The Growing Pains of Brexit, 50 Days In

The crucial services exports, manufacturing exports and imports, the arts & entertainment industry, fishing industry… it’s a mess.

By Nick Corbishley, with a little help from his father Peter Corbishley. For WOLF STREET:

This article — the first installment of a two-part series — explores some of the dark sides of Brexit that have emerged so far. It is not intended to reopen any debate about the 2016 referendum or the negotiations over 4 years between the EU and the U.K. which culminated in the Withdrawal Act and subsequently the Trade Deal. Its focus is on the current short-term effects, though they may become medium-, if not long-term ones. Time will tell. The second installment in a few days will look at some of the isolated bright spots that are beginning to shine through.

Brexit began in earnest 50 days ago, on January 1, with the entry into force of the EU–UK Trade and Cooperation Agreement. It is — at least to my mind — the first ever trade agreement that actively seeks to slow down the flow of trade between the two signatory parties. And the costs are mounting for companies on both sides of the English Channel, particularly the British one. And the benefits remain largely elusive. This is no great surprise: Brexit is a process, not an event, and it will take time for most of the benefits of separation from the EU to feed through. Many of the costs, meanwhile, are of immediate impact, although some will no doubt fade as companies adapt to the new procedures.

The UK’s fishing industry is one of the hardest hit sectors, despite the disproportionate attention the sector, which represents just 0.5% of the economy, received in the final stages of negotiations. Prior to Brexit, about 80% of fish caught in the U.K. was exported to the EU. But on January 1 the industry started to unravel. In no time fishing ports from Scotland to Cornwall were up in arms about border delays and unanticipated changes in regulations, causing fish to be left rotting by the roadside or deliveries to be aborted.

The arts and entertainment industry, which is worth an estimated £111 billion to the U.K. economy each year, is hurting. According to the Creative Industries Council, it employs over 2 million people. Already hammered at home by Covid-induced lockdowns and social distancing rules, which led to the closure of cinemas, theaters, art galleries, and museums, and to the cancellation of live events, tours, and festivals, the industry woke up on January 1 to discover that the Brexit deal has made it almost impossible for British bands, artists, or musicians to resume touring in Europe, even once Covid has died down.

In some EU countries, work visas are now costing UK workers hundreds of pounds. The rules also mean that, once visas have been purchased and paperwork completed, a truck can only make one delivery stop in one country, plus an interior move within that country, and an additional move to just one other country before returning home. The result? Touring and festival hops become untenable. The only way forward for a UK haulage company serving the industry is to relocate to the EU. If they go, so, too, could lighting companies, sound companies, and video companies.

Manufacturers are also running up against major obstacles, as they discover that the UK government’s claim that the trade deal with the EU guaranteed zero-tariff, zero-quota trade between the two partners is not entirely true. Those protections only apply to goods traded between the EU and UK that originate from whichever side exported them. The rules of origin included in the trade deal aim to ensure that goods imported from, say, India into the UK can’t be sold on to the EU tariff-free. Complying with these rules is notoriously hard – especially for processed agricultural or industrial goods, which typically include ingredients or components from around the world.

Non-tariff barriers — largely consisting of regulatory barriers that are arguably the biggest obstacle to international trade these days — were not adequately addressed by the trade deal. With Britain now formally outside the bloc, customs checks and formalities now apply, which can be time-consuming and burdensome. Exporters now have to navigate inspections, safety regulations, and a vertiginous mountain of paperwork. Customs bureaucracy has also caused some freight forwarders to reject contracts for delivery of goods into the UK.

Some business owners say that Brexit is an even bigger problem for their business than the economic impact of Covid-19. According to Scottish Engineering CEO Paul Sheerin, “all those who export goods are suffering” as a result of Brexit. “Problems are myriad, predominantly involving availability of logistics capacity and increased costs”.

