Category Archives: Brexit

The UKs farming landscape has changed dramatically since Brexit. Agricultural policy has been adjusted, and EU subsidies, which funded UK farming for decades, are no more.

Before the split, those subsidies helped British farmers to the tune of nearly 3 billion a year, which for some, made up 90% of their annual income. That system is now being phased out, in a move which the UK government claims will be more environmentally sustainable.

Central to this new approach are environmental land management schemes, designed to encourage farmers to produce what are known as public goods things like soil health and wildlife habitats with financial payment levels dependent on which of these goods are attained. Defra aims for 70% farmer participation by 2028, with 11,000 farmers in England already enrolled.

But its appeal and practicality remain contentious. And the new way of doing things comes with profound implications for the farming community.

Money is tight, and the future is scarily uncertain.

Our work investigates the constraints and challenges facing farmers in the UK and abroad. Recently, we explored the constraints encountered by farmers since Brexit, specifically focusing on upland farms in England. We found that the focus on environmental sustainability, though commendable, overlooks critical economic and social dimensions.

The transition threatens to marginalise traditionally minded farmers, lose cultural heritage and weaken the rural communitys social fabric. And its a transition which doesnt just affect the farmers themselves. The farming and food industries are valued at over 120 billion to the British economy.

Speaking to upland farmers (who work in hilly and mountainous regions) across four English counties (Yorkshire, Lancashire, Cumbria and Devon), we discovered that many are extremely concerned about the future of the farms they look after. Farms that for some, have been in their families for generations.

One 70-year-old farmer from Lancashire commented bluntly about the future of his 250-acre beef and sheep farm: Were not going to be viable.

He added: I might as well stop farming and diversify into holiday lets.

Another farmer, aged 50, who keeps Herdwick sheep in the Lake District, highlighted the critical role of EU subsidies, noting that their planned removal by 2027 would severely limit their farms finances and their ability to pursue environmental initiatives.

She said: With that basic payment taken out of the business, its really difficult. We can make about 10,000 profit, but our basic payment is more than that. So thats going to take us into a situation where were not making any money.

There were also concerns expressed about how difficult it is to understand the new farming policy in the UK. Four in ten UK farmers are aged over 65, and information laid out in the 150-page Sustainable Farming Incentive document can be overwhelming. Many traditional farmers do not use mobile phones, and are unfamiliar with the online world.

One farmer told us: In my porch Ive got like a thousand leaflets stacked up that [Defra] just sent me to take out to people because a lot of the farmers that Im working with are not online. They havent heard about a lot of this stuff.

She added: I went to a farm last week, which is only accessible with a 4x4. Nobodys been there to talk to them about schemes and stuff ever.

Another said farmer, aged 72, said: All the form filling is too damn difficult. I dont even bother with these newer schemes because I dont understand it.

And while new schemes may be complex, many of the farmers we spoke to were very clear about the risks to the future of British farming. Overall, they seemed worried that farms, skills and knowledge that have been passed down through generations would be lost during this transition to more sustainable farming.

One said: If farming isnt going to be supported in the way it has been in the past, were going to lose an awful lot of farmers who have been on farms [for generations]. Their skill set and instinct will be gone, and itll be enveloped by agribusiness. Thats perhaps what [the government] want.

Another explained: If we lose the older generation thats a massive loss.

"What used to happen with tenancies is people would work together, like me and my son. And then one would gradually step back and the other would gradually take over. Its a gradual process.

Overall, we found that for the more traditional farmers we spoke to, the future seemed pretty bleak. There was also a strong sense that while the farms they operated may not be hugely profitable, or provide the strongest environmental benefits, the work they do still had social and cultural value which risks being lost forever.

Read more: Why are farmers up in arms? The view from Wales

And as England navigates the complexities of post-Brexit agricultural policy, the balance between environmental goals and the preservation of traditional farming practices remains precarious. Many of the farmers we met felt that they were being pushed away from their traditional role as producers.

As one farmer put it: If youre taking productive land out of production for your tree planting or diversification of whatever kind, then wheres our food coming from?

See the original post:

'I might as well stop and diversify into holiday lets' new research reveals the reality of farming after Brexit - The Conversation

A leading French bank has sent letters to at least 60 British clients in the last few months announcing out of the blue that it is closing their accounts.

