Tuesday, December 28, 2021
One year after leaving the EU
Britons are plagued by Brexit “nightmare”
It has been almost a year since Britain broke out of the EU economically. What follows is twelve months with empty shelves. One finding is already clear: the road to becoming an independent trading nation propagated by Premier Johnson is still a long one.
It seems like an irony of history that Donald Trump is also feeling the consequences of Brexit. The former US President cheered and defended Britain’s exit from the EU. Now his luxury golf hotel Trump Turnberry in Scotland is also suffering. The annual report reads like a summary of Brexit concerns: a lack of workers due to a shortage of EU employees, but higher costs due to increased customs and transport fees.
These are precisely the problems faced by many companies, both European and British, a year after Great Britain severed ties with the EU economically on January 1, 2021. More expensive and time-consuming: Hardly a day goes by without one industry making its Brexit worries public. First and foremost, the British labor market will notice it. There are well over a million vacancies there.
But what Finance Minister Rishi Sunak is cheering about causes problems in supermarkets, at gas stations and on farms. Because cheap workers from EU countries such as Poland, Romania or Lithuania are missing, since high fees for work visas have been due since Brexit, truck drivers are now missing – shelves and at times petrol pumps remained empty, there was a lack of supplies. Pig farmers had to cull thousands of healthy animals because too few butchers work in the slaughterhouses. It is estimated that 200,000 EU citizens have permanently emigrated.
In order to fill the gaps, the government is constantly granting new professional groups exemptions for work visas. But the word “Brexit” seems to be on the index on Downing Street. Prime Minister Boris Johnson and his cabinet regularly deny that leaving the EU is responsible for the problems. Rather, they insist that Britain, like many other countries, will be hit by the consequences of the pandemic. The government has no interest in dealing with Brexit, says Ulrich Hoppe, head of the British-German Chamber of Commerce in London.
Economic strength suffers
On the contrary: Instead, every positive news as a result of Brexit and freedom from the regulatory framework of the EU will be sold. There is a lot to discuss. Bilateral trade with the EU has long since collapsed. The think tank Center for European Reform has calculated that British trade in goods in October 2021 was 15.7 percent or 12.6 billion pounds (almost 15 billion euros) lower than if the UK remained in the EU internal market and in the customs union would have been.
That affects the economic strength. The Office for Budget Responsibility (OBR) has come to the conclusion that leaving the EU will reduce gross domestic product (GDP) by four percent. Broken down, this means, according to AHK boss Hoppe, that every Briton has to work a year longer. “Brexit is a bloody nightmare,” complains a person in charge of an important English port city behind closed doors.
It is still unclear how the British government wants to position the United Kingdom in international competition, criticizes foreign trade expert Marc Lehnfeld from the federally owned company GTAI. The EU remains the most important market, the targeted trade agreement with the USA is a long way off, also because of political disputes over Northern Ireland.
This is another reason why the government often makes do with gestures. The traditional calibration mark Crown Stamp, banned by the EU, is once again used as a measure. The exclusive labeling of foods with old weight units such as pounds and ounces is also permitted. But looking across the border, bureaucracy continues to make it more difficult to work together: “Mostly, associations and companies see the EU successors to EU REACH (UK REACH) and the CE mark (UKCA) as a major double burden, as the EU remains an important sales market”, states foreign trade expert Lehnfeld.
It’s not all bad
Prime Minister Johnson recently hailed a free trade agreement with Australia, the first deal that London has completely renegotiated since Brexit. Compared to the losses in EU trade, the treaty is more like a drop in the ocean. Even the BBC commented: “The UK has given Australia almost anything it wanted in access to the UK agricultural market. Other major economies will not miss it and will be demanding similar access.” Complaints come from British farmers who fear cheap meat imports.
But it’s not all gloomy. Lehnfeld and Hoppe emphasize that Great Britain remains an important market. In some areas, the British government is acting pragmatically, so now goods suppliers are allowed to enter without a visa and install machines or kitchens from the EU, for example. The cheaper dividend taxation is attracting companies, and Shell recently chose the UK as its headquarters. When it comes to offshore wind and green hydrogen, the UK remains the measure of all things.
And even if Great Britain is on the verge of dropping out of the top ten German foreign trade partners for the first time, the UK is in a solid fifth place in terms of exports. However, in view of the new import controls announced by London on January 1, experts are wondering how long this will continue to apply.