A UK parliamentary committee has cited a dramatic increase in north-south trade on the island of Ireland as an example of "considerable diversion of trade" caused by post-Brexit trading rules.
Britain's Public Accounts Committee said the UK government had blamed the Northern Ireland Protocol, the part of the EU-UK divorce deal covering the North's trade, for having a "significant impact on Northern Ireland" resulting in increased trade between the North and the Republic.
The UK cabinet office told the committee that the results of its monitoring of the impact of the protocol had been “very concerning and had revealed considerable diversion of trade”.
MPs referred to the 61 per cent year-on-year increase in goods flowing from Northern Ireland to the Republic and the 47 per cent increase in the other direction in the first eight months of 2021.
“We also know from examples in our own constituencies that businesses have incurred significant increased costs as well as delays in moving goods because of the protocol requirements,” the parliamentary committee said in a 25-page report published on Wednesday.
The EU and the UK are locked in negotiations to find a better way of implementing the protocol and reducing checks on goods moving from Britain to the North under the arrangement.
Unionists have complained that the trading rules under the protocol separate Northern Ireland from the rest of the United Kingdom and want them abandoned.
The parliamentary committee said in its report that the London government should continue to try to resolve the “challenges of the protocol” and ensure that UK departments are “ready to put any negotiated outcome into operation and that it has prepared for any contingencies which may be required if an agreement cannot be reached between the UK and the EU”.
MPs said most businesses moving goods from Britain to the North were using the Trader Support Service run by HM Revenue and Customs, a free service that makes customs declarations for affected businesses and on which £360 million (€426 million) is being spent over two years.
The report said that the UK's department of agriculture is providing up to £200 million to the end of 2023 for the Movement Assistance Scheme to help certification costs for the movement of agri-goods but that only £10 million had been spent so far.
The EU introduced its post-Brexit border controls at the start of last year, but the UK has only just introduced their import controls and delayed them further for trade from Ireland pending the outcome of talks on the protocol.
Overall, MPs found that there had been a clear increase in costs, paperwork and border delays for UK businesses since Brexit and that this has not been helped by the British government’s “repeated delays” in creating a new import regime for goods entering the UK from the EU.
Their report found that it was “clear” that the UK’s exit from the EU was having an impact on UK trade volumes and that “new border arrangements have added costs to business”.
“One of the great promises of Brexit was freeing British businesses to give them the headroom to maximise their productivity and contribution to the economy - even more desperately needed now on the long road to recovery from the pandemic,” said committee chair Meg Hillier MP.
“Yet the only detectable impact so far is increased costs, paperwork and border delays.”