Brexit makes the rules complicated, it says.

The local Crdit Agricole accounts are those of UK residents with second homes in west France.

The letters, written in English, warn of closure with 60 days notice.

They demand that bank cards and cheque books are returned and warn that any overdrafts must be paid off by the closure deadline.

The bank says this concerns accounts that are rarely used but affected readers told us their accounts are in regular use, and necessary, to pay bills relating to their French properties.

In one case a wifes account is being closed while her husbands with a larger balance is not. Both are used for paying utilities, taxes, and expenses such as repairs and gardening.

The letters are mainly coming from the headquarters of the banks Nord Midi-Pyrnes caisse, which covers Lot, Tarn, Aveyron and Tarn-et-Garonne, although a similar letter was received last year in Pas-de-Calais.

In that case, the reader complained and was able to remain a client.

Crdit Agricole Nord Midi-Pyrnes told The Connexion the closures were partly due to complications linked to the UK leaving the EU, and also strict anti-money laundering rules which state that it must know each client, which is harder when they are abroad.

Read more: Can you open a bank account in France without a local address?

The letters formal tone added upset.

Retired headteacher Michel Taylor, 78, who has a home in Aveyron, said his wife, 83, was devastated to receive a letter of closure.

It was a very legalistic letter. The account has been solvent for 30 years, it is crazy.

Maybe there are some dodgy accounts but not those of ageing foreign couples like us paying our bills at the right time. We have made transfers to keep it topped up regularly.

An adviser at Britline, an online English-speaking service run by the Normandy caisse, told him his account may have been kept as its balance was higher than his wifes.

A spokesman for the Crdit Agricole group said there is no overall policy on UK residents.

Retired lawyer Jeremy Strachan, 79, who has been a Crdit Agricole client in the Lot for 25 years, said: I have been told informally by the person I dealt with at the bank that many people are in this position.

The original email, in English, gave notice of termination with no explanation and with threats that I must remove my money quickly. It was unpleasant.

In England, banks can only terminate an account without justification if they suspect it is involved in money laundering. For a major bank to behave this way is pretty poor.

They suggested I move to Britline. One arm [of Crdit Agricole] was implying I was a crook by terminating the account inexplicably, while another arm welcomed me.

The Connexion has seen two of the letters, which state: Due to the general conditions of our account agreement, we wish to end our business relationship with you.

Customers were asked to stop transactions on the account and told to send a copy of their passport and a request for the funds to be transferred to another bank account.

Any overdraft would also have to be repaid by the deadline, or legal action would ensue, the letters warned.

Read more: Seven ways to save on French bank charges

David Sword, 69, who has had a second home and bank account in Lot since 1994, said he was not given a specific reason despite inquiries.

However, he was sent a follow-up message saying the decision does not call into question the quality of our interactions (ie. it was not his fault).

Mr Sword, a retired local government worker, said the original letter was sent to his wife it is a joint account.

It seemed to imply it had been overdrawn. The wording was blunt and made us think we had done something to break the contract.

He added: My local branch has always been fabulous. Our contact says he has had a lot of Britons ringing him.

He said Britline appeared quite attractive as he did not need to be in France to open an account but its website said a deposit of 3,000 was required, which made him hesitant.

A spokesman for Crdit Nord Midi-Pyrnes said there had been about 60 closures.

They were linked to the complexities in dealing with UK-based clients post-Brexit, plus regulations imposed about information they must seek from clients to fight money laundering, he said.

This especially affects accounts that are dormant or infrequently used, he said, and where it is hard to stay in close contact with customers who are abroad.

We are obliged to run checks on how the account is running and when the client is abroad, it adds to the complications.

There is a permanent, ongoing reinforcement of the regulations. As fraudsters find new loopholes, new regulations come out.

The closure letters must respect a certain format, regardless of the reason for the closure, he said. The regional head office has now been phoning those concerned.

Normally, we would aim to warn the customer before the letter arrives.

While the recent decisions affect French accounts of UK residents with French second homes, French-resident Britons with UK accounts have also faced Brexit-related closures.

Barclays Bank, for example, announced last year it was closing all such accounts.

Read more: Ex-Barclays customer in France struggles to transfer funds

Britline said its service, with mostly British advisers, is used to dealing with regulations that affect Britons so it does not refuse clients linked to the complex rules.

