Ominous rumblings like distant thunderclaps can be heard regularly here in the Downside Bunker as a constant reminder of the damage being inflicted on every sector of Britain’s battered economy by Brexit. Messengers bring an almost unrelenting stream of bad news.
Valuable exports and jobs are being lost and investments foregone. Businesses are relocating inside the single market to avoid the irksome paperwork and extra costs of penetrating the EU’s external frontier which encircles the bloc like an ancient city wall. Next year, as the UK government has already admitted, the introduction of long-delayed border controls in Dover will see Britain closing the main gate in its own external wall, making imports more expensive and adding to inflationary pressures.
The loss of freedom of movement may be a minor irritation to holidaymakers but for many professionals in Britain’s lucrative service sector – particularly in the creative industries – it is proving an existential threat.
Through it all, deep in the bunker we continue to add to the Davis Downside Dossier which this week reached the grand total of 1,315. Remember that David Davis once suggested there wouldn’t be any downsides at all.
This week’s crop are the usual sort of mixture, a demonstration if one was needed of just how all-encompassing the malign impact of Brexit has been, giving the lie to Brexiters’ claims that because just 6% of Britain’s businesses exported to Europe only they would be affected by Brexit.
It’s quite clear now we are all affected in one way or another.
The latest downsides
Manufacturing
Rare earth elements are exotic materials used to manufacture high-performance magnets found in the motors of electric vehicles, robots, generators, wind turbines, hard disk drives, and so on. It was therefore disappointing to see that Britain’s only manufacturer, Less Common Metals Ltd (LCM) based in Ellesmere Port, has decided to prioritise expansion in the US and EU over growth in the UK.
Director Albert Slot said:
“We are basically trying to expand into the European theatre as in the US. The Brexit executed by the British didn’t really help in LCM’s industry, meaning that we have to have a foothold in Europe.”
The CEO of the UK Atomic Energy Authority says Rishi Sunak’s decision to spend £650mn on nuclear fusion is an attempt to make up for the “irreparable damage of Brexit”. Sir Ian Chapman told a press conference:
“We have not been a part of [Europe’s fusion programme] for two years and nine months, and that whole time UK industry has not been eligible to win new contracts. Not only have they not won new contracts, but it has been such a long period of time, they’ve stopped bidding for work now and they’ve disengaged.”
Brexit, instead of nurturing the high-wage and leading edge industries of the future, is actively discouraging them.
Freedom of movement
In matters of health, we learn research into the causes of dementia has been held back according to the Dementia Research Institute at University College London due to the instability and uncertainty of the last three years and the ongoing difficulty of getting EU specialists into the UK.
The same problem also impacts European musicians who want to appear on stages in this country but find the ‘hassle’ isn’t worth it leading to a 40% decline in the number of bands coming to four major UK music festivals since Brexit.
British musicians who would like to go the other way and tour Europe have discovered ‘onerous’ regulations on ‘cabotage’ rules which restrict UK lorries to just three stops, as well the expense of work permits and visas for some countries which is adding to the customs paperwork and carnets required for instruments and equipment. Some 80% of groups have seen their earnings drop.
Perhaps the most bewildering story this week is the one from Northern Ireland where two young children aged five and 11, the sons of a Nigerian student living under a UK international student visa in Derry, have been advised they will need to apply for a visa from the Irish government if they want to go on a day trip to Donegal with classmates.
This is said to be the reality of the ‘invisible hard border’ which is all too visible for many people.
Trade
Trade paperwork is an ever-present issue in the dossier and this week we heard of tension between port operators and the logistics industry over plans to charge a flat fee of £43 for every consignment of animal and plant products imported into the UK. This is border friction monetised with the cost eventually being borne by you and me. In Northern Ireland, the Windsor framework is being blamed for a reduction in consumers’ future choice as retailers limit the number of different products crossing the sea border that Boris Johnson pledged would never be allowed to exist.
The extra costs of logistics and shipping is also proving a challenge to Britain’s fashion industry especially for those selling to continental European stores. There is now a 12% tariff on most fashion goods exported to the EU plus VAT, making them uncompetitive. One small manufacturer of organic skincare products in Cheshire, has stopped EU exports altogether after learning she had to appoint (and pay) someone inside the EU who would be legally responsible if anything goes wrong.
More portents of problems coming down the track for UK exporters are contained in a survey of 733 small and medium-sized enterprises that showed over 80% were unaware of new EU reporting requirements under an EU green tax that takes effect next month, or new VAT obligations that are due to be implemented from January 2025. The FT suggests these companies are completely unprepared for an impending “avalanche” of new EU regulations and taxes.
Agriculture
The UK has failed to phase out 36 harmful pesticides at the same rate as the EU, despite promises by ministers not to water down EU environmental laws according to the Pesticide Action Network (PAN), an environmental lobby group.
A spokesperson for PAN said:
“The emerging gap between UK and EU pesticide standards is incredibly concerning for our human health and environmental protections, but also for the future of UK agriculture as our standards fall further and further behind those of our largest trading partner. UK food exports containing pesticides that EU growers aren’t allowed to use, are likely to be rejected. Given that the EU still accounts for around 60% of UK agricultural exports, the impact on farmers could be devastating.”
In Wales, a potato farmer has told BBC that even after the government made 15,000 extra visas available for seasonal workers, she is still “struggling massively” to recruit staff for this year’s harvests. Tessa Elliot, whose family grows potatoes near Cresselly, Pembrokeshire says, “If we can’t get pickers, potatoes aren’t going to be on the table, simple as”.
Funding
Pre-referendum pledges to match and even increase EU regional funding continue to prove worthless. The dossier has plenty of examples of local and regional bodies discovering their funding has been drastically reduced.
This again is the foregone investment in infrastructure that is badly needed.
In the latest example, research by the think tank UK in a Changing Europe has revealed that the UK Infrastructure Bank invested a derisory £2.4bn in 2022, a third of the amount the European Investment Bank (EIB) spent six years ago. Together with other similar new institutions in Scotland and Wales, they invested just 17% as much in infrastructure projects last year as the EIB did before it began to cut its links with the UK.
It’s becoming increasingly difficult to sustain the belief that the potential benefits outweigh the negative impacts, although that doesn’t prevent some of the more dedicated and deluded Brexiters from trying.
Every day brings fresh evidence from reputable sources and real people that Brexit is not just not working out as its supporters promised in 2016, but that it will never deliver the prosperity voters were led to expect. Worse, it is permanently reducing Britain’s productivity by deterring investment, driving wealth generating businesses away, needlessly raising costs and attaching a drag-anchor to the economic growth that both major parties profess to want.
If you would like to read more about these and all the other downsides since we began adding them to the dossier, click HERE. To make the dossier easier to maintain, more accessible, and useful as a resource we recently converted it into a searchable database. Not only that, but you can also – after filtering if you wish – download the database as a .csv file or as a Word document.
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