Brexit: A New Era for the UK?

[Stavros]

I woke up this morning for the first time in 47 years in a country that is no longer part of the European project that was launched in 1957 with the Treaty of Rome. The trade deal with the EU that was signed before Christmas is over 1,000 pages long and contains a 'wealth' of detail that I am sure will emerge as the year rolls on. We know now that producers of Sausage and minced meat will no longer be able to export their products to the EU chilled -they must either be deep frozen, or cooked -in both cases incurring extra costs, on top of the customs forms that must be filled in. Indeed, while there is 'tariff free' trade with the EU's Single Market, the extra costs of the paperwork alone suggest that while they might not be tariffs on goods, the UK must pay in another way to export to the EU. And Northern Ireland remains in the Customs Union with regard to goods.

Again, free movement has come to an end, yet the Common Travel Agreement that was first signed with Ireland in 1923 remains unaltered, and at the last minute, the UK and Spain agreed to allow Gibraltar to remain in the Schengen Zone with free movement in an out of Spain, though as with other aspects of the Trade Agreement, including fishing quotas, these are all subject to review over the next five years.

If one were to try and be positive, the argument would look like this. The UK opted out of the Treaty of Rome in the 1950s but by the 1960s the simple economic fact of life was that with industry in decline, the UK needed to join trading blocs to expand its opportunities. It was thus a founder member of the European Free Trade Area in 1960, and by 1972 this bloc had recorded increases in growth for its members, so the step forward to the EEC in 1973 was a logical conclusion of this trend.

The difference now, is that with the service sector accounting for 80% of the UK economy, the reasons that led the UK into the EEC/EU no longer retain their importance. Moreover, because the City of London has retained its status as a major financial hub, the argument is that it will not only retain this over the next ten years but that it gives the UK the potential to become a Singapore off the coast of Europe. Or, the City will retain its status, but not become that Singapore, because the decline of financial passporting will not make London an attractive and practical gateway into the EU for non-EU states with investment capital directed there. One the one hand growth, on the other, decline.

Every potential benefit also contains a potential threat.

Another difference, is that while manufacturing has declined, it has not disappeared, and if, for example, we see a transition over the next 10-20 years away from petroleum based energy to renewables, and notably the growth of UK based electric vehicle manufacture, there is no reason why we should not be making a new generation of vehicles in the UK. Or, the fact is that automation means that even new start ups in vehicle manufacture do not create thousands of jobs. And, Ineos proposed to build a new generation of 4x4 vehicles in Bridgend in Wales, but have since pulled out to make them in France.

So on the one hand the UK is a diferent country, economically, than it was in 1973, and has its services sector plugged into the Global economy from which it should still benefit without being in the EU. But, the profile for jobs does not suggest the benefits will be wide-spread, the profile for income might be better but the Government will not want to impose high taxes on the few successful industries we have, and the UK enters a new era with a colossal debt problem exacerbated by the costs of Covid which must result in an increase in income and secondary taxes some time soon rather than never.

I therefore suggest that it will take time for the full impact of Brexit to be felt, that pre-existing problems related to debt and the costs of Covid-19 will undermine any economic growth that might result from Brexit and that at the very least the word 'disappointing' will dominate the news this year.

But the UK was never in favour of the 'Ever Closer Union' that has been at the core of the European Project and is in the first sentence of every treaty agreed since 1957. In the end, the irony of this Brexit project, is that it was primarily political rather than economic, but that the result mght be a decline in the economy relative to the EU, and a legacy of bitterness and division that threatens to end the very Union that defines the United Kingdom.

Other views are available.

[Stavros]

From a short statement, the fact that with Brexit, the UK has lost access to the EU's Galileo satellite system, in which it had invested £1.2 billion, with its replacement, OneWeb, collapsing into insignificance at a cost to the taxpayer of £500 million.