It is part of Crdit Agricole Normandie, covering Manche, Calvados and Orne.

Its head Eric Morvan said they have taken on a limited number of people following account closures elsewhere.

Last year, UK-resident account holders in Normandy, other than French expatriates, were moved automatically to Britline, with several saying the decision came as a surprise. Britline said this was not Brexit-related.

Britline customers are satisfied with the quality of service, so we thought it was better to ask our teams to look after them, rather than having customers spread out across local branches.

He said there is no longer a systematic requirement for a set sum to open an account but requirements vary case by case.

While the service is online-only, customers can use day-to-day services such as cash machines at high street banks and everyone has a dedicated adviser.

In the coming weeks, they will offer webcam consultations, Mr Morvan said. If an issue is complex for example, relating to inheritance we can do three-way consultations with experts at our headquarters.

Several members of The Connexions subscribers Facebook group recently gave positive feedback on the service.

Read more: Telecom firms, utilities: which offer English language services in France?

French law allows banks to close accounts without giving a reason, with 60 days notice.

It requires them to check that movements of funds are not related to money laundering or terrorism.

Banks can ask the reasons for any transactions, as well as general questions about customers financial resources and wealth.

In the latter case, they should say why this is being asked. If clients refuse it can result in account closure.

Patrick Sourdin, general secretary of banking consumer body France Conso Banque, said: Banks dont communicate much on the subject of closures, or sometimes give false reasons.

It has been increasing since the 2015 terror attacks and even more since the war in Ukraine.

The banks dont say so clearly, but we think this is also to some extent a way for them to sift out customers that arent profitable enough.

He added: We advise opening an account with another bank as soon as possible, as account-closing banks rarely change their mind.

Original post:

French bank to close dozens of Britons' accounts citing Brexit - The Connexion

A Labour government would seek to strengthen ties with the European Union on common interests but would rule out rejoining the single market, customs union or adopting free movement, according to insiders.

Senior party officials told the Financial Times that Keir Starmer favours a "twin-track strategy" to build closer trade and security ties but will not cross the three Brexit "red lines". Debate is reportedly "raging" about what this new deal might involve.

At the moment, "Brexit barely figures on voters' lists of pressing concerns, with inflation and the economy at the top", said The Guardian. But with recent poll findings showing that 60% of Britons would now vote to rejoin the bloc, Brexit "is likely to be a recurring and potentially fraught feature of a Starmer premiership".

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In the run-up to the 2019 election, Starmer crafted Labour's pledge to offer a second Brexit referendum. But since taking over as party leader in April 2020, he has repeatedly ruled out rejoining the single market or the customs union or adopting free movement.

These three Brexit red lines will form the basis of Labour's manifesto pledge on Europe, said the FT, and give Starmer "political cover for a lower-profile pursuit of co-operation in a range of areas".

The party has left the "door ajar to moving towards a somewhat closer relationship with the single market", said the UK in a Changing Europe think tank. Possibilities raised include mutual recognition of professional qualifications, the introduction of a mobility scheme and minimising regulatory divergence.

Labour's top team have recently begun talking about improving the UK-EU relationship, with Starmer and shadow foreign secretary David Lammy making a series of visits to EU officials in recent months. They are "keen to create softer mood music", said The Guardian.

Russia's war in Ukraine is making the need for a security agreement between the UK and EU "more pressing", said Politico.

"It's absolutely fundamental that the United Kingdom and Europe have the closest of relationships and the Brexit era is over, the situation is settled," Lammy told the Munich Security Conference last month.

It is "bizarre" that the UK has "far less political contact with the EU than the Chinese or the Canadians", Anand Menon, director of UK in a Changing Europe, told The Guardian. "That is just weird. So I think that's a bit of a no-brainer."

Some Labour insiders are hopeful that regular discussions on security could embrace "broader issues", such as energy, supply chains and migration, said the paper.

Starmer is facing a difficult balancing act. He needs to avoid scaring off Brexit-backing supporters in northern "Red Wall" seats by appearing to soften Labour's stance on rejoining the EU or freedom of movement. But he also has to contend with a significant proportion of voters who, as recent polls suggest, desire closer cooperation with and even re-entry to the EU.

