Brexit plan to slash tariffs after no deal condemned as 'madness' and 'sledgehammer for UK economy'

Plans have been rushed out with just two weeks to go and will be disastrous say British businesses

Slashing tariffs to zero on the majority of UK imports in the event of a no-deal Brexit will be a “sledgehammer for the economy” and deliver a widespread shock across the country, business groups have warned.

The government announced it would remove import duties on 87 per cent of goods entering the UK as part of measures aimed at preventing billions of pounds of additional costs being passed on to consumers.

But business groups firmly condemned the plans as “cack-handed”, “madness” and “extremely worrying”.

Firms are worried about being suddenly exposed to cheaper imports which they have been shielded from within the EU.

The car industry trade body said the government’s plans would do nothing to prevent the “devastating” effect no-deal Brexit would have on one of the UK’s most successful sectors which supports hundreds of thousands of jobs.

The National Farmers Union (NFU) said it was “appalling” that plans had been unveiled with just two weeks to go until Brexit day.

Allie Renison, head of Europe and trade at the Institute of Directors, said the government had provided only the bare minimum needed to prepare for no deal and it has come “far too late”.

“Cutting tariffs unilaterally is a necessary and welcome part of a country’s trade policy, but it is crucial to do so in a measured, open and consultative way to get buy-in from both businesses and the public,” Ms Renison said.

“Unfortunately there has been virtually none of that from government in the run-up to this point.

“Making these tariff decisions temporary will lead to widespread confusion about what may change and when, as firms will want to know well in advance about how duties may rise.”

Carolyn Fairbairn, director-general of the Confederation of British Industry, described the prospect of no deal as a “sledgehammer for the economy”.

“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,” she told the BBC’s Today programme.

“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.”

Adam Marshall, director-general of the British Chambers of Commerce, said abrupt changes to tariffs would be an “unwelcome shock” for businesses.

“If the government were to bring these tariffs into effect on 30 March, the move would also have the potential to cede negotiating leverage in future trade talks.

“While ministers have clearly listened to our arguments and maintained targeted protection in some areas, overall 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.”

The government also announced there would not be any new checks or controls on goods moving from the Irish Republic to Northern Ireland.

Police in Ireland are concerned that could prove to be lucrative for potential smugglers and existing criminal networks in the country and across the border.

Tariffs will apply to goods including beef, lamb, pork, poultry and some dairy products in an attempt to protect farmers but the NFU said this would not be enough.

Irish European affairs minister Helen McEntee said the move would be “absolutely disastrous for Irish agriculture”.

NFU president Minette Batters said it was “appalling” that farmers have only just been given the opportunity to see the tariff rates – a fortnight before they could come into effect.

“Farmers and food businesses have no time to prepare for the implications, which will be exacerbated by the fact that we will face tariffs on our own exports on food into the EU and other countries with whom we currently enjoy free trade arrangements.

“Although we are pleased to see that the government has listened to our concerns and elected to treat many agricultural sectors sensitively, which may support farmers who are already facing disastrous disruption from no deal, it is enormously worrying that some sectors will not have this protection – noticeably eggs, cereals, fruit and vegetables.

“Even those sectors that are treated sensitively will, in most instances, see worrying and large reductions in the tariff rates currently charged on non-EU imports.

“Furthermore, the approach taken by the government to lump products under the same high-level tariff code, for example whole carcases and high value cuts of fresh beef, means there is a high chance of market distortion for many sectors who are deemed to have been treated sensitively.”

It comes after Theresa May lost a crunch vote on her Brexit deal in the Commons on Tuesday night.