UK government to pay Eurotunnel £33 million over backdoor Brexit ferry contracts

The UK government will pay £33 million to Eurotunnel after the company took legal action over a process to award ferry contracts to help mitigate the impact of a no-deal Brexit.

Brexit Source: Bloomberg

Eurotunnel took legal action against the UK government after the Department for Transport awarded contracts to ferry operators in December to get medical supplies to the National Health Service (NHS) and other critical imports in the event of a no-deal Brexit.

In response, the UK government has opted to pay £33 million to Eurotunnel, which operates the channel tunnel that links Britain and France, to settle the claim.

Eurotunnel will remain key supply channel post-Brexit

In a statement, the UK Department of Transport said that it had reached an agreement with Eurotunnel to settle the case out of court and reassured the company that the channel tunnel will continue to see freight and passengers moving through post-Brexit.

‘The agreement with Eurotunnel secures the government’s additional freight capacity, helping ensure that the NHS has essential medicines in the event of a no-deal Brexit,’ British Transport Secretary Chris Grayling said.

‘While it is disappointing that Eurotunnel chose to take legal action on contracts in place to ensure the smooth supply of vital medicines, I am pleased that this agreement will ensure the Channel Tunnel is ready for a post-Brexit world.’

Seaborne Freight deal terminated

One of the companies that the Department of Transport awarded a contract to was Seaborne Freight, but the deal was later scrapped last month after the company revealed that it did not have enough ships to deal with the amount critical imports required.

In 2018, Eurotunnel transported 21 million passengers, 17 million trucks, 2.7 million cars and 26% of trade between the UK and the European Union, but in recent months growing fears of a no-deal Brexit led to concerns that supplies coming through the channel tunnel could be disrupted.

To address those concerns, Eurotunnel said it is taking steps to minimise the impact of a no-deal on supplies entering the UK, with its parent company Getlink spending €13 million to prepare for Brexit.

‘Eurotunnel has concluded an out of court agreement ... that will ensure the Channel Tunnel remains the preferred route for vital goods to travel between the EU and the UK,’ Eurotunnel said in a statement.

‘The agreement enables the development of infrastructure, security and border measures that will guarantee the flow of vehicles carrying urgent and vital goods, thereby keeping supply chains essential to both industry and consumers moving.’

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