London's Labour mayor, Sadiq Khan, said he found it "frustrating" that Labour had vowed to "respect" the referendum vote. The "bad news" is that it will take "at least a decade before we can even talk about another referendum", he told La Repubblica.

But Labour peer Peter Mandelson believes there is no desire from UK voters to relive the Brexit wars of the past decade. "I cannot see the British people running towards [a referendum] for love nor money after what we went through during the last one," the former EU trade commissioner told a British Chambers of Commerce event last month.

Brussels also wants a more "stable, constructive relationship" with the UK but has no desire for wholesale negotiation of the country's return, he said. "Reopen a negotiation? You've got to be joking!" said The Guardian.

Ultimately, the "soft-Remainer view" that Starmer might be able to negotiate a "superior, closer deal with the EU while remaining outside the single market, is deluded", said Sherelle Jacobs, assistant comment editor of The Telegraph.

"When it comes to 'The B Word', British politics has become gripped by a kind of 'violence of silence'". Politicians and voters alike are "reluctant to confront the fallout from the country's mangled, halfway situation".

"At some point we need to be honest with ourselves," Jacobs concluded. "If, as a nation, we are unwilling to maximally benefit from Brexit by leveraging our freedom, then we should decisively minimise our losses and re-enter the security of the EU fold."

See the rest here:

Labour's Brexit conundrum - The Week

Today, we take the first step towards an ambitious but realistic agreement between the EU and the U.K. that would fix this issue," he added. "Our aim is to rebuild human bridges between young Europeans on both sides of the Channel.

The Commission said an envisaged deal would allow EU and U.K. citizens between the ages of 18 and 30 to stay in the destination country for four years, subject to certain criteria, during which beneficiaries would be free to take up activities like work or study.

Mobility should not be restricted by a quota or excessive visa fees, and any deal should include equal treatment when it comes to taking jobs and paying fees for higher education, the Commission also said.

That would make it more ambitious than a Youth Mobility Schemethat London has offered to some EU member states for example, by excluding EU participants from paying the health surcharge to access the U.K.s National Health Service.

However, it said any deal would not replace the freedom of movement the U.K. gave up when it left the bloc, which resulted in new barriers for Brits looking to move abroad.

It also said the deal would be distinct to the U.K. rejoining the Europe-wide Erasmus+ program, which had previously made it easier for students to study abroad.

Original post:

Brussels wants post-Brexit talks with UK on new youth mobility rights - POLITICO Europe

From 30 April, border checks will start on imports coming to Britain from the European Union. Nearly eight years after the Brexit vote, over four years after the UK formally quit the EU, and after many postponements, the UK will finally start checking items, one by one, rather than having the free flow of the EUs Single Market.

Except not yet. The government will run selective checks, and for a while yet will set the rate of checks to zero, i.e. not check. It is beyond frustrating that... businesses will have to try to navigate this clearly broken system, said a lobbyist for the perishable goods trade.

Checks on exports to the EU from Britain, long active, have reduced those exports, and the new checks will bring price rises and supply delays for stuff imported from the EU.

Brexit makes sense only for the section of the capitalist class which thinks it can use it to reduce worker, environmental, and consumer protections in the UK way below EU standards, something even Sunaks Tories have so far shied off from.

A big majority in Britain now says Brexit was wrong. But since the EU has proposed a youth mobility scheme for people aged 18-30 to move freely between the EU and the UK to work or to study, but Starmer has followed the Tories in saying no, on the grounds that youth mobility would amount to free movement of people.

Well, yes. And a good thing too. Solidarity agitates for Labour to reverse Brexit.

Follow this link:

Reverse the Brexit fiasco! - Workers' Liberty

With Labour highly likely to take office some time this year, the European Union is preparing to pull the UK back into its orbit.

Brussels officials have proposed that Britain sign a free movement-style deal for Europeans in a move that has been widely recognised as a thinly veiled attempt to woo Labour leader Sir Keir Starmer.

Ben Harris-Quinney, chairman of the Bow Group conservative think tank, told The European Conservative that such a deal would double down on already all-time record immigration, underscoring yet another example of foreign globalist interests riding roughshod over the stated democratic will of the British people as expressed in the 2016 Brexit referendum.

