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Brexit's Ripple Effect: Challenges and Costs in the Industry's Supply Chain

Three years after Brexit, the UK's departure from the European Union is manifesting in complex and costly ways for businesses, particularly in the fresh produce supply chain.

The government's decision to diverge from the EU's regulatory regime has introduced a new set of challenges, affecting everything from pesticides to construction materials.

A key example of this divergence is the introduction of the UKCA quality standard, which imposes significant costs on businesses. For instance, the insulation maker Recticel, based in Stoke-on-Trent, expects to spend around £400,000 retesting its products to comply with the new UKCA mark, replacing the EU's CE mark.

This change requires UK-accredited testing facilities to validate the new mark, meaning products must be retested, even if they meet existing EU standards.

The chemical sector is also affected. Since January 2020, the UK has not banned 36 pesticides prohibited in the EU, indicating a growing regulatory gap. This divergence creates complexities for businesses that operate in both markets, as they must now navigate differing standards and regulations.

The construction products industry, overseen by Michael Gove’s housing ministry, is particularly impacted. The ministry has decided to replace the CE mark with the UKCA for all construction products sold in the UK from June 2025.

This decision, requiring retesting of products to the same standards but in UK-based labs, adds significant costs and operational challenges for businesses like Recticel.

The broader implications of these changes are significant. Many companies in sectors like insulation are European-owned and prefer to produce products to a single, unified standard.

The divergence in standards raises concerns about the UK's testing capacity and the ability to place certain products on the UK market.

While Rishi Sunak’s government has made efforts to smooth over trade frictions with the EU in some areas, such as rejoining the Horizon scientific community and aligning the phase-out date for petrol cars with the EU, the goods export sector has already faced new tests and requirements since the trade and cooperation agreement with the EU came into force in May 2021. This ongoing challenge is likely to continue as EU regulations evolve, leading to what experts call "passive divergence."

Peter Kersh has just retired as managing director of the Yorkshire-based fish food maker WorldFeeds, which supplies aquariums and fish farms in more than 40 countries.

After the TCA rewrote the rules of trade with Europe, it took the firm a year before it could find a way of dealing with the checks and paperwork necessary for every shipment.

Previously, they would send small consignments via “groupage,” where a logistics firm would take a mixed shipment across to the continent made up of products from many different firms.

Carriers stopped offering the service, once every crate from the UK had to be separately checked and accounted for. “When you ship food into the EU now you have to produce a health certificate, which is a laborious matter, and you have to have a vet inspection of your products on-site before they’re shipped across. So there’s all this rigmarole to go through, and it’s costly,” Kersh says.

WorldFeeds ultimately found a solution – sending a full load to a single EU client, who then ships individual orders on to other customers. “So we’ve managed to kind of get our marketplace back. But it took a year to sort out and it’s added 30% to the cost of the product,” Kersh says.

“Our customers have been very loyal to us: it’s a very special brand, it’s the best fish food in the world and people like it. But of course you can only stretch a piece of elastic so far, and they won’t wait because they’ve got to feed their fish. So we’ve been massively prejudiced by this. And it’s just really sad.”

And like many respondents to the British Chamber of Commerce’s annual survey on the TCA earlier this month, he says that the gap between UK and EU regulation is likely to widen, as the EU’s rules shift and the UK struggles to keep up, even if it wants to.

“Food is hugely regulated. It gets into ingredients that you can and can’t use: so they could ban an ingredient in the EU that we’re still using in the UK, which means you’re going to have two separate products now, because you can’t sell the same one.”

The case of WorldFeeds illustrates the practical challenges of post-Brexit trade. The company faced a year-long struggle to adapt to the new rules and paperwork required for EU shipments, resulting in a 30% increase in product costs.

The independent Office for Budget Responsibility suggests that goods trade has been more adversely affected by Brexit than services exports. Labour has proposed aligning the UK more closely with EU rules, but the broader issue remains: the UK’s regulatory system is increasingly out of step with the EU's, lagging behind in updates and changes.

This divergence in standards and regulations post-Brexit presents a complex landscape for businesses in the fresh produce supply chain, with increased costs, operational challenges, and a need for strategic adaptation to navigate the new regulatory environment.


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