Six years after leaving the European single market, Britain has finally decided that following European food regulations might not be such a bad idea after all. The UK and EU have agreed the text of a new arrangement that will remove most of the checks and certification requirements imposed on food, plants and animal products following Brexit. The agreement is expected to come into force in early 2028, subject to the remaining approval and implementation processes.
This is being presented as another stage in the government’s reset of relations with Europe. It will undoubtedly make life easier for food producers, importers and exporters, and may eventually help to reduce some of the costs that have been passed on to consumers. But there is a rather more interesting story here, because the agreement amounts to an acknowledgement that a central assumption underpinning Boris Johnson’s Brexit settlement was economically impractical.
Britain was supposed to regain control of its regulations. We would make our own rules, rather than having them imposed on us by Brussels. What nobody adequately explained was how this was supposed to work in an economy that depended on European imports and whose businesses needed access to European markets.
The answer, as we have now discovered, is that it was going to be extremely expensive. We have spent six years making trade more difficult, constructing hundreds of millions of pounds’ worth of border infrastructure, repeatedly postponing the introduction of the controls that infrastructure was intended to support, and watching British exporters struggle with the additional bureaucracy. Now we are negotiating an agreement to remove many of those barriers by following European regulations again.
The illusion of regulatory independence
The problem was obvious before Brexit happened. Britain imports a substantial proportion of its food, much of it from the European Union, while British food and drink producers depend on selling their products abroad. These relationships were not going to disappear simply because we had decided to leave the single market.
In December 2020, I wrote about the prospect of food shortages following Brexit and the practical difficulties of British food self-sufficiency. We are accustomed to eating strawberries in December, tomatoes throughout the winter and a wide variety of foods that we simply cannot produce economically throughout the year. Even products that appear quintessentially British often depend on ingredients imported from elsewhere.
I was running Durham Distillery at the time, and the production of gin provided a useful illustration. Juniper is the essential ingredient in gin, but much of the juniper used by British distillers comes from continental Europe. A British product, manufactured in Britain, using ingredients that have travelled across international borders. There is nothing particularly unusual about this. It is how modern economies work.
The same applies in reverse. If a British producer wants to sell cheese, meat, biscuits or gin in France, those products have to comply with the regulations governing the French market. Britain can decide to adopt different rules, but it cannot insist that other countries accept them.
Of course, there was nothing preventing Britain from establishing different standards for its domestic market. We could have developed our own food labelling requirements, pesticide regulations or rules governing agricultural production. But businesses importing from Europe would still have needed products that complied with British requirements, while exporters would have needed to comply with European ones. Manufacturers serving both markets could have found themselves dealing with two sets of regulations instead of one.
The economic advantages of this arrangement were always difficult to identify. In practice, much of the supposed freedom to make our own rules meant the freedom to impose additional costs on British businesses.
Johnson’s Trade and Cooperation Agreement removed tariffs on qualifying goods, subject to rules of origin, but it did not preserve the regulatory arrangements that had allowed products to move relatively freely around the single market. Rules of origin determined whether goods qualified for preferential tariffs; they did nothing to remove the need for veterinary certificates, plant health inspections and other regulatory formalities.
We had exchanged a system of common rules for one in which businesses frequently had to demonstrate that they were complying with rules that were substantially similar to those they had followed before.
Building a border we couldn’t operate
The consequences were not confined to businesses filling in additional paperwork. Leaving the single market meant that Britain needed an entirely new system of border controls, including facilities to inspect food, animals and agricultural products arriving from Europe.
The government began spending substantial sums constructing this infrastructure. New inspection facilities were developed at ports, temporary border facilities were established and additional staff were recruited to undertake checks.
But there was a problem. The government repeatedly discovered that introducing the controls was rather more difficult than announcing them.
The European Union introduced its new controls on British exports at the beginning of 2021. Britain, meanwhile, repeatedly postponed introducing equivalent checks on imports from Europe. There were concerns about disruption to supply chains, the readiness of ports and the additional costs that the controls would impose on businesses and consumers.