The proposed deal, published by the European Commission on Thursday, would make anyone aged 18-30 eligible for a new visa allowing them to travel to any EU member state for up to four years to work, study, or volunteer. Currently, Britons wanting to stay in a bloc country for more than 90 days must apply for a visa.

Agreeing to such a deal would hardly be out of character for Labour, which has said it would like to go on a date with Brussels in the first instance to rekindle relations. In fact, Labour London Mayor Sadiq Khanwho weirdly seems to count foreign policy among his official responsibilitiesactually called for a youth mobility agreement with the EU just three months ago.

Starmer has already ruled out the return of free movement, and a Labour spokesperson responded to the Commissions proposal saying that the party has no plans for a youth mobility scheme. But it is not hard to imagine Labours position changing once it has stopped trying to get into office and is actually therenot least because Starmer, who once pushed for a second Brexit referendum to undo the first one, has made explicit his desire for the UK to have closer ties with the EU. It is also worth noting that the Commission is already tryinghowever unconvincinglyto frame its proposal as something quite different to a freedom of movement deal, which Starmer could use in his favour.

Envisioning what such a deal would mean for the UK, Ben Harris-Quinney told this publication:

One of the major reasons the EU didnt work for the UK is that the percentage of UK citizens that speak a foreign language fluently is negligible. Whilst many felt they valued the opportunity to work in Europe, very few were able to take it.

It meant far more people migrated from the EU to the UK to work than vice versa.

This policy of mass immigration drove property prices up and wages down. It was the main reason why the public voted to leave the EU.

And all these problems, it appears, could very soon be back on the cards, whatever Labour figures tell us now.

Read the original here:

EU Delighted by Prospect of UK Labour Reneging on Brexit - The European Conservative

The government has denied reports that post-Brexit checks on EU goods wont be turned on from the end of the month

A statementfrom Defra on Friday (19 April) refutes media reports claiming physical border checks on EU plant and food imports will be turned off.

As has been previously outlined, we will be commencing checks from 30 April, the statement said. Our enforcement approach will be graduated to help traders to comply.

The statement goes on to say that the UK government has full confidence that the facilities, infrastructure and systems at the border will be ready for the 30 April implementation date.

Border checks to start on 30 April

Checks are commencing from 30 April and, as we have always said, the medium and high-risk goods posing the greatest biosecurity risk are being prioritised as we build up to full check rates and high levels of compliance, a government spokesperson said.

Taking a pragmatic approach to introducing our new border checks minimises disruption, protects our biosecurity and benefits everyone especially traders.

Defras statement came after a report by the Financial Times claimed Defra had told port authorities it would not turn on critical health and safety checks for EU imports because of the risk of significant disruption.

Officials reportedly outlined a plan to prevent queues of lorries entering the UK from the bloc, which included significantly reducing the number of physical checks on plant and food products due to begin at the end of the month, over fears the new border systems would not be fully prepared.

Graduated approach to minimise disruption

We are confident we have sufficient capacity and capability across all points of entry to handle the volume and type of expected checks. It is important to remember the cost of our border checks is negligible compared to the impact of a major disease outbreak on our economy and farmers, the Defra spokesperson said in the Friday statement.

Defra said its border enforcement approach follows extensive engagement with businesses including regularly contacting 30,000 importers with up-to-date information, delivering over 50 webinars to thousands of businesses and working with major supermarkets and their suppliers to provide training.

Speaking today (22 April) to the FPJ to clarify the situation, Fresh Produce Consortium CEO Nigel Jenney said: In simple terms, the 30 April implementation date to our understanding has not changed and will not change for the products it applies to at that date.

What I believe Defra is explaining is that, from that date onwards, they intend to have a phased incremental implementation of the levels of inspections that would be incurred to ensure that things will work seamlessly from day one onwards.

From the end of this month, therefore, this legislation will apply to plants and cut flowers from Europe.

No checks yet for EU fruit and veg

Jenney explained that fruit and veg from Europe are currently not included in the 30 April implementation.

However, he said the FPC does envisage that an announcement will be made in the near future, and that perhaps EU fruit and veg will be included towards the end of 2024.

We originally believed that fruit and veg from EU specifically would be excluded from the governments post-Brexit border strategy. However, earlier this year we were told at short notice that that wouldnt be the case, and that there would be what they called a temporary easement.