Peter Cowgill, chairman of JD Sports, one of the UK’s biggest retailers, said the red tape and delays in shipping goods to mainland Europe meant “double-digit millions” in extra costs. Because JD Sports imports many of its goods from East Asia, those goods then incur tariffs when they go to its stores across Europe. He said the company may open an EU-based distribution center to ease the problems. Other large companies are thinking of doing the same.

Large multinationals like JD Sports can just about cope with the new UK-EU trading rules, but many small independent businesses that can’t afford to set up shop in the EU are drowning in red tape. The Federation of Small Businesses says the profits of many small firms are being wiped out by the new, additional post-Brexit costs.

Sarah McCartney, the owner of a fragrance company called 4160 Tuesdays, pinned her hopes on sales to the EU after the loss of domestic sales due to lockdown. After a month, however, she realizes that, whether sourcing raw materials from abroad or dispatching products to the EU, additional forms need completing and new customs rules and VAT regulations mean extra costs. All her 60 products are now officially illegal in the EU. To make them legal would also require a legally appointed ‘responsible person’ and an outlay of £60,000.

“We’ll find a way to make it all work eventually, but until we understand the VAT issues, there’s no point,” she wrote in The Guardian.

Many other companies appear to be adopting a similar approach. Others are sending out their products, only to have them halted at one of the EU’s external borders. Hauliers have also been tangled up in reams of red tape. Many firms are having to completely overhaul their logistics process and relearn everything from scratch.

It’s still too early to know with any real precision just how badly this is impacting UK exports to the mainland. But the initial signs are not encouraging. In early February, the Road Haulage Association (RHA) said loads on lorries going through British ports to the EU had fallen by as much as 68% in January 2021 compared to January 2020. More than half of the companies reporting a drop in exports blamed the deterioration on Britain’s departure from the EU, according to IHS Markit.

But there are signs that the pressures may already be lifting. In the second week of February the rejection rate for cargo shipped from France to the U.K. dropped to the lowest level since November, reported logistics company Transporeon.

The impact on the UK’s all-important services exports is even more difficult to measure. Services represent more than 80% of the UK economy, and the EU is by far the UK’s largest services export and import market. Yet the TCA offers little support for services beyond including standard market access and the non-discrimination obligations that are typical of modern EU free-trade agreements. This is mainly due to the fact that the most important trade barriers in services are regulations, not tariffs.

One of the most exposed sectors is the UK’s financial services industry. On January 1, 2021, UK financial firms lost blanket access to the EU under the single market passporting regime and are now reliant on Brussels granting regulatory equivalence to its financial services sector. But the EU has so far only offered temporary equivalence in two areas, for derivatives clearinghouses and to settle Irish securities transactions.

The continued absence of regulatory equivalence is putting pressure on companies to shift their European operations to the mainland, or to countries that already have equivalence with the EU such as the U.S. The biggest beneficiaries have included Amsterdam, which recently drew headlines by overtaking London as Europe’s largest share trading center in January 2021, as well as Frankfurt, Paris, and New York. The UK’s share of the Euro-denominated swaps market has also decreased, from 40% in July 2020 to 10% in January 2021.

But there are a few silver linings for the City of London, as well as certain sectors and businesses on either side of the English Channel. But that will be the subject of my next article, on the short-term and potential long-term benefits of Brexit. It will probably be shorter than this one. By Nick Corbishley, for WOLF STREET.

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  98 comments for “The Growing Pains of Brexit, 50 Days In

  1. CreditGB says:

    Whether it concerns services or products, any time Governments are inserted into the stream of commerce, it becomes perverted.
    In other words, it is F.U.B.A.R.

    EU is a classic F.U.B.A.R. Whatever touches it will be a mess.

    • Sean Brodrick says:

      The problem is caused by Britain leaving the EU. That’s rather obvious. The Brits were lied into a crisis. Trying to pretend otherwise doesn’t help.