By May 2024, the National Audit Office reported that the government had postponed the introduction of full import controls five times. Even then, it remained unclear when the complete system would be operational.
The financial consequences were extraordinary.
According to the National Audit Office, the government spent £62 million acquiring or developing two border facilities at Dover that were subsequently judged unnecessary. HMRC spent another £258 million establishing, operating and eventually closing eight temporary border facilities after the anticipated demand failed to materialise.
A further £391 million had been spent on permanent border infrastructure, bringing the total government expenditure on these facilities to £711 million by 2023–24.
Not all this money was wasted. Some facilities provided services while they were operating, and others continue to perform useful functions. But at least £320 million was spent on facilities that were either never needed as intended or whose expected demand failed to materialise. That is not a precise calculation of waste, but it gives some indication of the scale of the problem.
The wider programme of post-Brexit border arrangements was expected to cost at least £4.7 billion. That figure includes much more than inspection buildings, so it would be misleading to describe the whole amount as wasted infrastructure expenditure. Nevertheless, it demonstrates the enormous administrative undertaking involved in creating a border that had previously been largely unnecessary for trade with Europe.
The absurdity became particularly apparent when I visited Felixstowe earlier this year to photograph some of the infrastructure built to accommodate the new arrangements. We had constructed facilities to enforce controls that successive governments had been reluctant to introduce, largely because of the economic disruption those controls would cause.
Now we have an agreement that is expected to remove the need for many of those inspections altogether.
There is a particularly striking example at Portsmouth, where a border inspection facility costing around £25 million was designed to undertake approximately 80 inspections a day. It has reportedly been averaging just three. The local council is now seeking compensation because the new agreement could make much of the facility’s intended work redundant.
The buildings are only part of the story. The National Audit Office also reported that port health authorities had recruited around 520 additional staff to undertake inspections, of whom approximately 370 were subsequently found not to be required.
We had created an expensive new system of controls, struggled to implement it, and are now negotiating arrangements that will eliminate much of the need for it.
The cost to businesses
The infrastructure expenditure was largely a one-off cost. The additional costs imposed on businesses were potentially much more damaging because they continued year after year.
Before Brexit, a British food producer could sell products into the European single market without the certification and border formalities subsequently introduced. Afterwards, exporters faced additional paperwork, inspection requirements and the risk of delays, sometimes involving perishable products whose commercial value could disappear while they waited to be cleared.
The National Audit Office reported that the additional sanitary, phytosanitary and safety-and-security controls planned under the government’s Border Target Operating Model would cost traders an estimated £469 million annually. Not all these costs arose from EU trade, and the figure was a forecast rather than a measurement of what businesses actually paid. Nevertheless, it illustrates the recurring costs associated with the new arrangements.
For larger businesses, additional bureaucracy was an irritation and an expense. For smaller exporters, it could make an entire market uneconomic.
I experienced something similar with Durham Distillery. Before Brexit, we exported to Ireland, Spain and Japan. Those exports subsequently stopped. The Japanese business was particularly frustrating because our distributor combined British and European products into shipments for Asian markets. Brexit complicated that arrangement, despite Japan being thousands of miles from the European Union.
In April, I wrote about the impact of Brexit on British exports, including research suggesting that goods exports to the EU were substantially lower than they would otherwise have been. The precise estimates vary depending on the methodology, but the evidence of additional trading costs and damage to smaller exporters is substantial.
The food and drink industry provides a particularly clear illustration. Recent analysis by the National Farmers’ Union suggests that volumes of British agricultural food exports to the EU have fallen by more than a third since 2019, with particularly severe declines in some categories.
Not all of this can be attributed to Brexit. Businesses have also had to contend with Covid, inflation, energy prices and changing consumer demand. But the additional barriers created by leaving the single market were real, and they were imposed on businesses that had previously traded across Europe without them.
There is another problem that the new agreement cannot immediately resolve. European customers have not spent the past six years waiting patiently for British suppliers to return. They have found alternatives, established new relationships and reorganised their supply chains. Removing the barriers will make it easier for British exporters to compete, but it will not automatically restore the business they have lost.