We envisage some fruit and veg will be considered medium-risk later this year and will be subject to border inspection at a lower level frequency of inspections.

However, we are working hard to get a definitive list of which fruit and veg, and at what levels of inspection the government intends applying later this year. But that list is not definitive.

The FPC believes that roughly 50 per cent of the volume of fresh produce the UK buys from Europe will be considered medium-risk. So for those business importing mixed consignments and who also use groupage, this will be a major challenge.

The real concern we have are the cost of those inspections and the delays that will be incurred if certain government facilities are chosen for those inspections, says Jenney.

Common User Charge

The common user charge has now been announced by the government. And to our total frustration the consultation was based on a cost per consignment, whereas the actual confirmation is based on cost per commodity, up to the first five commodities in that declaration.

In other words, we expected the fees to be roughly between 20 and 40. But for five commodities in the consignment they will be 145, which is a 500 per cent increase that industry will be required to pay [most consignments will have five or more different commodities].

If you are choosing to use the ro-ro ports of Dover or the tunnel, these fees apply simply because you have imported the consignments. It doesnt have to be physically inspected to incur those fees. Its the fact that youve used that port and ultimately, if called for inspection, you have used the government border control facility at Shevington in Kent, Jenney explains.

If as a small business I import 100 consignments, which I would in several weeks, I would incur 100 charges of 145. So in other words, I would be charged 14,500 every 100 consignments I imported to the UK. If I am importing cut flowers, it is a 3 per cent inspection level, so it is 4,800 per physical inspection. So it is just extortionate.

From our point of view this is hugely expensive. It is unaffordable. It will drive food inflation and ultimately this is a blatant tax on our industry by the UK government.

Control points

Jenney explains that goods can arrive through other UK port where the common user charges fees do not apply.

We have helped develop what are called control points and there are about 40 of those around the country. And they are commercially run facilities that allow the goods to be presented by that business for the official inspector to arrive and inspect as they are declared and as they arrive, he says.

However, literally a couple of weeks ago, the government announced that the government officials that would need to inspect these goods would no longer be available after 7pm in the evening for most control points.

Since most European fresh produce arrives throughout the night, businesses are left with two choices, Jenney says. Either a business has to wait until the next day, which is simply ludicrous because they would miss their market delivery or my retail delivery. Or, they are forced to use the highly expensive government control facility at Shevington.

Jenney says the FPC is lobbying Defra and the Cabinet Office to change these proposals.

I am hoping we will get some advice from Government this week, he says. We are working very hard to say, look your current proposals are not fit for purpose. And in the short-term we urgently need control points to have official inspectors available when the goods arrive from Europe.

We estimate theres over 1m consignments annually coming from Europe. So if you add all these fees together, you are talking about a liability to our sector of over 200m unless government reconsiders their position. As we speak, it hasnt as yet.

Go here to see the original:

Brexit border checks will start from 30 April - Fruitnet

London financiers have largely lost access to EU markets, but the UK says its recognition of Swiss banking and asset management rules is 'ground-breaking'

UK-based financial firms will be able to serve Swiss clients using domestic rules, under an agreement signed by British finance minister Jeremy Hunt today (21 December).

The mutual recognition deal, under which both countries agree to accept each others regulations for sectors like banking, investment and asset management, comes after financiers in the City of London lost significant access to the much bigger EU market next door.

The Berne Financial Services Agreement is a global first, Hunt said in a statement, describing it as a "blueprint" for deals with other trade partners.

The ground-breaking agreement gives British insurers a unique right to serve Swiss clients without a base in the country, and is only possible" due to the new legal situation post-Brexit, the statement added.

The UK's finance and insurance trade with Switzerland grew by 53% since 2016, reaching 3.28 billion in 2022, the UK Treasury said.

Brexit also meant that UK-based banks and brokers could no longer trade freely across the EU bloc, however, and Brussels has been reluctant to open up its market by deeming British laws equivalent to its own.

UK-based banks moved 900 bn in assets to places such as Dublin, Paris, Frankfurt and Amsterdam, one 2021 study by London-based think tank New Financial found, after regulators such as the European Central Bank called for operations to shift to locations within the bloc.

