UWSaint wrote: ↑Wed Jul 10, 2024 11:33 am
As for Brexit, I don't think that's a critical factor in the UK's current economic situation. Growth is stagnate in many European countries, inflation raged through the eurozone in 2022, etc.
While there certainly has been widespread economic problems all over Europe caused by the pandemic and the Russian war against Ukraine, there are structural problems inherent in Brexit that causes additional problems in Britain.
1) A shrinking domestic market.
As part of the single market British companies had access to a "domestic" market of more than 500 million people. No customs, no tarifs, extremely little red tape. A small family firm could receive an order from France or Germany, load the goods on a lorry and send it on its way. No more paperwork than when selling to a customer across the street. That market has now shrunk to just 67 million.
2) Loss of customers due to tarifs and red tape.
If the same company gets a similar order today, they need to fill out extensive paperwork and the shipment will be inspected on the border and customs fees and tarifs will be applied. Since the infrastructure for these border checks had been more or less done away with, the new structures are as of yet understaffed and underdimensioned, and shipments will often be stuck at the border for days. As a result deliveries take longer and products become more expensive for the customer, so they often decide to start buying their products elsewhere, ie from someone inside the single market.
3) Price increase on imported products.
The red tape, the customs fees and tarifs go both ways. Products from the EU become more expensive within the EU as tarifs and customs fees are applied, and the additional red tape for both the producer and the importer increases the cost of handling and adds even further to the price the final customer pays.
4) Loss of entire market segments due to slower delivery.
A vast majority of British fishermen voted to leave, as they wanted to get rid of competing fishing vessels in British waters (in many respects the EU is treated as one entity, and so fishing waters are in no way exclusive). In hindsight they regret this. Britons are rather more conservative in what they eat, and a lot of fish and shellfish were mainly exported to France and Belgium. Now, freshness is imperative for these products, and having your products stuck for three days at the border means they can no longer be sold as a premium product. The British fishing industry has had to switch to canning or freezing products in order to be able to export them, and then it becomes a completely different product that can not be sold at the same price as the fresh product. There is a similar problem, albeit not quite as drastic when it comes to flowers, fruits, berries and fresh produce.
5) Shortage of unskilled labour.
British farmers have been relying on migrant workers from Eastern and Southern Europe for harvesting fruits and berries that need to be handpicked. Since there are no restrictions on the free movement of labour within the EU people did not need to apply for work visas or residential status or whatever. They just showed up and went to work. When the harvest was done they went home again (you are only allowed to reside longer than three months in another member state if you can support yourself). As Polish and Portuguese fieldhands no longer are available and unemployed British youth is not all that interested in this line of work, crops are rotting in the fields. The same goes for the hospitality industry. Scores of young Swedish women used to head to London to work in pubs or restaurants for a year or two before going to college. Now it's too complicated, so they go elsewhere. Maybe to Paris, Berlin or Dublin. Or even Oslo. As a result pubs, restaurants and hotels in Britain have a severe hiring problem.
6) Lack of truck drivers and skilled workers.
Millions of East Europeans, mainly from Poland, migrated to the UK to drive trucks or work in plumbing or construction, as the pay they would get there was roughly twice what they'd get back home. This was widely used in Brexit campaigning, implying that Polish workers were stealing jobs from Britons. In reality they provided much needed services at reasonable prices, which increased the standard of living both in the UK, where people could afford having more work done, and in Poland, as they sent home part of their earnings to their family. After Brexit these people relocated. Many - having already collected a nice nest egg - went back home, others moved to eg Germany. As a result there is now a shortage of skilled workers in many industries and especially in distribution. Boris Johnson tried to amend this by offereing three months visas to truck drivers. But as one Polish truck driver said: "I can't bring my family to Britain on the premise of having to apply for a new visa every three months. We've already moved to Germany and are quite happy here."
7) The finance sector.
This has actually done better than predicted. Prior to Brexit it was estimated that 75,000 jobs in the City of London might be lost. In reality it has only been 7,000. However, between 2018 and 2021, there was an 18% decrease in financial services exports to the EU, with only a 4% increase in exports to non-EU countries to offset it. To some extent the impact is being muddied by the effects of the pandemic, but this dip is worse than for the OECD, the EU27 and the G7 averages, so it may still mean something.
https://www.euronews.com/business/2024/ ... ial-sector
8) Overall impact on the British economy.
The Office for Budget Responsibility (OBR) predicts that the long term effect of Brexit on the British economy amounts to a 4 percent reduction of GDP, compared to if Britain had stayed in the EU.
https://www.bbc.com/news/business-59070020
9) More refugees.
While Britain belonged to the EU, they benefitted from an EU rule saying that refugees must apply for asylum in the member state that was their point of entry to the EU. This meant that most refugees arriving in Britain were just put on the next ferry heading back to the continent. Since the UK left the EU, they are no longer privy to this, and France, Belgium, etc, refuse to accept that Britain ships refugees back to them.
This is ironic, given that a lot of people voting for Brexit did so to get rid of immigrants. As the chart shows, it has had this effect on EU immigrants, but simultanously the number of non-European immigrants is going straight up, except for a minor dip during the pandemic.