      • Joe Saba says:

        Best thing in LONG RUN they could do
        A total RESET is coming due to JIT – just (NOT) in time supply chain

        throw in shipping now and delays/paperwork

        but after reset – bet on growing companies coming out of this with new SALES to – Canada, Merica, Austrailia, etc.

        or just move to low cost country – like Merica, place were they rob you with tie (ALL GOVTS) /s

      • Javert Chip says:

        Sean Brodrick

        I suspect you’re implying the UK government lied to its own population. My view is the EU lied to most member states. They (but no longer the UK) are not-so-slowly losing their sovereignty, any in the Euro zone have already lost control of their own economy.

        The EU (France in particular) has been both petty and punitive in the BREXIT ordeal; most bureaucrats have their heads up their butts, and fail to realize the UK is still a huge customer of the EU.

        No doubt there is uncertainty for BREXIT, but the path forward for the EU & ECB is fairly well known: Germany gets stronger & wealthier, everybody else does not.

      • Finster says:

        The Brits were lured into a bait and switch … what started out as a trading arrangement was morphing into a united states of Europe. If it didn’t change course, it would eventually have surrendered its sovereignty to continental rule.

        • char says:

          The United States of Europe was from the outset. the Brits changed their mind

        • Gas leak says:

          Excellent observation – bait and switch !
          Maybe the other north Europeans and specifically the Frugals and Visegrads will wake up and spot it too!

          Particularly when so much of the intended post-Covid EU funding is being pumped into settling the intentionally non performing inadequately secured loans and mortgages of the ‘well connected’ in the retarded southern EU. Or going off shore. Not actually regenerating their economies.

          But no one anticipated how petty the EC and the current EU Presidency – the “Contra os Bretoes” Portuguese – would be in ‘illegally’ triggering Article 16 and all the infantile obstacles this article describes.

          Interesting that sterling is at its highest for 3 years against the dollar and at 1.17 to the euro.

        • fajensen says:

          Of Course it is totally the fault of the EU that the UK also(?) did not bother to read (or comprehend?) the Treaty of Rome, which they signed up on. Is there a pattern forming?

        • wkevinw says:

          Finster-
          1. from my Brit friends- this is exactly what they say. It was supposed to be a minor-moderate trade agreement- not the US of Europe
          2. Europe has a difficult hurdle. It’s not a nice thing really: different languages (not to mention cultures), different currencies, and different fiscal/government spending structures. It is a very difficult thing to make a “Union” from.

        • char says:

          It was never to be a minor trade agreement. The plan was always a United States of Europe. People who say differently are rewriting history

      • ian says:

        When two willing parties want and need to make something work they will make it work. This situation is caused by the EU wanting to make it difficult to discourage others from leaving. The EU exists only for the EUs sake as a political project.

    • Harrold says:

      Caveat emptor.

      • Joe Saba says:

        bet you did when you chose LOW COST PRODUCT FOR PPE

        chinese made perhaps????
        wait til they say NO MORE

    • char says:

      As seen in the European state of Texas.

      Regulation often brings down the cost of a transaction significantly. Those transaction/negotiation costs are often so high that they wouldn’t be financially possible without regulations

      • Nacho Libre says:

        “Regulation often brings down the cost of a transaction significantly.”

        I am very curious about this comment. Can you give some examples?

        Are you saying the regulation will reduce the price or reduce the cost?

        • char says:

          Cost. Negotiations costs money. Introduce regulation and you don’t have to negotiate that much. Saves a lot of money

        • Nacho Libre says:

          What sort of negotiations? Who is negotiating?

          How do regulations come about without negotiations?

          Can you please give concrete example(s) so that we all what you are referring to?

        • char says:

          The buyer and seller need to negotiate.

          Example of regulation that makes trading easier:
          Before the kilogram every village had its own pound. Makes trading hard and requires a higher margin to be profitable because you know that some traders will fool you with a lighter pound

        • Nacho Libre says:

          Ah, the standardization ones. Those which categorize class 1 and class 2 bananas?

          I personally find those not helpful and wasteful, but I can see your point.

