U.K. releases new budget plans, BIFA reacts with concern

The United Kingdom made another baby step forward in its preparations for Brexit yesterday, as British Finance Minister Philip Hammond delivered what is said to be the U.K.’s final budget before its membership with the European Union is severed next spring. Reaction from British International Forwarders Association (BIFA), however, was mixed.

The plan proposes changes to spending in housing, wages, defense, and healthcare, but provided minimal updates on plans surrounding Brexit. The elements of concern to the logistics community include:

• an additional £500 million toward preparations to leave the E.U., on top of the £2.2 billion previously announced.
• £30 billion toward improving England’s roads, e.g. repairs to highways.
• a 30 percent growth in infrastructure spending.
• potential that the “Spring Statement” released next March (one of Britain’s two yearly forecasts)  could be upgraded if needed.
• a continued freeze on fuel duties.

To read the BBC’s full account of the budget plan, click here.

BIFA said the proposed investments in road infrastructure and the continued freeze on fuel duties were favorable aspects of the outline to the forwarding community. But the group expressed concern that negotiations will fail to produce an agreement and result in a “no-deal” or “hard Brexit” come the deadline in March 2019.

Robert Keen, director general of BIFA, said that the potential for new tariffs could render the new agenda “unsustainable,” stating that BIFA members “remain concerned about the potential impact on infrastructure plans, labor shortages and border delays of a no-deal Brexit, and want to see much more progress with the agreement on several key processes if a frictionless border is to be achieved.”

Addressing the last bullet point, BIFA said it is concerned by a perception that Hammond does not think the new budget plan would be affected in the event of a hard Brexit. “If that is the case, why would Mr. Hammond feel the need to also state that his Spring statement might need to be upgraded to a new hard-Brexit budget?” Keen asked.

Concern from organizations like BIFA is certainly justified; the consequences of a hard Brexit would not only fall on the U.K., but on its European trading partners as well. Navigating new cross-border trade relations will be a logistical nightmare and money pit for players on both sides of the net, in terms of customs processes, tariffs and licensing fees.