Brexit: ‘Urgent’ need for UK-EU protocol deal amid cost of living crisis, warn business chiefs

Plan put foward by Liz Truss will create ‘myriad’ problems, say trade bodies urging ‘swift resolution’

Foreign Secretary Liz Truss has vowed to push on with protocol bill (Niall Carson/PA) (PA Wire)

The UK government’s plan to tear up part of its Brexit deal with the EU and replace the Northern Ireland Protocol unilaterally will create a “myriad” of new problems, business leaders have warned.

The Northern Ireland Business Brexit Working Group – which includes Logistics UK, CBI NI and Manufacturing NI – said soaring inflation mean there was an “urgent” need for compromise with Brussels.

The trade coalition said legislative plan put forward by foreign secretary Liz Truss in June would put the region’s export economy at risk, as well as creating “legal and commercial risks” for its businesses.

Business chiefs also warned that some families in Northern Ireland “are amongst the least well-placed” to manage the cost of living crisis – arguing that the tough winter ahead demanded a “swift resolution”.

Both Truss and her Tory leadership rival Rishi Sunak have vowed to push through parliament the controversial Northern Ireland Protocol bill – including plans for a new, dual regulatory system.

But the group representing key sectors said the plans – which would ask firms selling in Northern Ireland to choose whether they comply with EU standards, UK standards, or both – would create fresh difficulties.

The government wants to replace protocol rules with a new system that would create green and red channels differentiating between GB goods destined for use in NI and shipments bound to go across the Irish border.

Goods arriving through the green channel would be freed of red tape, while the red channel would retain the checks and inspections required by the protocol.

“We have been clear with the UK government that if it proceeds unilaterally with the Northern Ireland Protocol Bill, particularly with the creation of an all-encompassing dual regulatory regime, it will create myriad reputational, legal and commercial risks for many of our businesses,” the working group stated.

“Northern Ireland has been a top-performing region in exporting goods since EU Exit – but that is now being put at risk,” the business chiefs added.

Citing figures showing inflation rising to a 40-year high of 10.1 per cent, the working group called both the UK and the EU “to redouble their efforts to resolve their differences on the Northern Ireland Protocol and find an agreement based on compromise”.

In a statement attacking “inflexibility”, the coalition said: “Northern Ireland is now facing into the most difficult of winters. It is our view that the scale of the current economic challenge is such that it demands a swift resolution to the impasse.”

The group added: “Our communities are amongst the least well-placed to manage the cost-of-living crisis, with households seeing the largest fall in discretionary spend of any UK region this year. The need for an urgent resolution is readily apparent.”

The group, which includes the Dairy Council, Federation of Small Businesses and the NI Food and Drink Association, also said the EU needed to show “much more ambition” when it comes to relaxing SPS (sanitary and phytosanitary) controls on agri-food products.

The trade chief said it was possible to tackle “the disproportionate burden placed on goods that are not at any material risk of entering the EU single market.”

Truss and Sunak have insisted at recent Tory leadership husting they would press on with the bill empowering ministers to scrap the existing protocol.

The foreign secretary, strong favourite to win the race and become PM by early September, told Tory members in Belfast she was determined to push through the legislation in full, even if she faced opposition in the US.

“I have been very clear with people like [US House Speaker] Nancy Pelosi exactly what I think about this and exactly what we need to do – I have got on with delivering this,” she said.

But Sunak left the door open for new talks with Brussels, saying the legislation would “take time” to move through the Lords, so he would still urge the EU to compromise on a negotiated settlement until then.

The protocol is vociferously opposed by many unionists in Northern Ireland, and the DUP is currently blocking the formation of a power-sharing administration at Stormont in protest.