There is “little evidence” of firms preparing for a no-deal Brexit, the UK government has warned.
A report by the Cabinet Office said the lack of preparation by businesses is likely to add to the disruption experienced in a no-deal scenario.
It said: “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 report comes as a leaked letter from health secretary Matt Hancock warned of reduced access at Channel crossings for up to six months in a no-deal scenario.
Despite being “one of the most basic and straightforward parts” of preparing for no-deal, many businesses have not yet registered for an Economic Operator Registration and Identification (EORI) number, the report said.
The report said as of February 2019, there had only been around 40,000 registrations, but it's estimated around 240,000 businesses currently trade with Europe.
Without an EORI number, the report warned that businesses would not be able to complete the necessary customs forms for goods they are importing.
It said: “The lack of preparation for EU controls – of which this is an example – greatly increases the probability of disruption.”
However the report said there is capacity to sign up 11,000 businesses for EORI numbers per day, and a change in behaviour by businesses could rapidly change the current position.
Despite the government making progress to ensure that additional UK border controls would not cause disruption to trade through Transitional Simplified Procedures, the report said that border controls imposed by member states would be disruptive.
As well as potential delays at customs, HMRC has estimated that the administrative burden of customs declarations alone could cost businesses £13bn per year.
The report also warned one of the most visible impacts of no-deal would be the effect on food supply. It said that some food prices are “likely to increase”, as the UK is particularly reliant on the EU for fresh fruit and vegetables.
Currently 30% of the UK’s food supply comes from the EU and the report said disruption at Channel crossings would lead to reduced availability and choice for consumers on products, but it expected less than one in 10 food items would be directly affected by delays.
In a letter to staff leaked to SM, Hancock said government estimates showed there would be “significantly reduced access” across the Channel “for up to six months”.
He said the Department for Health and Social Care (DHSC) had analysed the supply chains of 12,300 medicines and almost half a million medical devices and other items.
Hancock said: “A combination of securing freight, buffer stocks, stockpiling and warehousing, regulatory flexibility, and clinical assessment and decision making will be required help to ensure the continuation of medical supplies.”
He added: “The key risk to supply is reduced traffic flow at the short straits crossing (i.e. between Calais and Dover or Folkestone), which is where the majority of medicines and other medical products imported from the EU come through.
“Government estimates show, in a reasonable worst-case scenario, that there will be significantly reduced access cross the short straits to and from Dover and Folkestone, for up to six months.”
A leaked letter last week showed the DHSC had set up a logistics hub in Belgium to help medical firms deal with border delays.
Retailers including Sainsbury’s, Asda and Marks & Spencer wrote to the government last month warning of supply chain disruption in the event of no-deal.
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