Three months after Brexit: a British toothache

Three months after Brexit: what the conservative government likes to portray as transitional problems threatening thousands of export-oriented companies on the island.

Three months after the United Kingdom finally left the European Union’s internal market, Brexit has become only a marginal part of the public debate. Of course, the Covid pandemic, with all its social, economic and political implications, remains the dominant theme.

The impressive numbers have already proven the Kingdom’s secession from the world’s largest economic region. What proportion of that attributed to the voters ’decision five years ago and interpreted by the conservative government – and what is owed to Sars-CoV-2? “We really don’t have an answer,” says Thomas Sampson, a professor at the London School of Economics (LSE). “We only know: Something serious happened there.”

After Brexit: British exports drop sharply

Before Christmas, London insisted on the greatest possible distance from Brussels on future economic ties. A close agreement was made to transport the goods. Services such as the work of bankers, dealers and lawyers in the City of London, the world’s largest international banking center, were not included. They make up 80 percent of the British economy in total.

Since then, the European Union has treated the former member as a neighboring third country; The booming trade (and highly profitable for member states like Germany) in the movement of goods is hampered by various bureaucracy and new fees.

The result: In January, British exports to the domestic market were down 40 per cent compared to January 2020. In the case of imports, which are vital to the UK food supply, the impact remains limited, as the London government has informally suspended the introduction of the new customs and tax system until July.

Lower post-Brexit GDP: Johnson blames Coronavirus and the transition phase

In order to be able to quantify the politically controversial economic consequences of Brexit, the London-based think tank Center for European Reform (CER), which is close to the European Union, devised a doubling for the British economy after the referendum in June. 2016. Up to this point, development on the island has been comparable to a quad of friendly industrialized nations: the USA, Canada, New Zealand and Germany. “Over time, this model calculation will allow us to determine how much British trade will be affected by Brexit,” CER Deputy Director John Springford said at a recent webinar at LSE. One thing is already certain: the real GDP of the country was already three percent less than the fictitious equivalent output, even though the kingdom was still part of the internal market and the customs union at the time.

Prime Minister Boris Johnson’s government is responding to criticism of its enthusiasm for Brexit with two arguments: on the one hand the impact of Covid, and on the other hand, the necessarily difficult transition after 48 years of membership in the European Economic Area.

Brexit shows long-standing problems for the United Kingdom

First, the consequences of leaving the European Union are said to be negligible compared to the massive impact of Covid. According to the Office for National Statistics, the economy shrank by 9.8 percent in 2020, and the recovery is still pending this year. More than 30 million people have now been vaccinated against SARS-CoV-2 at least once on the island, which is 45.5 percent of the total population. But the work-from-home order still applies. In the greater part of England, bars and restaurants as well as retail will be closed until early next week – bad for the economy.

For the sake of Brexit, government representatives prefer, secondly, to use the term teething problems, literally: teething problems, that is, teething problems. Nevertheless, the media from the left-liberal “Guardian” to the conservative “Sunday Times” continue to provide new examples of long-standing problems. For the many companies with tens of thousands of employees who rely on smooth trading, what they encounter in everyday life is that they always have permanent dental pain.

Brexit supporters blame Brussels

Take fish for example: Like other third countries, Brussels now also requires British fisheries to clean their produce before importing it. As a result, lucrative exports of mussels and oysters from British coastal waters have practically ceased – contrary to industry expectations, most of which have enthusiastically supported Brexit. The government had promised him and his colleagues unimpeded access to the internal market, John Holmyard of Offshore Shellfish in Brixham (Devon) told the BBC. “That was true even in the absence of a deal,” that is, a messy exit from the European Union without any affiliation agreement.

Faced with reality, supporters of London’s exit from the European Union blame the European Union. Agriculture Minister Georges Ostis complains that the Brussels approach is “unacceptable and unnecessary”. Prime Minister Johnson urged the British people to consume native produce. “Absolutely weary” fisherman Holmyard could not help but smile wearily about this: “We have delivered 95 percent of our goods to the continent. The domestic market does not make up for it.”

Post-Brexit trade with the European Union: Imports and exports have become more expensive

Take imports for example: Nottingham’s wig studio “Rivelli Capelli” has so far imported most of its merchandise from Germany without any problems. The clients mainly consist of cancer patients whose hair has been stolen due to chemotherapy, according to co-owner Ian Brooks, whose salon is named after her husband, Michael Rivelli. “It’s a difficult topic, a lot of people don’t want to think about it.” This is exactly why the short delivery times in a few days have been so convenient.

Meanwhile, delivery from Frankfurt takes no less than two weeks, but often four weeks; It also costs 15 percent more. This relates to additional personnel costs and bureaucracy: a new payment form and all customs formalities papers must be filled out correctly, notification and prepayment for the courier service takes extra time.

Example of exports: Frog Bikes in Pontypool, Wales sell kids’ bikes in 22 European Union member states. Prices have actually increased by 19 per cent – due to the enormous additional costs of around 294,000 euros incurred by the small company with a turnover of 14.1 million euros in the first two months of the new year alone. “These are not growth problems,” says company owner Jerry Lawson. “There is a structural problem here and so far there is no solution.”