A total of 14 more downsides have been added since last week with Northern Ireland continuing to figure prominently in the Davis Downside Dossier. The Belfast Newsletter points out that the easements agreed in the Windsor framework are only for goods intended for “final sale/end use” in the province. Parts or goods procured in Great Britain intended for further processing by local manufacturers, unless they’re for industries that are exempted, will need to pass through the red lane.
This appears to mean businesses involved in electronics, engineering, and chemicals will be unable to use the green lane and be subject to the full post-Brexit EU border control regime, a further incentive to source in Ireland to avoid extra costs, delays and cumbersome paperwork.
The unionist leaning Newsletter also believes the rules designed to prevent dairy or meat products purchased for example in Newry in the north and labelled ‘Not for EU’ being taken across the border to Dundalk just 30 minutes away, are in practice unenforceable.
To diverge or not to diverge?
By a perverse coincidence, in the week the business secretary launched a review to remove “unnecessary regulations that hold back firms and hamper growth”, more businesses called on the government to keep aligned with EU law to avoid further damage to UK-EU trade.
Britain’s major supermarkets wrote to the environment secretary Thérèse Coffey, pleading for her to introduce legislation keeping us aligned with new EU regulations aimed at halting the destruction of the world’s forests, or put at risk their ability to export British-made products to Europe.
Financial services
And in the financial services sector, the Investment Association (IA), a trade body representing Britain’s investment fund managers says the government ‘must’ align itself with EU rules and cut compliance costs to avoid the sector’s £8.8tn of managed funds losing global competitiveness. Last year, assets under management fell 12% from the £10tn seen in 2021, a bigger fall than during the global financial crisis.
The lobby group said: “The most important detractor in sentiment has been the incremental cost and complexity of the UK regulatory environment.”
On this last point, it’s worth mentioning that a few days earlier, Bank of England governor Andrew Bailey, told Prospect magazine that he was optimistic about The City’s future despite some short term “misalignment”.
Bailey apparently suggested despite “pretty dire” predictions about damage to the City of London, ‘much’ (not that reassuring is it?) has remained intact and although he didn’t want to trivialise or ignore the fact that there has been some post-Brexit damage, he did say that it’s “not a slow puncture”.
In fact, the IA – and others – seem to believe that’s exactly what it is.
Trade
Trade openness is measured as the sum of a country’s exports and imports expressed as a percentage of that country’s GDP. The FT report that in the last two quarters Britain had the biggest fall in trade openness of any G7 country.
Think about this for a moment. Just about the only thing politicians agree on is that Britain’s GDP growth has been disappointing, yet external trade has failed even to keep pace with that lacklustre performance and may have been a driver of it. It exposes the entirely false narrative being pushed by Brexiters that Britain’s exports are somehow surging at record levels.
The FT used figures from the quarterly trade tracker maintained by the think tank UK in a Changing Europe (UKICE) which show that while UK exports have increased since 2019 in current prices, when adjusted for inflation, they have actually fallen by 0.62% of GDP compared to Q2 2019.
UKICE also say Britain’s balance of payments (trade) deficit continues to grow as the export of goods and services has fallen by more than the import of goods and services.
The economy
A survey of British Chambers of Commerce’s (BCC) 70,000 members now shows they are reluctant to make large investments in machinery and new technology while barriers to trade with the EU remain in place. These are businesses of all shape and sizes with more than six million employees across the UK.
The BCC said that over the last six years, investment had “flatlined” and even in the pre-pandemic period remained stuck in first gear. The number of firms increasing investment never rose above the 28% recorded in the first quarter of 2018.
We should perhaps remind ourselves here that one leading Brexiter, John Longworth, was once the director general of the BCC, the UK’s most representative business network. He was forced out after going freelance and campaigning to leave the EU, breaking with the organisation’s neutral stance.
Longworth then became co-chair of Vote Leave and later a Brexit Party MEP. He was expelled and lost the whip in December 2019 for “repeatedly undermining their general election strategy”. Longworth is now chair of the Independent Business Network (IBN) of family businesses. We don’t know how many members it has because it doesn’t publish the figure, but the advisory board includes Patrick Minford, Julian Jessop and Lance Forman – the usual suspects.
One wonders what Longworth would say to his former BCC colleagues now?
And labour shortages continue to be a problem. A racehorse trainer from Lambourne, Berkshire says the horse racing industry will remain “under pressure” without changes to post-Brexit immigration rules. Jamie Snowden, claims there’s “definitely a shortage of staff” in the industry with the National Trainers Federation (NTF) claiming 2,000 vacancies across the country and a third of staff missing.
Manufacturing
Car makers on both sides of the Channel have been pressing the UK and the EU to delay the introduction of tariffs that will become payable on electric vehicle exports in January next year because there aren’t enough domestically sourced batteries available to meet so-called rules-of-origin. UK manufacturers want a three-year delay until 2027 but Brussels is said to be offering just one year.
The German newspaper Die Welt reported in 2021 that the EU anticipate being self-sufficient in EV battery production by 2025 which if met, would give continental car makers a significant advantage.
Horticulture/agriculture
A US owned seed wholesaler based in Barmby Moor near Pocklington, East Yorkshire is to withdraw from the UK market because of the difficulty in importing seeds from Europe, according to a report in the horticultural trade journal Hortweek.
This is hardly surprising. The founder of Real Seeds, Kate McEvoy, told The Sustainable Food Trust last year that dealing with seed imports from the EU since Brexit is now “slow, tricky and a pain”.
And Jacob Rees-Mogg, MP for North East Somerset since 2010, did himself no favours with farmers in his largely rural constituency by comments made at a meeting on the fringes of the Conservative conference in Manchester, reported in Farmers Weekly.
The former Brexit opportunities minister said he wanted to eat hormone-treated beef from Australia because it was “absolutely delicious”, and cheaper too.
A group of farmers have written to him asking if he was “seriously suggesting that we return to using hormones in our beef production?” and condemning his grasp of the complexities of their industry, accusing him of “undermining British farming values”. Fancy that.
Citizens/publishing/the arts
The Daily Telegraph explicitly blame Brexit for retirees abroad struggling to move pensions into drawdown, buy annuities and make changes to their contributions because new rules mean pension providers are less likely to offer cross-border services.
Madeleine Ross, a financial reporter who used to work for Mail Online, said:
“In the wake of Brexit, opening a new pension, moving money into drawdown so an income can be taken and making changes to contributions are considered cross-border business.
“Because UK pension schemes are no longer authorised by European authorities, they are often unable to offer the insurance activities.” Well, well, well. Who knew?
A publisher of comics and graphic novels in Scotland is closing due to the financial impact of Brexit and the Covid-19 pandemic. Glasgow based Black Hearted Press say that shrinking profit margins and escalating costs “exacerbated by the complexities of Brexit” had made the international side of the business unfeasible. The firm was nominated for publisher of the year in last year’s prestigious Saltire Society Awards.
And finally, The Art newspaper said although international wealth still largely favours London, Paris is catching up “as post-Brexit red tape complicates business for UK art sellers and more major galleries set up shop in the French capital”.
More examples of the slow puncture?