    • Thomas Roberts says:

      CreditGB,

      The fact is whether or not the EU is FUBAR, whether or not the EU will collapse (it could become a superpower as well). The UK overwhelmingly benefited from EU and enjoyed the taking end of a parasiitic relationship with it. The UK was also a big factor in a lot of the messes the EU is in. The UK was a mess and in steep decline before entering the EU and now that’s it’s gone, the UK government will be even more off the reigns in ruling it’s subjects. The UK government is far worse than the EU system.

      Even if you are sure the EU will eventually collapse, leaving early can be a very bad idea for countries. As a trade block, the EU has to push for its members above other countries. If you leave early, the EU will have to decide whether or not to reduce the trade volume it’s members have with you, that trade from you, could be moved to a poorer member state. The change in trading relationships between specific countries, in the EU or not, could very easily persist, even after the hypothetical EU collapse. Even if you think the EU will collapse (now that the UK is gone, it could eventually become a superpower though), just manage the chaos, sometimes just flat out refuse certain things like migrants, and hold tight till it actually starts to happen.

      • Edward Xylem says:

        Please check your facts. British growth rate prior to joining the EEC was higher on average than it has been since.

        • Joe Saba says:

          sure glad we don’t have NON-VOTER induced lock downs for 2020 and into 2021
          til ?????
          of course they’re in severe decline
          eu masters made UK pay price by typical means – lying

        • Thomas Roberts says:

          Britian was called the “sick man of Europe” for a reason. You can’t forget to leave out how as competing European countries began to rebuild themselves after the war, England and it’s “great leaders and managers” failed to keep the country running well and competitive. England was falling apart, prior to joining the eec and after joining was years later able to recover. That decline has to be counted in the statistics. You also have to take in account, population growth, which was slower in the decades after their decline ended. This is on top of how global growth was higher in the mid to late 1900s compared to today.

          On paper, yes Britian was growing faster before eec, that however isn’t a very complete story.

        • Thomas Roberts says:

          The UK as is, is a wealthy devoloped country (though I would rank it as a lower one). It is still far better to be in then most countries. However, it’s not nearly the power it thinks it is and because of brexit, will soon begin to lose world standing (Most of its remaining prestige).

          The UK government is alot worse than the EU by quite a lot. Without the EU, the UK government will be even more ridiculous. Over time, the UK government let it’s economy be hollowed out in favor of finance, the EU could easily pull most of that finance away. The UK no longer has a say in anything in Europe.

          As a country in Europe, the UK will remain one of the better places in the world to live, but it could easily sink to the low rungs of Europe and that Commonwealth of countries and other such things will easily fade away in such a scenario.

          Brexit was unquestionably a terrible decision, but we’ll see how they manage. Ideally, if finance leaves, they might be forced to rebuild the rest of the economy, and that could benefit average person in long run. But, they could have had both, inside of the EU.

        • Willy2 says:

          @Edward Xylem:

          – No, YOU should check the facts. Stop selectively using only the facts that support your story.
          – The UK joined the EEC in 1973. Yes, the UK did better in the 1950s and 1960s. So did the US and many other countries in Europe who were already in the EEC. So, whether one was part of the EEC or not didn’t matter when it came to growth rates.

        • mike kelley says:

          difficult to tell edward its not obvious but growth was certainly more stable for longer after eu entry and that counts for a lot but in general its a far wealthier country now than before startilingly so for someone my age like many people I prefer eurocrats and freedom to the uk goverment and no freedom I am a european

    • Patrick Lewis says:

      when they voted they should have said vote for Brexit and you might have to apply for a visa to go on a business trip or holiday in Europe.
      if you saved and wanted to spend the remainder of your live in the sun gone unless you give up your UK passport.
      when you come back from your hols 200 fags and 2 bottles of wine everything else binned no cheap trip to France to fill the van and say it’s for a wedding.
      when you think it through we are losing a lot Boris was brought up in Brussels so i am sure he will get to keep his EU passport Nigel Farage millionaire and married to a German with a house in Switzerland so his also OK, the only benefit i see is for the UK Gov as they will now get the 60% of lost tax and Vat from all those fags and booze that they no longer can bring in with not many questions, the only funny and good side of all this is everybody in Europe will speak English.

