No need to worry they said!
A look into the future after Brexit! Not pleasant and things are
looking bleak
It is July 2018 and two
years ago the UK voted to leave the largest trade bloc on the planet where we used to enjoy duty and tariff free trade and the
ability to trade all over the world through other EU negotiated trade
agreements.
We have finally managed, after two years of difficult talks to
extricate ourselves from 40 years of trading regulation agreements and we have
been removed from all the planned fiscal, travel, scientific, research
investment and other agreements that we had with the EU.
The Government however
is still grappling with untangling decades of laws that we have to amend now we
are no longer in the EU. It is estimated it will take years to accomplish.
In addition a Scottish
Referendum will soon be held and the future of the UK Union is under threat.
Also there are major issues over the border between Ireland and the North.
Today the UK joins the EU Common External Tariff Regime of the
EU and the Common External Tariff Regimes in every country around the world.
Now the REALLY hard work can begin.
First off, whoever happens to be Prime Minister here has to
appoint a lead negotiator (yes appoint, not elect) who will then appoint his
team to send to Brussels to try to negotiate a worse trade agreement than we
used to have with the EU.
Who will this be? And what training might they be given in
negotiating international trade deals? They are sure going to need some. When
will the first meeting take place? The EU teams are busy working and talking
with trade blocs like the USA, Central, Eastern and Western African Trade blocs
and trade blocs from Asia. But none of them will enter into trading agreements with
the UK until our new relationship with the European Single Market has been
settled.
Everything the UK sells around the world just got more
expensive. UKTI is frantically trying to set up a UK Common External Tariff
Regime under WTO rules to protect UK manufacturers and farmers while at the
same time trying to recruit and train a bunch of new negotiators with its
limited budget (approximately double the amount of International Aid that the
UK sends to Ethiopia).
What on earth happens next? No one knows except that everything
we buy is more expensive and everything we sell is more expensive and our
customers have begun looking for alternative suppliers.
It's mid April 2019. We
have terminated all our agreements with the EU now, they all finished 9
months ago and new Chancellor of the Exchequer just delivered the first ever
Budget last month. And WHAT a budget!
Following our vote to leave the EU back in June 2016 GBP
Sterling has continued to fall. It lost around 12% of its value just during the
campaigns but it's continued to fall as predicted by every researched study at
the time. Strangely the forecasters underestimated
the damage this would do. The cost of imported goods is now subject to the new
UK tariff regime and with the weakened £ prices have risen by nearly 20%. And
we used to think 4% inflation was bad eh?
HM Treasury income has fallen on average by around 3%, or £23.4
billion in the last 9 months alone, triple our old EU membership fee. This
means cuts across most Government departments and no department is ring fenced.
Every department is facing a further 3% reduction in spending over the next 4
years.... including the NHS and Education.
The Department of Work and Pensions took the hardest hit in the
Budget. Many companies are having staffing problems since the new points based
visa system for EU nationals was introduced in January this year, and since
businesses are unable to hire the staff they need to grow they are finding it
increasingly difficult to function. This is lowering corporation tax income and
has frozen Income tax and national insurance contributions. Many companies have
just closed down as they are unable to handle the higher priced imports from
their suppliers since July 1st last year.
More people are unemployed and head of DWP Iain Duncan-Smith was
on Daily Politics crying again that the Government has less money and he has
had to cut Job Seekers Allowance and Income Support payments by 30% as he did
in 2015 with disability benefits. As always under a Conservative government the
poorest are paying the price.
There is at least *some* positive news. The Stock Market is
doing very well. Trading is higher than it has been for years!!! As a result of
the low pound sterling, stocks in UK FTSE 500 companies appear cheap as chips
on the global markets and foreign companies have been buying up what's left of
UK companies left right and centre.
The rich get even richer and the poor get even poorer. Welcome
to Brexit.
So it's now the Summer of 2023 and
five years since all our agreements ended with the European
Union. How are things looking?
Back in early 2016 over 250 foreign
banks (including the main Swiss banks) used the UK as their EU headquarters
because of our access to the EU market through their ability to 'passport'
banking and financial services to a market of 508 million people. Three
quarters of them have now moved their head offices across to Frankfurt. 2.2
million people in the UK used to work in the Financial services sector - that's
now down to just 750,000. The losses of income tax and National Insurance to HM
Treasury have been devastating for the Budget.
The Nissan Juke, Qashqai, and Leaf
models that used to be built by thousands of Brits in Sunderland are coming up
to the end of their lifetimes and Nissan announced in May that their new models
are going to be built at the new facility near the Renault-Dacia plant in
Romania. Toyota and Honda have also made announcements that new models will be
built inside the EU rather than in the UK. Over 700,000 people used to work in
the automotive sector in the UK and over 70% of the million cars built in
Britain were left hand drive for the EU market. With new import tariffs on car
parts of 7% and sales tariffs in the EU of 10% the UK just can't compete any
more. The unions have been begging the Government for a bailout but there just
is no money.
Siemens engineering and research
centres and the global research centre for Dyson and other companies in the UK that
employ thousands have been really struggling to be able to recruit high quality
staff from abroad and the brain drain from the UK as a result of R&D
companies abroad hiring our talent isn't helping. There are rumours that
Siemens and other R&D businesses are planning to relocate out of the
country. This isn't helped by the loss of hundreds of millions of pounds in
research grants that Universities used to get from the EU. This has gone and
Westminster have not only failed to replace it but they've also cancelled the
student loan programme and now everyone has to pay up front in full for Uni
tuition.
There are more downstream
manufacturers suffering the same issues as the auto sector and this is having a
knock on effect to steel making and other upstream industries.
The Leave EU campaigners who were
saying "see we told you nothing would happen if we leave the EU" from
late 2016 to 2019 are now really starting to eat their words.
For each million jobs lost so far HM
Treasury has lost £11 billion a year just in income taxes, national insurance,
corporation taxes and VAT income. The loss here so far is £38.7 billion.
The loss to the wider economy in the first five years of Brexit is
estimated in the region of £720 billion overall. It is sad looking back at 2016
when the Leave EU campaigns and people were complaining about the £8bn a year
pittance that we sent to the EU. If only they could see then what we now know
eh? And it's not like the evidence wasn't out there either - people knew but
chose not to listen.
Compiled from various postings made by Jason J Hunter whose work over the last 3 months I have appreciated and valued greatly.