Hundreds of businesses including high street retailers Marks & Spencer and Fortnum & Mason have suspended exports to the EU with Brexit small print expected to drive up costs.
Small businesses have also been affected. Parcel courier DPD announced on Friday it was suspending its road delivery services to the EU.
Although the government sealed a “tariff free” trade deal on Christmas Eve, it has emerged that food and clothing products that do not qualify as made in Britain could be hit by special export levies.
Under the agreement, if more than 40% of its pre-finished value was either not of British or EU origin, a product will attract tariffs.
Boris Johnson was said to have swerved the topic of Brexit impact in a call with more than 200 business leaders earlier this week.
“It was a meaningless call, it was all mottoes, we are going to build back business better, build back business greener and a few patsy questions about how much better it would be, nothing about the realities of Brexit and Covid hitting us all hard,” said one business leader.
Retailers including Tesco and high street stores such as Matalan and River Island are now calculating the cost of this Brexit shock which could affect clothing that includes fabric from Asia or food that is largely based on non-British or EU ingredients.
In addition, retailers have been hit by the cost of customs paperwork that applies to all imports and exports including goods moving from Great Britain to Northern Ireland.
DPD said “complex” Brexit procedures meant a fifth of parcels were now going into its system with “incorrect or incomplete” data and it would pause deliveries to the EU with the intention of recommencing on 13 January.
M&S has temporarily cut nearly 400 products from the food and drink aisles of its 20 stores in Northern Ireland. The exercise is designed to simplify the business and so avoid the delays at the border amid reports of retailers having trucks turned back due to inadequate paperwork.
The reduction equates to about 5% of the 6,500 products usually sold in M&S food halls and includes popular readymeals such as lasagne and beef bourguignon, as well as takeaway salads and some essential lines such as bread, sugar and teabags.
A spokesman for M&S said it had served customers in Northern Ireland for over 50 years and its priority was to provide the “same choice … our loyal customers have always enjoyed”. Its stores had been receiving regular deliveries this week but the changes came as it moved over to new processes, he said.
M&S has also warned that more than 2,000 of its food products, including Percy Pig sweets, could attract new import taxes when re-exported to its stores in EU countries such as Ireland and France. The new “rules of origin” regulations dictate whether tariffs must be paid based on where a product’s ingredients come from and where it has been manufactured.
The M&S chief executive, Steve Rowe, said: “Tariff-free does not feel like tariff-free when you read the fine print. For big businesses there will be time-consuming workarounds but for a lot of others this means paying tariffs or rebasing into the EU.”
Tesco said it had experienced short delays moving goods into Northern Ireland but that it had a “good supply of products coming into Northern Ireland”. “There has been a short delay on certain products but we’re working with suppliers to get these back on the shelves as quickly as possible and direct customers to alternatives where we can.”
Tesco said it was discussing the “rules of origin” regulations with HMRC and Irish Revenue and hoped “to find a satisfactory resolution as quickly as possible”.
The department store chains Debenhams and John Lewis, which recently closed its international business, are among the big names no longer serving the Irish market. Fortnum & Mason, the famous London department store, has also temporarily ceased shipping to Northern Ireland and EU countries.
The British Retail Consortium said: “At least 50 of our members, all of them large retailers, face potential tariffs for re-exporting goods to the EU.”
Dominic Goudie, the head of international trade at the Food and Drink Federation, said some product-specific rules meant exports were no longer viable, with “serious challenges for supply chains that span across the UK and EU”.
He also said EU-produced food and drink that moves to other EU markets via Great Britain without further manufacturing taking place in Britain faced the payment of full EU tariffs on return to the EU.
“As a result, suppliers are being forced to cancel deliveries of products to customers, particular those in Ireland,” he added.
One unnamed source for a logistics business spoke of mayhem behind the scenes. He described how one truckload of parcels had to be completely offloaded and relabelled on Thursday night before export to the EU, simply because one line on the code for goods was wrong.
He also told of companies hiking charges for invoices to £3.50 a parcel going to Europe, making low-value goods too expensive to export.
John Arbon Textiles, a small artisan knitting wool company in Devon, said it had been told by DPD that its spools and balls of fibre would not be accepted in Europe.
“I feel DPD are being cautious, but I have no confidence that I can send anything to my customers in the EU at the moment,” the business’s owner, Juliet Arbon, said.
Northern Ireland’s chief vet has said goods arriving in the region, which is now following EU rules for imports, would be destroyed or returned if not compliant after a short grace period.
Robert Huey told a Stormont committee that some companies contracted to do the paperwork for hauliers were “overwhelmed” and in one case a staff member had to show a major supermarket how to complete its paperwork.