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Brexit is slowing down the British economy more than was assumed before the exit. And things could get worse.
“I feel deceived and let down,” says entrepreneur Simon Spurrell bluntly – when asked about the consequences of Brexit. Spurrell has been producing flavored specialty cheeses since 2010 and in 2019 invested around £1 million in a new maturing warehouse and distribution facility to be able to ship its specialties to EU countries from Macclesfield in central England.
The Brexit was already decided at that time. And the British government was in the midst of a battle divorce with the EU.
However, the cheese producer believed the conservative government’s assurances that the withdrawal agreement would not harm the export economy. “We were promised a smooth transition; everything will stay the same for us. As a Brexit opponent, that calmed me down, »said Spurrell.
Export to the EU decreases
But for the cheese exporter, the rude awakening will follow just a few days after leaving, at the beginning of January 2021. His cheese packages will be rejected at the border because the food hygiene certificates that are suddenly required are missing. “Nobody had warned us,” criticizes the entrepreneur. And he sees himself forced to stop exports to EU countries overnight and to take his online shop offline.
Nobody had warned us.
Simon Spurrell calculates that it would have been much too expensive to have a hygiene certificate that was recognized in the country of destination issued for each package: “A cheese order worth £30 costs £12 for shipping. That’s what people are willing to pay for. But suddenly there were certification costs of 180 pounds. Of course, direct shipping is no longer worthwhile.”
Simon Spurrell can quantify how much money his “Cheshire Cheese Company” has lost since then: he lost around 600,000 pounds because exports to the EU collapsed.
Brexit slows growth, investment and innovation
Cheese is one of many products whose exports have declined since Brexit. For example, the slump in the export figures for cars, the most important British export good – by a whopping 24 percent since 2016 – has a far greater impact on the economy when the exit decision was made.
The weakening export economy contributes to the fact that the British economic growth lags behind the other G7 countries. According to the British Central Bank, the UK’s gross domestic product is still 0.7 percent below the pre-pandemic level, while other G7 countries have long since recovered from the Corona crisis: Eurozone GDP is already 2.1 percent higher than at the end of 2019; that of the USA is even 4.2 percent higher.
“The fact that we are recovering more slowly also has something to do with Brexit,” economist Anna Valero from the London School of Economics told SRF. Companies invested below average in the home market. This is “a chronic problem,” says Valero, which has become even worse since Brexit: “It reduces the productivity of companies if, for example, they do not make the necessary investments in their IT.”
That also harms the competitiveness and innovative strength of British companies. Valero: “There is an urgent need for more investment in research and development and in the further training of workers.”
However, the economist observes that many British companies hesitate because of the sluggish, sometimes unresolved relations with the most important foreign trade partner, the EU.
A new deal with the EU?
“We should rejoin the single market immediately. That would be the easiest thing,” says cheese exporter Simon Spurrell. “After that we could negotiate a better deal with the EU.” At the same time, Spurrell knows how much the Brexit issue is still dividing the country and that both the government and the opposition would prefer not to discuss Brexit and its consequences at all.
The cheese exporter has therefore dared to take flight: in mid-November he sold three quarters of his company to the largest manufacturer of Cheshire cheese. “This way I can export to Europe again because the parent company can handle our customs and hygiene certificates much more efficiently, together with their bulk shipping.”