View original post here:

EU Policy. UK hails financial access deal with Switzerland after Brexit losses - Euronews

Inflation has become a concern for policymakers worldwide. Its potential causes include geopolitical tensions, supply chain disruptions, expansionary monetary and fiscal policies, and rising commodity prices (Ilzetzki 2022). This has also been an issue in the UK, which has experienced higher inflation than other G-7 economies, and raised the question of whether and how Brexit has contributed to rising prices.

There are different channels through which Brexit can affect price levels. One source is the pound devaluation, as Breinlich et al. (2022) find. Our research highlights an alternative source: the trade policy uncertainty (TPU) associated with Brexit. Specifically, we find that uncertainty about the future trading conditions with the EU increased the UK's import prices from the EU-27, with the leave referendum raising those prices by as much as 10%.

The opportunity to vote for Brexit in the 2016 referendum increased uncertainty about the future trade conditions between the EU and the UK. In 2013, the UK Prime Minister David Cameron raised the possibility of a referendum on the EU and announced he would follow through after the Conservative election victory in May 2015. As the June 2016 referendum approached, 83% of UK Chief Financial Officers (CFOs) reported high uncertainty, as did CFOs in Ireland (55%), the Netherlands (69%), and Germany (93%) (Deloitte 2016). UK CFOs ranked the Brexit referendum as the number one risk to their business over the next 12 months in 2016Q1. Similarly, two-fifths of CFOs in Europe ranked geopolitical risks as the first or second most important risk factor.

With the UK's membership status in danger, firms in other EU countries had to make investment decisions without knowing whether they would continue to have duty-free market access. Export investments include setting up distribution networks, acquiring consumers, matching quality to foreign tastes and product standards to regulations, as well as learning customs procedures. These investments in export capital cannot be easily recovered when market conditions worsen, for example if tariffs or other trade barriers increase.

Since at least May 2015, an EU firm had to consider the possibility that the UK would vote for Brexit, and a new agreement had to be renegotiated. If no deal could be reached, import tariffs on EU goods could increase by as much as 15 percentage points on some products, enough to significantly reduce expected future sales to UK customers. In Graziano et al. (2021), we use the difference between duty-free rates on EU trade and the Most Favoured Nation tariffs (MFN) to measure tariff risk from Brexit. We find that increases in the probability of Brexit reduce EU-UK trade in goods, particularly in industries with higher potential MFN tariff rates, such as motor vehicles.

There is a substantial amount of evidence showing that trade agreements increase trade by reducing trade policy uncertainty (Handley and Limo 2022). Brexit provides evidence of the same phenomenon in reverse: trade reduction due to a disagreement. However, much less is known about the price effects of trade policy uncertainty, and this is the focus of Graziano et al. (2023).

We first examine how the Brexit probability before the referendum is correlated with the growth in the UK import price index of goods imported from the EU versus its total imports. We use prediction markets on the referendum outcome to capture the likelihood of Brexit. To measure relative prices, we construct monthly import price indices from each EU exporter to the UK for each of the 1200 industry groups (e.g. babies' garments and clothing accessories from France), capturing 12-month changes. We plot its average relative to the UK aggregate import price index from the Office for National Statistics (ONS), which captures 12-month price changes in imports from all countries. As shown in Figure 1, the relative price of EU imports comoves closely with the Brexit probability measure.

Figure 1 Relative EU import price change and Brexit probability

EU firms would have expected UK tariffs to be higher on some goods after Brexit. In Figure 2, we show the sector-specific Most Favoured Nation tariff distribution imposed on different products by the EUthe reference we use for likely future UK tariffs. The threat of facing higher protection was heterogeneous between and within sectors. For instance, in Vehicles, Aircraft, Vessels, the increase would be 9% for motor vehicles but only 2% for trailers. In contrast, no products in "Pulp, Paper & Articles" would face a Most Favoured Nation tariff threat.

Figure 2 Sector-specific distribution of potential Most Favoured Nation (MFN) tariff rates

The theory predicts a stronger relationship between import price changes and the Brexit referendum probability for those products with higher Most Favoured Nation tariff risk. This is what we find in Figure 3: the relative price change of high to low-risk goods comoves with the Brexit probability.

