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.