The CBI has warned a new tariff regime on EU products, in a case of a no-deal Brexit will be a “sledgehammer” to the UK economy.
If MPs vote for a no-deal withdrawal from the EU, new levies imposed after 29 March will force prices up on EU imports, this includes food and car prices.
The temporary and unilateral regime will include levies of 10.6% on automotive products that were free from tariffs, a typical hatchback car could increase by £1,500.
Food tariffs on EU products such as chicken, beef, lamb, pork and cheese will all go up in price, should MPs vote to leave the EU without a deal.
Northern Ireland will have special arrangements and the UK’s temporary import tariffs will not apply to EU goods crossing the border, from the republic.
This is designed to avoid the need for checkpoints which could revive sectarian tensions and fears smuggling could rise, as ministers have insisted there will be no border on the Irish Sea.
Carolyn Fairbairn, CBI director-general told BBC Radio 4’s Today programme, “This tells us everything that is wrong with a no-deal scenario.
“What we are hearing is the biggest change in terms of trade this country has faced since the mid-19th century being imposed on this country with no consultation with business, no time to prepare.
“This is no way to run a country.
“What we potentially are going to see is this imposition of new terms of trade at the same time as business is blocked out of its closest trading partner.
“This is a sledgehammer for our economy.”
Adam Marshall, director general of the British Chambers of Commerce (BCC), said the tariffs would create “winners and losers across UK industry overnight” and potentially cost the UK leverage in future trade talks.
“The abruptness of changes to tariff rates in the event of a no-deal exit from the EU would be an unwelcome shock to many of the businesses affected,” said Dr Marshall.
“There has not been enough consultation, preparation or planning to support the firms and communities that could find themselves at the end of a sudden shift in tariffs. As MPs vote tonight, this is yet another reason why they must act to avoid a messy and disorderly exit from the EU on 29 March.”
Steve Turner, the Unite union’s assistant general secretary for manufacturing said, “Theresa May and her government need to stop the economic vandalism which is threatening jobs and livelihoods by properly taking a no-deal Brexit off the table and securing tariff-free frictionless trade with Europe.
“The UK’s steel industry has been pushed to the brink because of the dumping of cheap Chinese steel, while our tyre industry is fighting for survival in the face of inferior alternatives flooding the market from overseas.
“Reducing tariffs to zero on the majority of imports, including steel, in the event of a no-deal Brexit would destroy jobs and leave UK manufacturers competing with both hands tied behind their backs.”
George Hollingbery, trade policy minister said, “Our priority is securing a deal with the EU as this will avoid disruption to our global trading relationships. However, we must prepare for all eventualities.
“If we leave without a deal, we will set the majority of our import tariffs to zero, whilst maintaining tariffs for the most sensitive industries.
“This balanced approach will help to support British jobs and avoid potential price spikes that would hit the poorest households the hardest.
“It represents a modest liberalisation of tariffs and we will be monitoring the economy closely as well as consulting with businesses to decide what our tariffs should be after this transitional period.”