Figure 3 Relative price and quantity changes and Brexit probability

Figure 3 also shows a negative relationship between relative import quantities in high to low-risk goods and the Brexit probability. The increase in price and decrease in quantities implies a supply rather than a demand shock, ruling out alternative channels such as stockpiling high-risk goods.

The descriptive evidence above is consistent with a trade policy uncertainty channel for increasing UK import prices. Yet, it does not rule out certain alternatives or allow for easy quantification. Therefore, we derive and estimate the impact of pre-referendum trade policy uncertainty on import prices by exploiting the different Most Favoured Nation tariffs these goods could face and the changes in the probability of Brexit over time. In effect, the estimation answers if import prices of specific items, e.g. baby garments from France, were systematically higher in months when the Brexit outcome was more likely when compared to price changes of hats and other headgear from France, which would face lower tariffs.

We find that trade policy uncertainty increased import price indices. A one standard deviation increase in the pre-referendum probability of Brexit increased import prices by 2% at the average Most Favoured Nation tariff. This effect is due to increases in prices of products continuously traded throughout the year and a decrease in the available varieties.

Using the model and our estimates, we quantify the impact of the referendum outcome on UK import prices. Figure 4 plots the average price impact under alternative Brexit tariff threats. Our preferred estimate implies that the increase in probability after the referendum increased UK import price indices for EU goods by around 11%.

Figure 4 Predicted post-referendum price impacts across tariff risk factors

About 7% of total UK expenditure was on EU imports in our sample. Therefore, an 11% increase in the price of EU imports significantly impacts UK consumers and firms. Our calculations indicate that the prices for UK households and consumers increased by 0.6% due to higher trade policy uncertainty generated by the Brexit referendum outcome. This trade policy uncertainty remained in place and likely grew at least until an agreement was reached years later.

The Trade and Cooperation Agreement reduced some of the trade policy uncertainty present in 2015-2020, but has not eliminated it. For example, changes to rules of origin have meant some EU firms face Most Favoured Nation tariff rates. Likewise, the status of the sea border in Northern Ireland and the potential for renegotiation of the Trade and Cooperation Agreement remain a source of uncertainty. Brexit provides a clear example of how reductions in the credibility of trade agreements can exacerbate price pressure on consumers even in the absence of applied policy changes.

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Brexit inflation: The role of trade policy uncertainty in increasing UK import prices - CEPR

British Prime Minister Rishi Sunak announced a breakthrough in the ongoing discussions with the European Union regarding the postponement of post-Brexit tariffs on electric vehicle (EV) sales. The European Commission, reversing its initial stance, recently approved a one-time extension until the end of 2026 for the planned 10-percent tariffs. The decision, influenced by concerns raised by the UK and EU automotive industries about potential increased costs, set the stage for Thursday's agreement. The deal involves a more gradual implementation of "rules of origin" regulations and associated tariffs. In a statement, Sunak acknowledged the industry's concerns, expressing relief for stakeholders. The prime minister emphasized that the delayed tariffs would help "keep costs down for businesses and for people at home who want to make the switch to electric vehicles." Attributed to disruptions in the global supply chain caused by the pandemic and the conflict in Ukraine, the need for the tariff delay became apparent. The UK officially left the EU in January 2020, finalizing a post-Brexit free-trade agreement during the subsequent transition period, effective in 2021. As per the agreement, tariffs were originally scheduled to commence on January 1, 2024, for vehicles lacking at least 45 percent UK- or EU-made content, along with batteries sourced at least 50-60 percent from these regions. The anticipated delay is anticipated to result in savings of up to 4.3 billion ($5.5 billion) for both car manufacturers and consumers, according to Sunak's office. Sigrid de Vries, the director-general of the European Automobile Manufacturers' Association (ACEA), welcomed the decision, stating that it provides "much-needed certainty" to the EV battery supply chain. She emphasized that the move recognizes the time required to develop emerging value chains and signals the EU's commitment to maintaining the competitiveness of critical industries. Mike Hawes, chief executive of the UK's Society of Motor Manufacturers and Traders (SMMT), lauded the agreement as a "win for motorists, the economy, and the environment." He highlighted that maintaining tariff-free trade in EVs ensures consumers have a broad and affordable choice of models during a crucial period for encouraging the transition to electric vehicles.

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UK and EU Reach Accord on Post-Brexit Electric Car Tariff Postponement - IndiaTimes