This is what the Government website stated last week:

"The UK no longer participates in the EU Galileo or EGNOS programmes.
...
Areas where UK involvement has come to an end

The UK:

• does not use Galileo (including the future Public Regulated Service (PRS)) for defence or critical national infrastructure
• does not have access to the encrypted Galileo Public Regulated Service
• cannot play any part in the development of Galileo
• cannot play any part in the development of EGNOS
• from 25 June 2021 UK users will not be able to use the EGNOS SoL service and the EGNOS Working Agreements (EWAs), which will no longer be recognised by the EU

This also means that UK-based businesses, academics and researchers cannot bid for future EU GNSS contracts and may face difficulty carrying out and completing existing contracts."
https://www.gov.uk/guidance/uk-invol...pace-programme


To compensate for this loss, and to create its own alternative, the UK goverment invested in a firm called OneWeb (with thanks to super-high-tech genius Dominic Cummings). As reported in the Financial Times in July this year-

"Downing Street pushed ahead with an investment in a bankrupt satellite operator as part of its post-Brexit independent space strategy despite a top civil servant warning the “unusual” deal could see taxpayers losing the entire $500m with “no wider benefits accrued”. The UK won the auction for satellite broadband operator OneWeb with a joint $1bn bid with India’s Bharti Enterprises earlier this month. Under the deal the British government will invest $500m for an initial stake of about 45 per cent in the unprofitable company, which is building a low-earth orbit satellite broadband network."
https://www.ft.com/content/d0721bad-...c-b11500f6bb6a

That this investment was sanctioned without the formal scrutiny one expects from HM Treasury, that other experts were incredulous that the UK would not seek to re-negotiate access to Galileo but invest in a dud firm, is exposed to ridicule with the classic comment from Business Secretary Alok Sharma-
"“I have been informed that even with substantial haircuts to OneWeb’s base case financial projections the investment would have a positive return,”".

Some haircut. OneWeb went the way of most internet bubble companies, taking £500 million of taxpayers money with it and leaving the UK outside the very system that works which it contributed to for years in terms of money and brains, the latter being absent in the government of Boris Johnson. Well, at least it helped show Dominic Cummings the door -but should anyone else be accountable?

A comprehensive account of this fiasco is here, and highly recommended to all-

https://bylinetimes.com/2020/06/30/u...-brexit-farce/

[Laphroaig]

Last I heard they were grovelling to be allowed back into the Galileo program. That was a few months ago though and I've not read anything about it since.

[Jericho]

We've royally fucked ourselves...The END!

[Stavros]

Congratulations to BBC journalist Faisal Islam for identfying some of the bizarre details in the EU-UK Trade Agreement -it relates to tariff free trade, but the way in which 'tariff free' is defined when specific goods are challenged on a 'Rules of Origin' agreement so that they are not, in fact, tariff free...

He has identified Grated Cheese, the Shelling of Nuts, the Assembly of a Table, and Doll's Eyes which, if exported to the EU, could have tariffs imposed if the products violate the 'Rules of Origin' agreement that the EU and UK have signed. Thus

“if the only operation that is performed on (imported EU) cheese is grating in a manner that does not require special skills” - [it] won’t qualify..."

"Nuts from the EU can contribute towards something qualifying as made in Britain, and this for zero tariffs, only if sufficiently processed. “All shelling of nuts is an insufficient process, even if machinery is used” as this is too “simple”..."

"A wooden table that was assembled in the UK from non UK desktop and and leg “will not be considered originating in the UK” even if both were sourced from the EU as “bilateral cumulation could not apply”.

"If eyes of a doll made in Britain did not come from the UK or EU, then doll could not qualify for tariff free trade with EU. But if the eyes and all other non originating material in same tariff category were less than 10% of value, Govt would tolerate it."

Faisal Islam provides the detail in the detail which either makes for hilarious reading, or anxiety for exporters....or just Why? from people like me.

