placements and large companies should be aiming to ensure at least 5 per cent of their workforce are trainees or apprentices.

‘But realistically speaking, the UK construction sector can’t satisfy its thirst for skilled labour via domestic workers alone. With record low levels of unemployment, we’ll always need a significant number of migrant workers too – particularly in London and the south east.

‘The Government needs to work with construction to amend its Immigration White Paper and rethink the current definition of low-skilled workers. Level 2 tradespeople play a vital role in the sector and would currently be excluded, which is wrong. We urge Ministers to engage with the construction industry to help improve these proposals.’

The Construction Industry Training Board – www.citb.co.uk, – however, expects positive growth for the construction industry but only in the case of an exit deal as opposed to a no exit deal, according to the CITB’s recent press release.

The annual Construction Skills Network (CSN) report – a five-year forecast into the industry’s skills needs – anticipates construction growth of 1.3% across the UK, down a third of a percent on the previous year. The forecast is based on the scenario that the UK agrees an exit deal with the EU, rather than a ‘No Deal’ situation.

The biggest increase is expected in public housing, which is pulling ahead as infrastructure slows. Financial support from Government at both local and national levels is encouraging a 3.2% growth rate in public housing, up half a percent since last year’s forecast.

Infrastructure is set to grow by 1.9%, down from 3.1% predicted in last year’s forecast. The sector has been heavily affected by Brexit uncertainty and by investors stalling construction of the Welsh nuclear power plant Wylfa in January.

Commercial construction is significantly declining due to investors taking a cautious stance in the face of Brexit. The forecast expects the sector to drop sharply this year then level out by 2023, with zero growth anticipated overall.

However, the housing repair and maintenance sector appears to be benefitting from a quieter property market as home owners halt plans to sell up and instead focus on improving their current properties. By 2023, the sector is expected to have grown by 1.7%.

Despite the wider economic uncertainty, more construction workers will be needed over the next five years. An approximate 168,500 construction jobs are to be created in the UK over the next five years, 10,000 more than in last year’s forecast. Construction employment is expected to reach 2.79 million in 2023, just 2% lower than its peak in 2008.

Steve Radley, Policy Director at CITB, said:

‘This forecast aptly reflects the uncertainty, particularly associated with Brexit that we’re seeing across the wider economy. Currently, concerns around Brexit are weighing on clients and investors, creating a knock-on effect on contractors and their ability to plan ahead.

However, assuming that a deal is agreed, we expect low but positive growth for construction.  Even as infrastructure slows, sectors like public housing and R&M are strengthening. This will see the number of construction jobs increase over the next five years, creating growing opportunities for careers in construction and increasing the importance of tackling the skills pressures we face,”

Whether one prefers the notion of a road to opportunity or the wake-up call of a No Deal Brexit, the clock is ticking for the UK’s construction executives as the sector waits for clarity from the UK Government.

By MARK POWNEY

Source: Busubess Bewa Wales

Brexit UK economy
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UK economy dodges no-deal Brexit hit, for now

UK economy has struggled beneath the weight of Brexit uncertainty for nearly three years, but many business leaders would probably be relieved just to have more of the same for the next few months.

The risk of a damaging no-deal exit by the world’s fifth-biggest economy from the European Union on March 29 has been averted by the reprieve granted to Prime Minister Theresa May by other EU leaders on Thursday.

But the possibility could return as soon as April 12. Or the delay could stretch into May or beyond, depending on the prime minister’s ability to break the Brexit impasse in parliament.

Employers took some comfort from the postponement, even if it did little to settle the wide range of Brexit outcomes that has led to many of them putting their expansion plans on hold.

“Businesses will accept a short extension because it’s a better alternative to no deal,” Seamus Nevin, chief economist at Make UK, an engineering trade group, said.

“But we really need to make decisions soon. Prolonged uncertainty just means the investment decline of recent months will continue and companies will be forced to decide whether to move production elsewhere.”

Carmakers have reduced expansion plans in Britain and many financial firms have set up operations in other EU countries.

