U.K. Confronts Threat of Food Crisis as Virus Surge Blocks Trade

(Bloomberg) -- The U.K. confronted threats of food insecurity and panicked shopping days before Christmas as European nations restricted trade and travel to guard against a resurgent coronavirus, offering Britain a preview of the border chaos to come in the absence of a Brexit deal.

Fearing a fast-spreading new strain of the virus that forced a strict lockdown across England, France on Sunday suspended travel from the U.K. for 48 hours and Germany halted arriving flights from Britain. The crisis gave renewed urgency to negotiations for a trade deal with the European Union that remained at a critical stage after weekend talks.

The Port of Dover late Sunday halted freight moved by truck into France while allowing unaccompanied cargo to keep moving. Though traffic into the U.K. is unaffected, truckers often run supplies in both directions and the latest outbreak in the heart of the country may discourage them from entering the U.K.

The disruptions are exposing Britain’s trade vulnerabilities just as a 4 1/2-year odyssey to leave the EU moves from political rhetoric to economic reality. Business groups facing catastrophic losses urged Prime Minister Boris Johnson’s government to act soon, with the 18,000-member Logistics UK calling for rapid Covid-19 testing of truckers departing the country as the quickest way of protecting supply chains.

“This is the nightmare before Christmas,” said James Withers, chief executive officer at the Scotland Food & Drink industry group.

Scottish Seafood

He said there are more than 100 trucks laden with seafood due to cross the border into the EU, bound for Christmas wholesale markets in France and Spain that would normally be held on Wednesday. Fears are growing that live shellfish will spoil if they’re held up at the border, and the government needs to act today to ensure that the freight can keep moving, Withers said.

Container ports and ferry terminals were already congested because of stockpiling ahead of the Dec. 31 deadline marking a final break from the European single market.

The border chaos comes at the tail end of a year that’s seen Johnson nearly die from the virus and come under heavy criticism over his response to the pandemic -- which has seen the U.K. suffer the worst hit to output of any major economy as well as a death toll second only to Italy in Europe.

Grocers Scrambling

British supermarket chain J Sainsbury Plc said it is considering using air freight for products sourced from Europe. If the situation doesn’t change, Sainsbury will start to see “gaps” in the coming days sourcing some fruits and vegetables, said Victoria Durman, head of corporate communications.

Outside Dover, trucks began lining up on the M20 motorway as the “Operation Stack” emergency plan was triggered with drivers unable to board ferries. The Department for Transport was also preparing Manston airport in Kent, which is being overhauled to accommodate as many as 4,000 vehicles as part of Britain’s no-deal planning, according to the kent.gov.uk website.

Richard Ballantyne, chief executive officer of the British Ports Association, urged travelers to follow the advice of their carriers. “There could be a period of disruption at some of the U.K.’s ferry ports for the next 48 hours,” he said. “We are confident that the U.K. will continue to be supplied.”

U.K. travel, leisure and retail shares slumped on Monday as flights were canceled, while stay-at-home stocks, like Ocado Group Plc, got a boost. Airlines that were expecting a lift around the festive period were among the worst hit, with British Airways parent IAG SA falling as much as 20% and Easyjet Plc down as much as 18%.

Weaker Growth

Economists at Berenberg cut their 2021 growth forecast for the U.K. just last week to 7.3% from 8% because of new lockdowns. Transport Secretary Grant Shapps sought to downplay the urgency of the situation, telling Sky News the short straits between Dover and Calais account for about 20% of goods to and from the country.

“It’s not the mainstay. Most goods actually come in and out by unaccompanied containers, and those will continue to flow,” he said. “We obviously don’t want these links to be closed for too long, but it’s not unusual for them to be closed and disrupted.”

Asked about the vaccine, he said “virtually all” of it comes across via containers and is unaffected by the stoppage at Dover. Shapps said the French have told U.K. authorities they want to restart haulers crossing the channel “as quickly as possible.”

Still, the economic drag of tougher lockdown and trade turmoil will only deepen the hole the country is in, unleashing more damage stretching from mom-and-pop retailers to already struggling European airlines.

Johnson abruptly canceled plans to allow families to mix over the holiday period as the government warned over the weekend that the new strain of the virus is “out of control.” There were scenes of panic at train stations, with people defying social-distancing rules to get out of the capital.

More than 16 million Britons are now required to stay at home, mainly in London and southeast England.The measures ban household mixing in the capital and the southeast, and restrict socializing to just Christmas Day across the rest of England.

Until Friday, Johnson was adamant that close households would be able to mix over Christmas. It was the latest U-turn from a government that has been reluctant to impose limits to movement, unless forced. There is some unease among his Conservative rank-and-file lawmakers.

©2020 Bloomberg L.P.