Get stuck into the use of the word 'Simple' in his exposition-
https://twitter.com/faisalislam/stat...25083803787267

[Stavros]

Another day, another lost sandwich...

"Dutch TV news has aired footage of customs officers confiscating ham sandwiches from drivers arriving by ferry from the UK under post-Brexit rules banning personal imports of meat and dairy products into the EU.
Officials wearing high-visibility jackets are shown explaining to startled car and lorry drivers at the Hook of Holland ferry terminal that since Brexit, “you are no longer allowed to bring certain foods to Europe, like meat, fruit, vegetables, fish, that kind of stuff.”
To a bemused driver with several sandwiches wrapped in tin foil who asked if he could maybe surrender the meat and keep just the bread, one customs officer replied: “No, everything will be confiscated. Welcome to Brexit, sir, I’m sorry.”
https://www.theguardian.com/politics...ritish-drivers

[Stavros]

The Scottish Fishing industry, depending on who you are and where you are, is either on the point of collapse (Scotland) or merely having to deal with the 'teething problems' (England) that are part of thet transition away from the EU. Fish and live seafood that used to be landed on the coast and shipped to the Continent within 24 hours have been rotting away because the new regulations require significantly more paperwork per delivery than was the case before, while the delay has meant the catch has led major distributors to ask Scottish fishermen to stop fishing until the backlog of cases has been cleared, thus-

"The prices of some Scottish seafood are down 40 to 50 percent this week, dropping 80 percent in some instances. "This is because processors and intermediaries are not buying, as they are not guaranteed to be able to sell seafood on to EU customers because they can't get it out of the UK," said industry body Seafood Scotland in a statement. They call it a "seafood crisis."
"Issues from computer failure to lack of clarity on paperwork have rendered some Scottish companies' efforts to export seafood all but impossible," they added. Last week, they pointed out, a Scottish seafood company that usually sells £1 million worth of seafood into the EU each week was only able to sell £12,000."
https://www.politico.eu/article/brex...-happier-fish/

The Scots are blaming the English, not least because the Fisheries Minister admitted she had been too busy organizing a Nativity Trail last Christmas and thus had not actually read that part of the EU-UK Trade Agreement dealing with fishing, while the English have blamed the SNP Government-

"A UK Government spokeswoman said: “We are working closely with the industry to help understand and address the issues they are experiencing, including contacting exporters, their representatives and transporters to advise on the requirements for keeping their goods moving.
“The Scottish Government cannot abdicate their responsibilities to Scottish businesses. Over the past 18 months they have assured the fishing industry that the systems they were putting in place would be adequate. They clearly are not.
“The Scottish Government need to step up and ensure there are no delays to food exports being checked at hubs in their area.
“We have given the Scottish Government nearly £200m to prepare for leaving the EU, to minimise disruption and guarantee business readiness.”
https://news.stv.tv/scotland/more-de...-to-europe?top

Meanwhile, Boris Johnson has pledged £100 million in compensation (is that all?) for the failure of his Brexit Project, while the Leader of the House of Commons, said the Government was 'tackling' the matter, but that

"The key is we've got our fish back. They're now British fish. They're better and happier fish for it.”

Hmmm...Yesterday I interviewed a Langoustine, Auld Lang Stein, and he told me he was fed up. "I have been yanked out of my bed to sit here in a box freezing to death on a miserable, wet Scottish afternoon when I shoud be all dressed up and on a plate in Paris- I mean, I promised the wife..."

[Stavros]

As described above, the Scottish fishing industry is in crisis. But not accordig to the Foreign Secretary, Dominic Raab-

"Faced with warnings that the Scottish fishing industry is “drowning under red tape” and that generations-old firms could collapse in a matter of days, the foreign secretary claimed he was “not convinced” that the chaos was a result of Brexit."