Overall business investment fell throughout 2018, the longest such run since the global financial crisis, and another fall is expected in 2019, threatening to worsen the country’s weak productivity growth.

Britain’s economy lost momentum after the 2016 referendum decision to leave the EU.

The slowdown deepened last year as the Brexit deadline approached, with no guarantee of a transition to smooth the shock, but also reflecting the weakening of the world economy.

While Britain would bear the brunt of a no-deal Brexit hit, U.S. Federal Reserve Chair Jerome Powell has said it is a risk for the slowing U.S. economy, along with Washington’s trade war with China.

The shock would also be felt in Europe where Britain’s closest trading partners are struggling.

“It would be a material shock for the EU at a difficult time,” Brian Coulton, chief economist at ratings agency Fitch Ratings, said. “Among the things that could tip the euro zone into a recession, it might be a candidate.”

Even the strongest Brexit supporters say a no-deal divorce would deliver a shock. But they believe the economy would adjust and flourish once it is free of the constraints of EU rules and can strike its own trade deals around the world.

Gerard Lyons, a pro-Brexit economist, said weak business investment was a long-standing British problem, not just a Brexit one, and he pointed to strong jobs growth and tax revenues as a sign of underlying resilience in the economy.

While his preferred option was for Britain to leave EU with a transition and then hammer out a trade deal, he said a no-deal Brexit would not be a disaster because progress has been made to prepare Britain’s finance industry, ports and logistics.

“It’s like a kick in the groin. It depends how hard the other side wants to kick you, and how well you manoeuvre yourself,” Lyons said.

The Bank of England said on Thursday that about 80 percent of almost 300 companies it surveyed felt they were as ready as they could be for a no-deal, no-transition Brexit, up from 50 percent in January.

The BoE has said a worst-case no-deal Brexit scenario — in which Britain loses the confidence of global investors and chaos hits transport and ports — could mean that the economy is 5 percent smaller in three years’ time than if the country stayed in the EU.

A more managed no-deal Brexit could reduce the hit to about 2.5 percent, still a material hit at a time when the economy is struggling to grow by more than 1.5 percent a year.

Most economists say the higher the barriers for British firms to do business in the EU, the bigger the drag will be on economic growth stretching out into the decades ahead.

Any gains from free trade deals with countries such as China or the United States would be “relatively modest”, Britain’s independent budget forecasters have said.

It is small wonder therefore that many employers are hoping for a change of the Brexit plan, even if it means yet more sapping uncertainty.

“Our country is facing a national emergency,” the Confederation of British Industry, a major employers group, and the Trades Union Congress umbrella group said on Thursday in a rare joint letter to May, urging her to avoid a no-deal Brexit.

“The shock to our economy would be felt by generations to come.”

Writing by William Schomberg; Editing by Toby Chopra

Source: UK Reuters

housing minister Rightmove
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Housing minister warns of Brexit’s threat to Scotland’s housing ambition

A “no deal” exit from the EU has potential to cause serious problems for Scotland’s housing sector, housing minister Kevin Stewart has warned.

In a letter to housing organisations and stakeholders due to issue this week, Mr Stewart will highlight the potential adverse consequences of Brexit including:

  • Hurting investor confidence in residential assets and build to rent market
  • Inflation and interest rate fluctuation affecting rents, the financial health of Registered Social Landlords (RSLs) and the availability and cost of finance for new build homes
  • Reduced availability and increased costs of house-building materials such as timber, prefabricated concrete and boilers from non-tariff and tariff barriers
  • Impact on the availability of EU nationals working in the construction and housebuilding sector, as well as housing support services

Speaking ahead of Scotland’s Housing Festival 2019 tomorrow, Mr Stewart said: “The UK’s exit from the EU has the potential to impact the housing sector in Scotland and therefore our housing ambitions. As we strive to provide stability and certainty, our efforts are being compromised by the UK Government’s failure to acknowledge our concerns or discuss compromise alternatives.

“Some 60% of the UK’s building material imports come from the EU and we have a particular reliance in Scotland on imported timber for housebuilding. Many of those employed across the housing sector are EU nationals. The extent to which we depend on EU relations cannot and should not be underestimated.

