The Builders Merchants Federation (BMF) has warned builders merchants face paying 20% more on EU imports if the UK crashes out of the EU without a mutually beneficial customs arrangements.

With Parliament having voted this week to ban the UK from raising taxes bound for the EU unless the EU also collects tax for the UK, the BMF said its members could be forced to pay 20% VAT upfront on European timber and other building supply materials.


The BMF said this would result in serious and immediate implications for cashflow, costs and prices, given that the UK is heavily reliant on imports for materials such as timber, bricks and paint. 60% of timber used in the UK's industry comes from the EU, mainly Sweden, Finland and Latvia. For bricks, imported mainly from Belgium and Holland, the post Brexit changes would add costs of £160m, while for paint, which comes from across the EU, added costs are estimated to be around £80m.

Overall, the added costs are estimated to be £1 billion, with serious knock on effects on costs within construction and the UK's housing market.

John Newcomb, Chief Executive of the BMF, said: "Merchants already face significant cost increases due to rising world prices and currency fluctuations involving Sterling. Paying 20% more due to VAT rules will hit builders merchants hard."

(LM/MH)