The government is starting to give the impression of behaving like the sorcerer’s apprentice, having conjured up forces in Brexit that it doesn’t understand and can’t control. At the NFU’s conference in Birmingham this week, Rishi Sunak was forced to offer a £427mn olive branch to head off more protests by angry farmers like the ones seen in Dover recently.
It comes as trade talks with Canada have stalled over UK reluctance to import hormone-treated beef, leaving British cheesemakers to face a tariff of 245% when exporting products to our erstwhile dominion and commonwealth partner.
Meanwhile, trade secretary Kemi Badenoch fired off a letter to her colleague Steve Barclay at DEFRA attacking his plans to introduce labels promoting homegrown food products, telling him:
“I am very concerned about the costs of such an approach on domestic producers and exporters to the UK.”
Welsh farmers are also protesting but they’re unhappy with the devolved administration in Cardiff over plans to encourage the planting of trees on 10% of their land and designate another 10% as wildlife habitat, all part of the sustainable farming scheme (SFS). Channel Island farmers despair at the sheer amount of red tape now involved in importing seeds and machinery from Europe.
DEFRA has been accused of hiding an analysis showing upland and hill farmers were likely to sell up or go out of business when the truth of their financial situation after the government’s agricultural reforms becomes clear.
The Food and Drink Federation (FDF) has urged ministers to ditch plans requiring all meat and dairy products sold in the UK to be labelled “Not for EU” consumption which they say will raise food costs, hit exports and deter investment in domestic food manufacturing.
This is all in the last few days. It’s clear that nobody is happy and farming and the whole issue of food resilience in this country is rising quickly up the political agenda.
There were 24 downsides added this week and it seems obvious that we should begin with agriculture.
Agriculture
I won’t repeat the downsides already covered above but in addition, according to figures calculated by The Guardian, UK food businesses sending products to the EU have had to spend an extra £170mn in export costs alone because of Brexit red tape, with the changes described as being “catastrophic” for some exporters, particularly smaller producers.
Strawberry and garden plant growers are said to be worried that checks for bugs and diseases that were previously carried out at the 7,000 or so greenhouses and premises which imported them and are spread across the UK, will from 30 April need to be concentrated at a handful of ports where and when the plants arrive. Any problems at these new facilities could lead to long delays that may impact the quality of the plants.
A survey by the Haymarket publication Hortweek, serving the horticultural industry, shows 93% of respondents believe the new checks will have a negative impact on plant imports.
Perhaps more worrying should be the EU reforms to the CAP that came into force last year aimed at increasing farm resilience, particularly for smaller and medium sized farms, while achieving wider environmental goals. Unlike the UK, their reforms are an evolution, retaining the basic payment scheme (BPS) and offering extra incentives for green improvements which farmers can adopt voluntarily.
The British approach, as usual, is to scrap everything, start with a blank sheet of paper and hope all goes well.
The economy
The British Chambers of Commerce have written to chancellor Jeremy Hunt to tell him UK businesses have still not adapted to the impact of Brexit. They want closer relations with the EU. DG Shevaun Haviland told City AM that a recent BCC survey showed 77% of UK firms felt the post-Brexit trade and co-operation agreement (TCA) was “not contributing to their business growth” and 56% said they had “trouble in making the new trading arrangements work for their sales and export strategies”.
The BCC fears were echoed by an associate professor at the LSE’s department of economics who says Brexit has failed and that far from boosting trade, it has left the UK “less open to the world”. Professor Thomas Sampson said the growth in trade since 2019 has been “the weakest in the G7,” contributing to the ongoing stagnation of the UK economy.
And as if confirmation was needed, a peer-reviewed academic paper published in the European Economic Review claims that Brexit is responsible for a fall in UK-EU trade of about 20%. The authors found that Brexit has “substantially reduced trade” in both directions.
In one area at least, the prospect of the UK diverging in any meaningful way from the EU’s regulatory orbit is diminishing. According to a technology lawyer from the global law firm Linklaters, UK businesses are likely to adopt EU regulations in relation to artificial intelligence (AI). This is seen as a bit of a blow to Britain’s plan for world dominance in AI announced in 2021.