“We are committed to delivering more affordable homes and are on track to deliver our ambitious 50,000 affordable homes target by 2021, backed by our investment of over £3 billion. We are also investing in energy efficiency improvements to existing homes, making them warmer and cheaper to heat.

“We must not allow the UK Government’s approach to Brexit jeopardise these commitments which also supports our aims to end homelessness, and reduce fuel poverty.

“We will continue to work with the housing sector on Brexit-related risks – with construction, housebuilding and mortgage lending industries in Scotland, as well as through the Joint Housing Policy and Delivery Group.”

Scotland’s Housing Festival 2019 takes place in Glasgow on 12-13 March.

In 2018, the Scottish Government commissioned an analysis of the construction and housebuilding industry in Scotland to understand specific Scottish risks on housing demand, materials and workforce.

Source: Scottish Housing News

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No-deal Brexit could damage Scotland’s housing sector, minister warns

A no-deal Brexit could cause serious problems for Scotland’s housing sector, the housing minister has warned.

Kevin Stewart will say that leaving the EU without a deal could damage investor confidence in residential assets and the build-to-rent market when he writes to housing organisations and stakeholders next week.

He will also say that inflation and interest rate fluctuation could affect rents, the financial health of Registered Social Landlords (RSLs) and the availability and cost of finance for new-build homes.

There are also concerns that house-building materials such as timber, prefabricated concrete and boilers could be more expensive and less available.

The extent to which we depend on EU relations cannot and should not be underestimated

Kevin Stewart MSP

Speaking ahead of Scotland’s Housing Festival 2019, Mr Stewart said: “The UK’s exit from the EU has the potential to impact the housing sector in Scotland and therefore our housing ambitions.

“As we strive to provide stability and certainty, our efforts are being compromised by the UK Government’s failure to acknowledge our concerns or discuss compromise alternatives.

“Some 60% of the UK’s building material imports come from the EU and we have a particular reliance in Scotland on imported timber for house building.

“Many of those employed across the housing sector are EU nationals. The extent to which we depend on EU relations cannot and should not be underestimated.”

Mr Stewart said that the Scottish Government is committed to delivering more affordable homes and is on track to deliver its 50,000 affordable homes target by 2021, backed by its investment of more than £3 billion.

It is also investing in energy efficiency improvements to existing homes, making them warmer and cheaper to heat.

He said: “We must not allow the UK Government’s approach to Brexit to jeopardise these commitments which also supports our aims to end homelessness, and reduce fuel poverty.”

Scotland’s Housing Festival 2019 takes place in Glasgow on March 12-13.

A UK Government spokesman said: “An orderly Brexit is in the UK’s best interests and the best way to achieve that is for MPs of all parties to support the Prime Minister’s deal.

“The deal is a good one for Scotland, Wales and the whole of the UK – it delivers the result of the referendum, gives us a close future partnership with the EU, and guarantees citizens’ rights.

“Refusing to support the Prime Minister’s deal simply makes a damaging no-deal more likely.”

Source: iTV

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Unemployment would rise after no-deal Brexit, top economist warns

A no-deal Brexit would be a “sharp shock”, increase unemployment and could shrink the Scottish economy by 7%, Scotland’s top economist warned MSPs.

With just three weeks until the UK is due to leave the EU, the Scottish Government’s chief economic adviser said that they would not be able to mitigate all the damage caused by a no-deal Brexit.

Giving evidence about his report into the economic impact if the UK leaves without an agreement in place, Dr Gary Gillespie told MSPs the Scottish economy would be between 2.5% and 7% lower compared with remaining.

He said: “Despite the best government mitigation, a no-deal would impact a short, sharp shock to the economy.

“With that kind of shock, you would see it manifest in the labour market.

“You would see unemployment – from its record-low level at the moment – beginning to rise as firms respond to the challenge of reduced demand, supplies and cash flows.”

MSPs questioning the economist came away from the Europe Committee no clearer about what plans are in place for a no-deal Brexit.