      • char says:

        Eunglish. It could divert from Queens English and do that fast. Depends on what happens with the US and its relationship with Europe. And there is no history to protect so not being able to read Shakespeare is not an issue

  2. Franz Beckenbauer says:

    Bligh me, old bugger, what a mess.

    You could just have stayed onboard the titanic with the iceberg in plain sight and made sure one of the more comfortable life boats was reserved for you. And then enjoy the show from a safe distance. And, seriously, nobody gives a bloody dam about those buffoons in Brussels and Strasbourg any more, anyway.

    Brexit is the second masterpiece of Eton-boys making politics after the brilliant decision of then Chancellor of the Exchequer Gordon Brown to sell all of your gold at the exact bottom of the market. What a stroke of genius. Made him Prime Minister. And go down in history as the lad with the “Brown Bottom” (excuse the pun).

    Rule Britannia, rule the waves. Down she goes.

    • Cas127 says:

      “Brexit is the second masterpiece of Eton-boys making politics”

      My sense is that essentially *no one* in the British Establishment wanted Brexit and fought against it even after the populist Exit vote.

    • SwissBrit says:

      Gordon Brown did not attend Eton (nor Oxford or Cambridge for that matter).
      That doesn’t excuse him from anything else though.

  3. brexit supporter says:

    this is the usual Remainer whinge-fest …if you dont like Brexit why dont you live in Brussels …hallowed be its name …i will help pack your bags and take you to the airport …in your beloved EU enjoy queuing for your jab …wait for your lot to agree to any sort of meaningful fiscal stimulus whe the ECB gets crucified by the euro and higher bond yields …

    • Joe Saba says:

      2nd that one
      to bad our migration is from BLUE states to RED states
      and we can’t stop infection
      gonna bitch all way down, but GLOBAL RESET gonna hurt

    • mike kelley says:

      we cant mate you have imprisoned us here have you forgotten that bit unless of course we move to northern ireland and get a euro pass via them leaving or of course there is scotland and get a euro pass when they leave you mate can sit in england because I will not

  4. A says:

    Soon they’ll tell you they need to cut your social services for austerity and cut taxes on the rich to “grow our way out of the problem.”

    And in the end the middle class will keep losing and the 1% will keep winning.

    The UK is on the same track as the USA under conservative rule, it’s just about 15 years behind.

    • Jonas Grimm says:

      Lawyers get grafted and the workers get shafted. So it goes.

    • Twinkytwonk says:

      This is very true. I remember visiting Disney world in 95 and being amazed at the amount of people riding around on little electric buggys. I said to my girlfriend,” that would never happen in the UK”. We both laughed but now the things are bloody everywhere.

      It was the same for the ‘ where’s there’s blame there’s a claim’ culture.

  5. VintageVNvet says:

    Thanks Nick, bean wondering how my scouse pals and other pals in England, Wales, Scotland, and Ireland have been doing with the breaks it.
    This response just for my fisher friends on all sides:
    JUST STOP,,, go home and plant a garden, and go on the dole for a month or so, and just make sure, damn sure, that NOBODY gets to get even one fish or other of the delicious special seafoods from your long long term traditional fishing grounds, or at least those north, east, and south and within sight of the western lands.
    The folks in the boats can sort it all out after the folks in the offices furk it up again as always…
    Good Luck, and God Bless ya lads and ladies!!

  6. Willy2 says:

    – Every trade deal is meant to reduce costs for the corporate sector. And governments are ready to accommodate such a deal because it means for governments that they can reduce costs as well.
    That’s why companies are Always in favor of such trade deals. When one reverses such a deal (like it happened with Brexit) then one shouldn’t be surprised to see costs going up.

