Here in the bunker we have started to detect not so much a rearguard action on the part of Brexiters, but more of a brazen Chemical Ali style performance which consists of simply declaring victory against a backdrop of their defensive positions being overrun by the irresistible forces of reality.
The latest attempt appears appropriately enough in the ‘Artillery Row’ section of The Critic, where Derrick Berthelsen shows how to respond to a shortage of ammunition: UK manufacturing is significantly outperforming as a result of Brexit.
Berthelsen takes up the mantle of Catherine McBride at the IEA. However, where McBride only dared to suggest leaving the EU hadn’t really damaged UK trade (it has), he goes further and tries to persuade readers that Brexit has “significantly boosted” UK manufacturing. It’s a bravura attempt with lots of charts but ultimately fails because the OECD data he relies on shows virtually all the growth in manufacturing occurred while the UK was a member of the EU.
Since Brexit at the end of 2020, it has fallen by a little over 7%. Some ‘boost’.
The Advanced Manufacturing Plan
What he was doing was little different to the business secretary Kemi Badenoch (like Berthelsen and McBride, she is also a product of the financial services industry and knows nothing about actually making things) who published her Advanced Manufacturing Plan last weekend, painting a glowing picture of the state of UK manufacturing in The Sunday Times as she announced £4.5 bn of “targeted” government investment for a five year period.
The plan itself revealed the money wouldn’t actually start to be spent until 2025.
The Harrington Review of Foreign Direct Investment, which came out shortly afterwards, said the UK government is concerned that “transformational investments by multinational companies and foreign investors” is going to competing countries rather than the UK.
Appendix E perhaps shows why. Ireland is investing €165bn between 2021 and 2030 in a National Development Plan with ten strategic objectives. France is putting €100bn into supporting businesses, rethinking production models, transforming infrastructure and investment in training between 2021 and 2030.
Germany has a number of long-term industrial strategies dating from 2017 including €98.3bn of funding earmarked for upgraded and new federal transport projects alone. President Biden in the USA has offered a $369bn package of clean energy subsidies as part of the Inflation Reduction Act.
Badenoch’s plan for manufacturing looks more like Britain trying to do it on the cheap and years behind. As usual, it’s too little, too late.
And this is assuming any of it is ever forthcoming anyway. Lord Frost, speaking in the Lords on Wednesday seemed unimpressed. He was worried the party has been “captured by the socialist belief that government regulation and spending is the way to solve our economic problems”.
He said giving vast taxpayer subsidies to all kinds of politically favoured industries never works out well.
The industries he listed (semiconductors, windmills, batteries, the hydrogen ‘boondoggle’, electric cars, zero-carbon steel and aviation) are precisely the ones targeted by Badenoch’s AMP as he launched into the “many snake-oil proponents of the so-called active state” by which I assume he meant the Right Honourable Member for Saffron Walden (Badenoch).
Having divided the nation, Brexit is now dividing the Conservative Party. No doubt party managers are trying to produce a manifesto that might bring all the warring factions together, but I wouldn’t bank on that.
Anyway, none of this appears to have any leverage on the polls. Last week YouGov found just 2% of adults thought Brexit had gone very well since we left on 31 December 2020. Another 10% thought it had gone fairly well. Against that 61% thought it had gone fairly or very badly.
This week, we added 14 downsides and one upside.
The economy
Following last week’s autumn statement from the chancellor, after which the Office for Budget Responsibility (OBR) downgraded the UK’s growth forecast, it appears they also downgraded the impact of Britain’s membership of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) which could add just £1.8bn to the UK’s GDP in the “long run”.
The OBR said: “if we take the long run to be 15 years after joining, this equates to around 0.04% of GDP” meaning we would need 100 CPTPP deals to match the 4% of GDP lost over the same time period due to Brexit.
After peaking in 2016, foreign direct investment (FDI) in the UK has now fallen for the fifth year in a row and in 2021 actually turned negative, with more people taking money out of the UK than putting it in. The Department for International Trade’s own figures show the number of projects fell 32% between 2016 and 2021 (2265 to 1538).
Confirming the gloomy outlook, a survey by Ernst & Young, the global professional services giant, into the UK’s relative attractiveness to investors, says, “Against the background of a rise in European FDI projects, the UK saw its project count decline in 2022 by 6.4% to 929, the lowest for eight years. As a result, the UK’s share of all European projects fell from 16.9% in 2021 to 15.6% in 2022, the lowest level in the past decade”.
E&Y says the decline in UK projects likely “reflected the political instability and uncertainty experienced in 2022, plus a trend towards net outbound project flows since Brexit”.