There’s no published plan as of yet but there’s no published plan at the UK level either

Dr Gary Gillespie

After six questions by Tavish Scott, trying to elicit details about whether the government had a plan for no-deal Brexit and how it would respond, Dr Gillespie said it had not been made public but insisted there was one in place.

He stressed the complexity of response required across all government departments and businesses, saying: “There’s no published plan as of yet but there’s no published plan at the UK level either.”

“There’s a plan in place but the key thing about the plan is that the plan can’t mitigate across all the areas.”

Dr Gillespie added: “What we’ve heard from the UK is that the Bank of England will bring forward particular measures but we haven’t heard much else about what a plan would be.”

MSPs also questioned Dr Gillespie and the Scottish Government’s deputy director of economic analysis Simon Fuller about the impacts of Brexit on people coming to work in Scotland.

Highlighting the damage to tax revenues of reduced immigration, Mr Fuller said: “If you had a 50% fall in EU migration, Scotland’s economy would be about 6% smaller by 2040 than would otherwise be the case if migration continued at the levels we’ve seen over the last five to six years.

“That would mean GDP of £6 billion to £7 billion lower and feeding through to tax revenues of about £2 billion to £3 billion lower.”

Following the committee meeting, Economy Secretary Derek Mackay said: “As a responsible government we have to prepare, as best we can, for all scenarios.

“The Cabinet Secretary for Government Business and Constitutional Relations has confirmed in his detailed statements to Parliament that planning for a no-deal outcome is continuing and intensifying across the organisation, with the Scottish Government Resilience Committee meeting weekly to manage and escalate matters as required.

“A no-deal exit would severely disrupt the flow of goods at UK borders and our preparations include working with transport operators, suppliers and retailers to safeguard as far as possible the continued supply of medicines and food, and engaging with exporters to help manage disruption.

“However, there is only so much we can do and we will not be able to mitigate all of the impacts of a ‘no-deal’ exit in Scotland.”

Scottish Liberal Democrat Europe spokesman Tavish Scott MSP said: “We’re well into March and a no-deal Brexit is a terrifying but genuine possibility. It’s unbelievably frustrating to have to draw information out of government officials like blood from a stone.

“Planning is difficult because no-one knows what a divided Tory government is going to do. But the bottom line is pretty simple. We need to have a plan and it should be publicly available. Available for Scottish business, residents and European citizens who live and work here.

“That is the only way worried citizens can be reassured the government has a grip on what may happen across the Scottish economy.”

Source: Express and Star

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Bank of England more likely to cut interest rates after no-deal Brexit, policymaker says

The Bank of England’s monetary policy committee would be more likely to cut interest rates in the event of a no-deal Brexit, according to rate-setter Silvana Tenreyro.

Tenreyro’s comments adds further clues as to the direction of travel for interest rates if Britain leaves the EU without a deal.

Speaking in Glasgow, she said negative demand would outweigh the impact on supply and the exchange rate.

She said: “In my judgment, a situation where the negative demand effects outweigh those other effects is more likely, which would necessitate a loosening in policy,” she said in a speech in Glasgow.”

She added that a smooth Brexit outcome would not automatically lead her to voting for a hike.

Last month fellow rate-setter Gertjan Vlieghe also said a no-deal Brexit would most likely lead to an easing of monetary policy.

But the Bank’s official position has long been that the monetary policy response to Brexit would not be automatic and could be in either direction.

Governor Mark Carney, and deputy governor Sir Dave Ramsden have indicated the potential need for rate hikes if Britain leaves the EU without a deal.

Michael Saunders exercised caution last week and said there was no need to rush interest rate hikes until the implications of Brexit were fully realised.

The typically hawkish rate-setter said: “The possibility that monetary tightening might be needed in the future does not necessarily mean we need to tighten now.

“A range of alternative Brexit outcomes are possible, and these may have very different implications for the economy and monetary policy.”

Tenreyro echoed those sentiments, advocating the “wait and see” approach post-Brexit.

She said: “While I still envisage that in the event of a smooth Brexit we will need a small amount of tightening over the next three years, before voting for any rate rises I would want to be confident that demand was growing faster than supply.”

