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No-deal plan threatens UK fuel plants

August 20, 2019

 

The future of the UK's fuel refineries could be threatened by a no-deal Brexit, according to an internal local authority document seen by the BBC.

 

Under current government plans for no deal, they face a "danger to viability" from cheaper imports, while exports to the EU are set to be hit with tariffs.

Concern is widespread in an industry deemed crucial for both economic and national security.

 

The government has been approached for a comment.

 

There are six major petroleum refineries in the UK, supporting around 120,000 jobs directly and contributing about £8.6bn to the economy.

They turn crude oil into petrol and diesel as well as products such as jet fuel.

 

Competition 'distorted'


The concern, which is shared by both the Scottish and Welsh governments, relates to the UK government's decision not to apply tariffs - taxes on trade - to imports of petrol in the event of a no-deal Brexit.

 

The decision was made to lessen the inflationary impact on prices in the event of a no-deal Brexit.

 

The current tariff on fuel imports from non-EU countries is 4.7%.

However, under World Trade Organization (WTO) rules, a zero tariff rate must apply to petrol imports from all countries, opening up the UK to Russian fuel imports.

 

At the same time, the EU has said it will apply a tariff, under WTO rules, of 4.7% to UK exports, making the trade with, for example, Ireland "uneconomical", according to insiders.

 

While a flood of cheaper imports could initially mean lower fuel prices for consumers, the industry says relying on foreign suppliers will ultimately lead to higher prices.

But the government has also said that reversing its no-deal zero import tariff plan would lead to higher prices for consumers.

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