Franco, Benidorm and the price of sovereignty
There is an interesting historical parallel here, although not perhaps the one that immediately comes to mind.
Following the Spanish Civil War, General Franco attempted to establish an economically self-sufficient Spain. His policy of autarky was intended to reduce dependence on foreign countries through import restrictions, protectionism and state intervention. Economic independence was regarded as an essential part of national sovereignty.
It was a disaster.
Spain lacked many of the raw materials, technologies and productive resources necessary to sustain a modern economy without extensive international trade. The restrictions contributed to shortages, inefficiency and economic stagnation. By the late 1950s, the limitations of the policy had become impossible to ignore.
In 1959, Franco’s government introduced a programme of economic stabilisation and liberalisation that marked a decisive break with the earlier commitment to autarky. Spain began opening its economy to foreign investment and international trade, while tourism became an increasingly important source of foreign currency.
The results are still visible along the Mediterranean coast. Large stretches of the costas were covered in hotels, apartment blocks and holiday developments designed to attract northern Europeans and, more importantly, their pounds and Deutschmarks.
There is a certain irony in a regime that had pursued economic independence subsequently relying on British and German holidaymakers to provide the foreign currency needed to support its economy.
The comparison with Brexit is not that Britain attempted anything approaching Franco’s economic policies. We didn’t, and there is no equivalence between the political systems. The point is that genuine independence from the economic influence of neighbouring countries requires something much more substantial than changing the legal arrangements governing trade.
If Britain really wanted to free itself from European food regulations, it would have needed to reduce its dependence on European food imports and accept that exporters selling into Europe would continue to follow European rules. Complete freedom from those rules would have required withdrawing from much of the trade that makes our modern economy possible.
In other words, something approaching the economic autarky that Franco attempted and ultimately abandoned.
Nobody seriously proposed that Britain should stop importing European food or selling British products into European markets. Yet the promise of regulatory sovereignty was repeatedly presented as though these economic relationships placed no meaningful constraints on our freedom to make different rules.
Franco discovered that economic independence was considerably more difficult to achieve than political independence. Britain has spent six years discovering a rather less dramatic version of the same lesson.
Six years later
The new agreement will establish common sanitary and phytosanitary arrangements between Britain and the European Union. Across the sectors covered, Britain will align its regulations with European standards, including changes made in the future.
That is an important distinction. This is not simply an agreement that British and European regulations are currently equivalent. It means that Britain will follow relevant European rules as they evolve.
In return, most of the veterinary certificates, plant health documentation and routine inspections introduced following Brexit will become unnecessary. This should make it easier for British food producers to export to Europe and for British importers to bring European products into the country.
It will not restore the single market. Rules of origin, customs declarations and other requirements will remain, while excise controls on alcoholic drinks will continue. The new arrangements will remove some of the barriers created by Brexit, not all of them.
There is also a rather obvious political consequence. Before Brexit, Britain participated in making European regulations through the institutions of the European Union. Under the new agreement, we will follow many of those regulations without enjoying the voting rights that came with membership.
We have spent six years exercising our freedom to establish separate regulatory arrangements, only to conclude that following European regulations is economically preferable.
The agreement is not a reversal of Brexit, nor does it need to be presented as one. It is a pragmatic response to the realities of trading with our largest neighbouring market. Businesses need predictable rules, affordable supply chains and the ability to sell their products without unnecessary administrative obstacles.
The remarkable thing is not that the government has reached this conclusion. It is how long it has taken, and how much money has been spent along the way.
The economic realities were there in 2016, in 2020 and in 2021. Britain was never going to become self-sufficient in food, and British exporters were never going to escape the regulations governing the markets into which they sold.
We could have acknowledged those realities when negotiating the original Brexit settlement. Instead, we spent years building border facilities, repeatedly postponing their use, increasing the costs of importing food and making life more difficult for British exporters.
Now, having incurred those costs, we are negotiating our way back towards the regulatory arrangements that made trading with Europe relatively straightforward in the first place.
It has taken six years, hundreds of millions of pounds in border infrastructure and considerable disruption to British businesses to arrive at a conclusion that should have been obvious from the beginning.