Meanwhile, Conservative MP and former levelling up minister Neil O’Brien has claimed the UK’s post-Brexit migration system is exacerbating the country’s housing crisis. While migrants were “not to blame” for the origin of the problem, he clearly implied that the government was.
Financial services
The Daily Telegraph describes as a “fresh blow” to the square mile, the British pharmaceutical company Indivior’s decision to drop its primary listing on the London Stock Exchange in favour of New York. Indivior, which makes treatments for opioid addiction and schizophrenia, said it could move its primary listing to the US as soon as this summer and is consulting shareholders over the switch.
Although in reporting this item I depart from my usual rule that Brexit should be explicitly mentioned, I defend it on the grounds that the pharmaceutical firm is just the latest to fly the coop and it’s hard to know why the steady exodus is taking place if it isn’t the UK’s departure from the EU.
And in what Politico say is “the ultimate irony”, UK authorities are now lobbying the EU to impose more red tape. Britain’s financial watchdog is to set out plans to require some domestic funds to hold more easy-to-sell assets but can’t act alone because 90% of sterling money market funds are based in the EU and fall under the bloc’s regulations.
Hence, officials from the Treasury, Bank of England, and Financial Conduct Authority are to raise concerns in Brussels about what they say is the EU’s lax approach to regulation of the European money market. Let us hope they are suitably embarrassed.
Finally in this section, the European Central Bank (ECB) has repeatedly warned investment banks that after Brexit they must move “sufficiently senior key risk-takers and proper reporting lines into the European entity” and that brass plate operations are unacceptable.
So, accusations in a legal case in Germany that the US investment bank Morgan Stanley has been trying to ‘dupe’ the ECB by giving a senior employee the fictitious job title of “head of loan trading” that “only existed on paper” solely to meet EU regulatory requirements is a tad awkward and bound to lead to further tightening of the rules.
Fishing and food
Ruth Watson, founder of the ‘Keep Scotland the Brand’ campaign claims Scottish businesses are struggling with the spiralling costs of Brexit, the price of energy, a one-sided VAT burden and high business rates. An Italian restaurant in Edinburgh, Contini, George Street, said:
“We import these amazing ingredients every week from Italy. That now takes an extra day to have the pallets inspected and checked at customs. We need to have phyto-sanitary certificates – who would have known what that even was 10 years ago?”
Denmark and Sweden are pressing the EU to take action against the UK in a fresh post-Brexit fishing dispute, according to the FT. Plans to ban the catching of sand eels on Dogger Bank in the North Sea for environmental reasons has outraged Danish and Swedish fishers who use sand eels as pig feed and for producing fish oil. Danish foreign minister Lars Løkke Rasmussen told his EU counterparts they had to “take a common stand to avoid a de facto erosion of fishing rights”.
Education/Culture
Changes to the UK’s immigration policy, particularly the new limits on family visas for the dependents of overseas students threatens Britain’s higher education sector according to research by the think tank UK in a Changing Europe.
UKICE claim continuing to attract a large number of overseas students is a necessity for the survival of many institutions but international student enrolment numbers are now expected to stagnate or decline, due to a decrease in the attractiveness of studying in the UK. They say “significant and immediate structural changes” are needed.
And coincidentally, professor Jonathan Freeman-Attwood, the principal of the Royal Academy of Music, says Brexit has brought no benefits and instead may cause “terminal damage” to the UK’s music industry. He told the European Movement that the proportion of European students at the London academy had fallen by half since 2016 and warned that Brexit has stopped the flow of talent coming in:
“It has been a complete no-win situation, not just for higher education but actually for music higher education, and particularly an institution like this that was founded over 200 years ago by Europeans.”
Government
And what may surpass even the irony of the Treasury demanding more EU red tape, Conservative MPs including Sir Jacob Rees-Mogg, Sir Bill Cash, and Sir John Hayes have criticised the government for sneakily adopting EU equality laws which they claim go even further than some ECJ rulings.
Worse, they accuse ministers of using secondary legislation to circumvent a debate in the chambers of either the Commons or the Lords. Ministers used powers under the The Retained EU Law (Revocation and Reform) Act to avoid scrutiny by MPs.
In short, they are complaining there is less oversight after Brexit that there was when we were members of the EU. Who would have thought it?