“I think this is a great deal for the fishing industry, both short-term and long-term. We get control over our fisheries back, full control as an independent coastal state. There’s an immediate 15 per cent uplift in terms of our access to fisheries for the UK sector in the first year. That rises to two thirds in the five-year transition period, then we have annual negotiations.
“And of course, the fishing industry is going to want to increase its capacity to take advantage of those increased stocks, and that’s why we’re putting in £100m to shore up, to strengthen the fishing industry right across the whole of the UK to make sure that this really important opportunity of leaving the EU can be properly grasped.”
https://www.independent.co.uk/news/u...=3#post-410271

Dominic Raab is a contributor to the Libertarian pamphle Britannia Unchained which heralds the UK's exit from the EU as an opportunity to eliminate red tape, EU regulations, and return UK financial contributions to the UK. Yet not only has leaving the EU created more layers of regulations for exporters than they had when the UK was a full member of the Single Market, Raab defends the £100 million injection of funds into a market that in Britannia Unchained he says the Govt neither needs to, nor should interfere with. The reality is that if he were Libertarian in practice as he is in print, the Govt would not be giving the fishing industry a hundred pence, never mind a hundred million quid. From where I am sitting, the market has failed, and Raab is a blithe spirit in the 'throw money at the problem' claque in Downing St, which is another way of saying he doesn't really care about the problems Scotland has, which in any event are now dismissed as 'teething problems', as if our friends in the North were toddlers.

To say the UK's fishermen now own more of their stock is beside the point, when the primary market for the fish is next door on the Continent, and some of the most lucrative seafood is expected to go from coast to cutlery in 24 hours, or perish and be worth nothing. Perhaps Mr Raab should go to Scotland and talk to the fishermen and the workers in the packing and processing plants many of whom could lose their jobs, for he is Foreign Secretary. Think of it as a dry run for a future when Scotland is no longer part of the UK - and in present circumstances, who can blame them for going solo?

[Stavros]

The Brexit Levies continue to wreak havoc to British business. Either the incompetent fools we call 'The British Government' swallow their pride and re-negotiate the Trade Agreement, or more jobs and livelihoods will go.

It beggars belief, but the Department for International Trade is recommending to UK Businesses that they seek entry into the EU Single Market that the UK has left!

Here-

"British businesses that export to the continent are being encouraged by government trade advisers to set up separate companies inside the EU in order to get around extra charges, paperwork and taxes resulting from Brexit, the Observer can reveal.
In an extraordinary twist to the Brexit saga, UK small businesses are being told by advisers working for the Department for International Trade (DIT) that the best way to circumvent border issues and VAT problems that have been piling up since 1 January is to register new firms within the EU single market, from where they can distribute their goods far more freely."
https://www.theguardian.com/politics...-up-shop-in-eu

The Brexit Levies do not just affect Fish or Ham Sandwiches, but also Cheese, tourisng Musicians -and Bananas, there must be Bananas in this farce.

Bananas
https://www.independent.co.uk/news/u...-b1791225.html

Cheese
https://www.theguardian.com/politics...00-brexit-hole

William Keegan's article today
https://www.theguardian.com/business...shing-industry

[Stavros]

Another robust article by Rafael Behr, for example-

"Were it not for the pandemic, loose ends and lost jobs would be making more headlines. Whether they would also be changing public opinion is a different question. Some enthusiasm is surely dropping into the chasm between Brexit as liberation theology and its real-world incarnation as rotting fish undelivered to a Calais market. But British political culture contains deep reserves of stoical resignation to adversity (especially other people’s adversity). There is no simple road back, no better deal on the table, and it is easy for ministers to spin the pain mandated by their deal as aggression by vengeful Europeans.

Leavers will be attracted to that story because it spares them the discomfort of admitting that they voted for a con, and then made a prime minister of the con artist."
https://www.theguardian.com/commenti...itain-brussels

But as the UK faces the prospect of emerging from the Lockdown in stages, the day must come when Brexit, far from being 'done', is back at the top of the news cycle, with the excuses running out of crediblity.