Shipping operator P&O has announced it will be re-flagging its entire UK-registered fleet to Cyprus ahead of Brexit, in order to keep its tax arrangements within the European Union.

P&O had said in December that it would re-flag just two of its UK ships operating on the English Channel route to France to the Cyprus registry.

But the company has now decided that six of its 20 ships will be re-flagged, changing their national registration from British to Cypriot.

"In advance of Britain leaving the European Union on March 29, 2019, we undertook a review of the flag status of our ships on the English Channel," a P&O spokesman said in a statement on Tuesday.

"For operational and accounting reasons, we have concluded that the best course of action is to re-flag all ships to be under the Cyprus flag."


He said that the decision to re-register the entire English Channel fleet will lead to fewer inspections and delays, "and will result in significantly more favourable tonnage tax arrangements as the ships will be flagged in an EU member state",

"We have no plans to make any other changes, including the terms and conditions of any of our seafarers, as a result of the new arrangements," he added.

P&O made the announcement less than 24 hours after Sky News exclusively reported that freight trade across the English channel to France could drop by between 75% and 87% for six months in the event of a "no-deal" Brexit, according to a Border Force document.

According to the document seen by Sky News, the reduction in cross-channel freight trade would be as a direct consequence of "third country" checks on UK trade that will be imposed by all EU countries and France in particular after 29 March, unless a deal is reached with the bloc.

The move by the ferry operator comes as Theresa May struggles to gain parliamentary support for her plan to see out the UK's departure from the EU.