A company specialising in providing finance to small and medium-sized enterprises (SMEs) claim 58% of those who trade internationally, importing or exporting, are struggling with tariffs, customs, and other barriers. It is said to be the single most frequently cited challenge, ahead of the cost of doing business overseas and currency fluctuations.
An article in The Global Legal Post says since Brexit, US and UK law firms are ‘flooding’ into the EU either expanding existing operations or starting new ones. Many moved to Dublin, a trend they claim still shows no sign of abating. Of the 37 international law firms with a local Irish office, over half have opened since 2020. Luxembourg welcomed 15 new international law firms while Brussels and Amsterdam have also benefited.
Food/Agriculture
The owners of Icelandic Seafood International, said to be one of Grimsby’s landmark seafood processing factories has announced its closure after recording an £8mn loss. Management blamed Brexit, the pandemic, and Russia’s invasion of Ukraine. The company will pull out of the UK and focus on its European operations.
A £2bn North Yorkshire food producer, has been forced to recruit 400 butchers from the Philippines in response to what they say are challenges in recruiting highly skilled staff “directly resulting from post-Brexit immigration policies”. According to Cranswick Group’s CEO Adam Couch, this “has come at a significant cost to the business”.
The National Farmers Union (NFU) claims that the reduction in post-Brexit farming subsidies plus rising costs has led to some farmers reducing the numbers of cows and lambs they keep. This in turn threatens a shortage of British beef and lamb in UK supermarkets. The NFU say upland farmers will lose an average of 37% of support payments as basic subsidies are phased out in favour of green schemes.
Retailers
The British Retail Consortium (BRC) has warned the prime minister that measures in last week’s autumn statement could add to inflation next year. The retailers’ trade body said the government risked prolonging the cost of living crisis by driving up the cost of doing business on the high street with Brexit red tape and higher taxes.
The cost of managing post-Brexit import checks and labelling rules, due to come into force next year, is likely to be passed on to shoppers, along with an increase in business rates and the rise in the living wage, the BRC said.
A Kent garden centre complains that Venus flytraps are in short supply due to Brexit. Because plants imported from the EU now require a certificate, even for small consignments, Tim Holmes from Tunbridge Wells Garden Centre, part of the Blue Diamond Group, says his firm has lost about £30,000 and is experiencing delays in the plants reaching their shelves.
Holmes said, “We can’t just get one or two trays through anymore, there’s legislation involved that is making it really hard to get hold of them”.
Citizens/culture
A study by the London School of Economics (LSE) shows the difficulties faced by some families due to post-Brexit immigration rules. The changes, say the LSE, have introduced status differences for members of what they call “mixed-status” families.
In one example, a dual Italian-Jamaican national married to a British woman resident in the UK, discovered his daughter had not automatically inherited her mother’s British citizenship and if they wished to leave, the daughter’s return to the UK for study or work reasons she would be treated as a new immigrant.
Summarising the Brexit related problems faced by the UK’s professional football clubs, Forbes Magazine, say work permits for foreign players arriving in the UK has significantly reduced the number of foreign players eligible to play in the Premier League.
They quote a study by the University of Harvard found that 58% of Premier League signings from abroad between 1992 and 2017 would not qualify for a work permit today. Famous players like Spain’s Cesc Fabregas, who joined Arsenal from Barcelona aged 16 in 2003, would have been among those excluded.
Manufacturing
Following Cycloc last week, yet another UK cycle maker is in trouble and blaming Brexit as one of the reasons. Administrators for Wiggle and Chain Reaction Cycles have announced that their online international eCommerce store is to close with the business now focusing on the UK market only. In a statement, the administrator said the international exporting part of the business has been impacted by “a range of economic factors” including Brexit and rising air freight costs.
Government
Perhaps one of the many ironies of Brexit is the faux outrage among some sections of the British press, those most vocal in support for the project in 2016, at the consequences of their actions.
The Daily Mail is furious that by next April the government will have sent £24bn to the EU as part of the divorce bill for leaving the bloc, which Britain agreed to pay under Boris Johnson’s 2019 withdrawal agreement.
Payments will continue until around 2064 for items like pensions when the total settlement could exceed £40billion. The report also says the EU is asking for £2.2bn per year annually from next January for Britain’s membership of Horizon, the EU’s scientific programme.
Upsides
There was one upside, reported gleefully by The Sun last week. The champagne and English sparkling wine industries are apparently to be consulted imminently about what the Murdoch owned newspaper describes as a “major change to Britain’s drinking laws”.
Government insiders say this ‘could’ pave the way for pint-sized servings for all wines “early next year”.
A business department source said: “This is just the latest win from our push to ditch pointless and restrictive EU rules.”
I’m sure we can hardly contain ourselves. It’s all been worth it then?
