General

Brexit Isn’t Going Very Well

The free trade deal promised by Jan 1ST under the Withdrawal Agreement has failed to materialise thus far. With the teething issues, 20% of UK SMEs have suspended exports to the EU as transition regulations start to bite.

UK SME’s have had to setup in the EU, incur inflated courier fees, file more forms, get a “Customs Agent/ EU handler”, get health certificates, pay VAT duties for non-EU goods arriving in the UK, that we re-export onwards to the EU. In the Single Market, European imports could be processed and packed in Britain and sent on to the EU for sale. An EU bugbear has been Britain bypassing trade barriers to flood the European marketplace with cheap, low quality Chinese goods. Of the >25% of UK’s 6 million SME’s that trade with the EU; most lack the resources to shoulder these costs. They are the backbone of the UK economy, our most profitable and innovative – we cannot allow them to fail by the thousand.

As the UK no longer follows EU product standard rules, inevitably businesses wanting to continue trade with Europe will need to adapt to more checks. Otherwise, finding new customers and markets takes time and money. You need resellers, distributors, foreign entities, supply chains, etc.

Add rising GBP/weak Euro reducing profits over the coming 24 months and we are in for a rough ride. And yet, without doubt, Brexit is affecting businesses on both sides: we don’t hear about the plight of the French cheese manufacturer.

Brexit remains about breaking free into global markets, not putting up protectionist barriers to trade. We already get our wines from New Zealand, our blueberries from Chile. The loss to our companies exporting to the EU is somewhat offset by cheaper goods we can source from elsewhere.

With the UK coming in second behind China on inward FDI rankings (UNCTAD); Private Equity betting big on a strong UK recovery, with 6 buyout offers in 2021 announced, versus 14 total last year; we stand 8TH on the World Bank Ease of Doing Business; and the pound is at 34-month highs on the dollar – you could say things are rosier than they first appear.

Following the Singapore-on-the-Thames zero-tariff, low corporation tax, low wage zone model will be difficult as the UK is largely untrained, relying heavily on immigration.

If 1992 Czechoslovakia could split in half while privatising two companies an hour (Thatcher went two-a-year) in 6 months; issue new documents and end the currency union 6 weeks after, why not Brexit in 6 years? Difference being it happened too fast for organised interests to mount a defence of the status quo. Good faith of leaderships meant no divorce bill, point-scoring border gridlock (Calais), licenses not recognised, or jurisdiction continuing beyond your border. Time, and good faith, were of the essence.

Just how difficult they are still making UK extrication shows how embedded the vested interests/corruption is within EU overregulation. Walking away from 12,651 EU Customs external tariffs, such as 200% overpriced garlic to protect French farmers, was never going to be easy.

They did their worst to make the UK a secessionist martyr as warning to other would-be departees. Hey, they gave Greenland 3-years of hell for leaving in 1982; they cannot afford their second biggest contributor to walk out scot-free. Crises can favour familiar ways of doing business, but Brexit is a genuine chance to improve British society. As Churchill said, “Never let a good crisis go to waste.”

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Richard Bolton was born in the UK and is a Manchester University PPE graduate. He is a financial planner. Areas of intrigue include global political affairs, culture and nascent technologies. In his spare time, Richard is a keen sportsman and investor.

Richard Bolton
Richard Bolton was born in the UK and is a Manchester University PPE graduate. He is a financial planner. Areas of intrigue include global political affairs, culture and nascent technologies. In his spare time, Richard is a keen sportsman and investor.

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