By Callum Keown

Source: City AM

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UK firms report weakest growth since April 2013: CBI

British businesses reported their weakest growth in nearly six years during the past three months due to fears of a no-deal Brexit and rising global trade barriers, the Confederation of British Industry said on Sunday.

The CBI’s index of private-sector activity over the past three months dropped to -3 in February from zero in January.

This was its lowest since April 2013, when Britain was still recovering from the global financial crisis. Firms expected similar weakness in the three months ahead, when Britain is due to leave the European Union after over 40 years of membership.

Prime Minister Theresa May has yet to win parliament’s support for a Brexit transition deal although she has paved the way for a possible delay to Brexit beyond its scheduled date of March 29.

“More and more companies are hitting the brakes on investment and day-to-day business decisions are becoming increasingly problematic,” the CBI’s chief economist, Rain Newton-Smith, said.

A survey last week showed manufacturers stockpiled goods by the most on record for any big advanced economy as they prepared for the possibility of border delays after Brexit.

The Bank of England predicts Britain’s economy will grow by just 0.2 percent in the three months to March and growth in 2019 to be the weakest since 2009, even if Brexit goes smoothly.

Britain’s trading partners in Europe are facing weaker growth too, due to trade tensions between the United States and China that have hurt global manufacturers.

The CBI survey was based on responses from 650 businesses in retail, manufacturing and services.

Source: UK Reuters

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No-deal Brexit would lead to food shortages and cost business billions, government reveals

A no-deal Brexit would lead to food shortages, higher prices in the shops and cost UK firms billions of pounds, a new analysis from the Government has revealed.

Ministers also admitted that up to a third of “critical” infrastructure projects were now behind schedule, partly due to firms failing to view a no-deal scenario as “sufficiently credible”.

Members of the public are also failing to prepare for a no-deal Brexit, according to the 15-page document, which warned that industries like the automotive sector would be “severely” impacted by new tariff and non-tarriff barriers if the Commons does not back the Withdrawal Agreement negotiated by Theresa May.

“In the absence of other action from Government, some food prices are likely to increase, and there is a risk that consumer behaviour could exacerbate, or create, shortages in this scenario. As of February 2019, many businesses in the food supply industry are unprepared for a no deal scenario.”

The stark analysis warned that harsh new customs arrangements would be implemented if the UK is treated as a third country by the EU in the event that no managed exit is agreed between London and Brussels.

“Every consignment would require a customs declaration, and so around 240,000 UK businesses that currently only trade with the EU would need to interact with customs processes for the first time, should they continue to trade with the EU,” they wrote.

“HMRC has estimated that the administrative burden on businesses from customs declarations alone, on current (2016) UK-EU trade in goods could be around £13bn pa.”

On Whitehall’s preparedness, the document said: “In February, departments reported being on track for just under 85 per cent of no deal projects but, within that, on track for just over two-thirds of the most critical projects.”

According to a Government survey, 55% of British adults did not expect to be impacted by a no-deal Brexit.

They added: “Despite communications from the Government, there is little evidence that businesses are preparing in earnest for a no deal scenario, and evidence indicates that readiness of small and medium-sized enterprises in particular is low.”.

The study also warned that consumers would be hit by rising food prices and shortages due to a “very significant reduction” in the amount of goods able to pass through the Channel crossings which the government say could last for months.

Downing Street had been initially reluctant to release the report but was forced into publishing it after a Commons vote.

The warnings come just hours after Theresa May vowed to give MPs a vote on whether they would be willing to accept a no-deal Brexit or a delay to Article 50 if she is unable to secure their backing for her deal.

She added: “If we have to, we will ultimately make a success of a no-deal.”

Responding to the report, Labour MP Martin Whitfield of the Best for Britain campaign, said: “These are truly shocking admissions by a government looking to abdicate responsibility for the oncoming chaos.

“We’ve known for a while that businesses aren’t ready for Brexit and that it’s disrupting their work already – big or small. Now we know a third of the most critical government projects aren’t ready, while the economy is due to shrink. The government has full ownership of this mess.”

Source: Politics Home