Amid all the shenanigans involving Nigel Farage and his army of fruitcakes and closet racists, some of whom have escaped from the closet and been out canvassing for him in Clacton, there was a remarkable admission this week by the Minister of State for Enterprise, Markets and Small Business Kevin Hollinrake. The MP for Thirsk and Malton, told Radio 4 listeners there was “no doubt, for some businesses, it is more difficult to trade” with the EU.
Hollinrake said: “Yes it is more difficult today, but the vote for Brexit was a vote for change.”
This was, shall we say, a rather novel interpretation of what the 2016 referendum was about. I for one don’t recall anyone on either of the leave campaigns arguing for trade with Europe to be made more difficult or even suggesting it might be an unfortunate side-effect of Brexit, but there we are.
Economic impact of Brexit
Anyway, Brexit won’t be Hollinrake’s problem in a few days’ time. The task of rebuilding our relationship with Brussels will fall to Keir Starmer and while he and Sunak may be keen to avoid mentioning the issue, it is being talked about elsewhere, as far afield as California.
Researchers at the University of California in Los Angeles (UCLA) have produced a major report claiming that the “long-term scars” caused by austerity and Brexit have stifled economic growth and undermined social cohesion in the UK. They say the UK has been lagging well behind the EU every year since 2020 for capital formation, which is one measure of investment, adding that:
“This chronic lack of investment is one obvious explanation for the UK’s infrastructural woes such as crumbling transport and a lack of affordable housing near employment centres.”
And this week, the director general of the British Chambers of Commerce representing 50,000 firms, with over six million employees, has confirmed that Brexit isn’t working for UK businesses. Shevaun Haviland, urged the UK government and the EU to reach agreement in areas of mutual benefit for business on both sides. “A better deal is best for everyone,” she said.
Unfortunately for Starmer, his rather modest plans to ease trade restriction will have “minimal impact” and will only “sand away at the sharpest edges” of the problems caused by Brexit, according to a 72-page report from the think tank UK in a Changing Europe reported by the FT.
In short, Labour are simply postponing the day of reckoning when real decisions have to be made.
Starmer will soon find himself isolated in a pro-EU cabinet with a pro-EU parliamentary party in the most pro-EU parliament for 20 years and a growing majority of the population believing the UK should cut its losses and rejoin as soon as possible. International investors and British industry and commerce would clearly support it.
Brexit is dead. It should be buried. The sooner we stop adding downsides, the better.
Brexit downsides
This week we added another 13 Brexit downsides to the Davis Downside Dossier.
Economy
I’ve already mentioned the critical report from academics at UCLA which claims austerity and Brexit have stifled economic growth and undermined social cohesion in the UK. And the British Chambers of Commerce has confirmed that Brexit isn’t working for UK businesses.
We have three examples of what the British Chambers of Commerce is talking of. The owner of a Carlisle haulage firm fraudulently applied for a government loan that he was not entitled to because he was fighting to keep his business afloat. At trial, his defence barrister told a judge that Stuart Chilton had the sole intention of saving his once-thriving business, which was ultimately killed off by the “twin bullets” of Brexit and the pandemic.
Amber Violins, a trader in second-hand violins, cellos and bows, relied on the EU market for both sourcing and selling goods. Owner Matthew Gryspeerdt says before Brexit, importers only had to pay VAT on the margin of the sale, but since Brexit everything imported, even if used, is charged at full VAT.
Gryspeerdt, was selling 1,000 units per year but this has now dropped to just 40. “Brexit completely scuppered [the trade] really. I basically couldn’t bring stuff in without a shipping agent, and that wasn’t feasible for a small business like mine.”
A wine bottling company in Manchester had actually noticed some benefits from the Australian and New Zealand trade deals and expects to save £3.3mn per year on reduced tariffs. However, the savings on the retail price per bottle has been more than offset by the UK’s new post-Brexit alcohol duty regime.
MD Ed Baker said: “For an Australian wine you might lose between 7.5p and 9p on the removal of tariffs but you’ll be paying 44p more on excise duty, and that’s ignoring the extra VAT too.”
Northern Ireland
Denroy, an injection moulding firm in Bangor, Co Down, sells products that contain material sourced from Great Britain, some of which originated outside the UK or EU, meaning they could be subject to tariffs when imported into Northern Ireland under the trade and cooperation agreement’s rules of origin.
CEO Kevin McNamee says: “In the year or so after Brexit, we paid tens of thousands of pounds on tariffs. In some cases, we simply re-sourced the supply, so unfortunately the GB supplier got dumped and we went directly to the EU to avoid tariffs.”
Jim Allister, founder of the political party Traditional Unionist Voice in Northern Ireland claims the government’s 2020 Fisheries Act, the UK’s first major domestic fisheries legislation in nearly 40 years, does not apply fully in Northern Ireland because Article 10 of the Northern Ireland protocol limits the amount of state aid that can be provided.
Brussels is able to cap funding to the local fishing industry under the Windsor Framework which Allister claims makes Stormont’s agriculture minister “but a slave” to the EU.
This sort of thing may have been in the mind of Doug Beattie, the Ulster Unionist Party leader, who has accused the “chaotic” Tory government of “destroying the cohesion of the United Kingdom”.
Sinn Fein’s Michelle O’Neill and Emma Little-Pengelly, of the Democratic Unionist Party, Northern Ireland’s first and deputy first ministers, have condemned the Conservative Party for the impact of Brexit on the region. O’Neill told Sky News the current government had “played fast and loose” with the Good Friday Agreement.
Citizens/Immigration
In another strange unforeseen consequence of Brexit, a Paralympic swimmer due to compete in this summer’s Olympic Games in France has said his career is at risk after a post-Brexit policy change barred him from flying in and out of the UK with his guide dog.
Mar Gunnarsson, a visually impaired Icelandic national, has been unable to fly to sporting championships to represent his country because his guide dog is not recognised as a service animal by the UK authorities.
Ireland has always been a source of willing workers in the UK but now it has dropped out of the list of top 10 nationalities seeking jobs here in Britain, according to data from a recruitment site. It is a dramatic reversal from the situation in 2016 when Irish applicants ranked second. The data appears to suggests that jobseekers from across the Irish Sea are turning away from post-Brexit Britain and the anti-immigrant tone coming from some politicians.
Agriculture/Environment
Wack’s Wicked Plants, based in Scampston North Yorkshire, has been forced to pull out of the Chelsea Flower show after they were unable to obtain the plants they needed due to Brexit rules.
The business, which specialises in carnivorous plants, has been unable to export anything since the UK exited the single market. Owner Helleentje Walker said: “If we have a customer from Spain who wants five plants for £70, it might cost £80 for the inspection – nobody is going to pay that?”
Following Brexit, the Environment Agency has reduced the testing of rivers under the EU-derived water framework directive, from annually to every three years, which critics claim has led to gaps in monitoring.
Now, a huge citizens survey has found 75% of UK rivers are in poor ecological health as a result of pollution from water companies and agricultural runoff. Dr Sasha Woods, director of science and policy at Earthwatch Europe, said: “The picture around London and the Thames river basin is particularly dire.”
Borders
The UK government has accused importers of making “deliberate” and even “criminal” errors on key documentation in a bid to avoid new Brexit border costs and delays. Apparently, some traders and logistics companies were repeatedly filling out forms incorrectly, declaring goods as low risk when they were medium, while high-risk products were being put down as medium.
There was also a problem with importers not including export health certificates for meat and dairy products and phytosanitary certificates for plants.
