The European Union (EU) has agreed to a Brexit extension of three more months rather than see the United Kingdom plunge out of the bloc with no deal on October 31.
After a meeting of European ambassadors, Donald Tusk, president of the European Council, announced 27 EU member nations had agreed to Prime Minister Boris Johnson’s request for an extension.
“The EU27 has agreed that it will accept the U.K.’s request for a new flextension until January 31, 2020,” he tweeted. “The decision is expected to be formalized through a written procedure.”
The latest extension removes the immediate threat of a no-deal Brexit on the scheduled October 31 departure date, an outcome the freight industry expected would cause supply chain chaos across northern Europe.
The extension until January 31 announced this morning (October 28) includes an option for the U.K. to leave the EU earlier if Parliament approves the withdrawal agreement Johnson agreed to with the EU earlier this month.
Under the Johnson agreement, the whole of the U.K. will leave the EU customs union, enabling the U.K. to agree to trade with other countries in the future. A customs border between Northern Ireland and the Republic of Ireland will be established legally, but in practice goods crossing this border will not be checked. Rather, a customs border will be established between Great Britain and the island of Ireland.
Johnson pledges undone
Johnson had previously pledged the U.K. would Brexit on October 31, “no ifs, no buts … do or die”. He is now widely expected to join opposition parties to push for a December general election to break the Parliamentary impasse that blocked his deal last week.
While Britain’s political deadlock continues, U.K. transport bodies have welcomed the decision by the EU to extend contingency measures to help reduce air and road supply chain disruption in the event of a no deal Brexit, an outcome that remains possible despite the extension announced today.
The road haulage contingency measure, which was due to expire on December 31, 2019, is now valid until the end of July 2020, while the aviation access contingency has been extended from March 2020 to October 24 2020.
“The extension of the No Deal contingency access is welcome news for logistics companies currently preparing for Brexit and is something which FTA [the Freight Transport Association] has been lobbying for on behalf of its members,” said Sarah Laouadi, FTA’s European Policy Manager.
“Both agreements will allow some degree of continuity, but it is clear that permanent solutions should be reached to enable businesses to plan efficiently for long-term business stability and avoid yet another cliff edge.”
Brexit labor shortages
As previously reported in FreightWaves, while political machinations continue in the U.K., shippers are already relocating distribution and storage capacity to continental Europe in expectation that Britain’s eventual exit from the EU will reshape Europe’s logistics landscape.
As well as losing business to rivals overseas, U.K. logistics companies are also struggling with labor shortages as the number of EU nationals immigrating to the U.K. for work plummets.
In a new publication titled FTA’s Logistics Skills Report 2019, the FTA notes that declining EU net migration has contributed to a 43% rise in job vacancies in the transport and storage industry over the past 24 months.
“The logistics sector is facing serious challenges in the recruitment and retention of labor: 59,000 HGV drivers alone are urgently needed just to keep operations afloat,” said Sally Gilson, Head of Skills Campaigns at FTA.
“Businesses within the logistics sector are reliant on access to EU workers to help fill job vacancies; these workers currently constitute 13% of the entire logistics workforce.”
According to the report, the number of EU nationals moving to the U.K. for work is now more than 50% lower than its peak period between June 2015-June 2016.
“With the Government now investigating an Australian Points Based System, the focus for future immigration is still focused on higher skilled workers,” said Gilson.
“FTA is urging Government to build its future immigration policy on what the U.K. economy needs to remain functional – not arbitrary academic levels and minimum salary requirements.”
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