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Published on December 14th, 2020 | by The GC Team

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Even a last-minute Brexit deal won’t save shoppers from increased prices next year

OPINION

As Brexit talks go down to the wire, international delivery expert ParcelHero says shoppers and retailers should make the most of our final Christmas in the EU. The firm warns that, even if there is a last-minute deal, there will be less choice and goods will be more expensive next year

David Jinks MILT, Head of Consumer Research at ParcelHero, writes:

The bureaucracy and red tape involved in clearing customs next year will make the UK a far less competitive market for European Union (EU) traders. This will be the case even if an 11th-hour Brexit deal means there are no new duties to pay on goods arriving from Europe.

The complications involved in filling out customs documents and having parcels checked at borders is unwanted hassle for sellers and causes delays for couriers. Many EU-based retailers may simply stop selling direct to UK shoppers, while EU-UK deliveries are likely to

The UK is going to be a considerably less attractive and competitive market for European sellers by next Christmas. EU traders will face new paperwork, delays and complicated tax arrangements when selling directly to British companies. That’s even if a trade deal is signed in the next few days.  

For example, let’s compare selling an item to a shopper in Italy as opposed to neighbouring Switzerland. Italy is a country in Europe and in the EU while Switzerland is in Europe but is not a member of the EU. By looking at the problems and costs involved in sending items to both countries it’s easy to see how Britain is likely to be impacted from January 2021.

A check on the ParcelHero price comparison site shows the cheapest pick-up economy service to Italy will ship a 10kg package for just £20.85 (£25.02 incl. VAT). However, the cost of sending the same parcel to neighbouring Switzerland, which is broadly the same distance but outside the EU, is £37.01. That’s a difference of over £16.

As another example, shipping that same 10kg package from the UK to EU-member Sweden costs just £19.52 (£23.42 incl. VAT), using an economy service. Shipping it to neighbouring Norway costs £35.84 because Norway – like Switzerland – is in Europe but has not joined the European Union and is, therefore, a less attractive destination for couriers to serve. Again, that’s a difference of over £16.

Why is there a price increase of around 80% sending the same parcel to certain countries that are next door to each other? The simple answer is that many delivery companies are not exactly fighting each other to serve non-EU countries because of the complexities of border controls, including customs declarations. This means that there is little of the fierce competition between couriers that serve the EU market. Just like Switzerland and Norway, Britain will soon be out of the EU and that will impact on the competitiveness of delivery costs to the UK.

There’s even worse news for Brits fond of buying goods from Europe using Amazon. Amazon sellers will face higher costs as well if they wish to carry on trading with the UK. From 18 December, Amazon’s Pan-European programme will no longer include the UK. From that date, EU retailers who want to continue selling to Great Britain will have to pay to get their items shipped to Amazon’s UK warehouses at their own cost. Previously, Amazon covered this.

Of course, many of the same issues apply to UK businesses and sellers wanting to continue exporting to the EU. Even if the EU and UK strike a last-minute deal and British goods aren’t hit with new duties when entering the EU, UK exporters are potentially looking at increased courier charges to compensate for delays at the EU borders. Likewise, UK-based Amazon sellers will also have to pay to transport items into EU warehouses and sign up to complicated new tax arrangements.

Everyone is keeping their fingers crossed that a trade deal can be struck that means no new customs duties on thousands of goods crossing the UK-EU border. However, it needs to be emphasised that, even if a deal is signed, next Christmas is likely to be a lot more expensive for everyone who loves buying from European retailers.

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