  7. Michael says:

    All we have had in the UK is ruthless government, misusing science and statistics, causing untold damage to the economy and people’s mental health, abdication from the diagnosis and treatment of major killers such as cancer and cardiovascular disease etc etc. Brexit is the least of our problems.

  8. 91B20 1stCav (AUS) says:

    Nick & Pa – great reporting, as usual!

    Now, the tub is well and truly dumped, but has anyone seen the baby?

    may we all find a better day.

  9. Prof. Emeritus says:

    To be fair the main advantage of the British retail sector was that they were willing to talk in English to you. As funny as it may seem that’s often a challenge for a German, French or Italian business of the same type, even though English by now is a semi-official language of the EU economy – a Flemish and a Walloon will discuss matters in English instead of learning each other’s mother tounge. Now that huge language-locked part of the market is up for grabs – the race is on who gets it first.

    • MarMar says:

      Ironically, it looks like Brexit might increase the importance and use of English on the Continent.

    • Lenox says:

      I think we shall continue with English as the international tongue. It is, of course, the commercial or ‘American’ English that has found favor as our lingua franca.

  10. Outwest says:

    What I find most astounding is that the Brexit referendum was only an advisory vote until it became some sort of half cooked mandate.

    In this world of big data, it’s only a matter of time until academic studies surface that link a person’s Brexit vote to their personal income after the full impacts of Brexit plays out. I’ll bet that most Brexit supporters will regret it.

    • char says:

      Not astounding. Advisory referendums have to be followed to the letter by the state while the law making style referendums can be ignored 5 seconds after the result is in.

    • Anthony says:

      Wow what a snob…the old story that only smart people voted to remain.

  11. nick kelly says:

    Excellent piece. Nothing to argue with….except the preface ‘this is not about the Brexit debate etc.’

    We’ve all tried to make this space about economics not politics but you will never get a clearer example of economics being a function of politics. It’s not possible to point out the disastrous effects of a decision without implicating the decision
    itself. If we try to that by fiat, we can’t move on to the obvious remedy, which is to insofar as possible reverse Brexit. If this means leaving the ‘Brexit’ name in place but having ten thousand targeted agreements instead of one big free trade agreement, may as well get on with it.

    To end by agreeing, I agree that the second installment about the Brexit benefits will probably be shorter.

  12. SpencerG says:

    “In the second week of February the rejection rate for cargo shipped from France to the U.K. dropped to the lowest level since November, reported logistics company Transporeon.”

    That is only a good thing if the same amount of cargo was shipped.

  13. RightNYer says:

    In my opinion, Brexit was less about free trade and integration with the rest of Europe than it was populist opposition to uncontrolled immigration.

    • Sailor says:

      All the Brits I know voted for Brexit to regain control of laws from Brussels. All the seniors felt that the inital entry to the EEC (as was) was a fraud, which it was, and wanted that corrected in the first opportunity they’d had to do so.
      None of them felt that uncontrolled immigration would be stopped, and indeed it hasn’t been. Globalist politicians in Westminster are to blame for that, and they haven’t changed a bit.

    • Harrold says:

      Looks like Europe will now be saved from the hordes of British ex-pats.

    • fizzee says:

      Thank you RNYER for pointing that out. All those in above comments who are obsessed with the dollar/pound results need to find a way to address the socio/economic/psychological realities of the so called “deplorables” who voted for Brexit/Trump etc.

      • Javert Chip says:

        fizzee

        How about we start by giving all the people you disagree with just 1/2 vote?

        Maybe we could just take some important & powerful dude who agrees with you, and make him…errr…ahhh…ummm…KING! Think of all the money that saves on elections! WOW! What a concept.

        Here’s an election slogan for you:

        “Why let people run their own lives WHEN YOU CAN HAVE A KING DO IT FOR YOU!!!”

    • EJ says:

      As someone outside of Europe, that was always my impression.

      In fact, thought it was kind of obvious… is it not?

  14. Maurice says:

    “In the second week of February the rejection rate for cargo shipped from France to the U.K. dropped to the lowest level since November,”

    Small wonder, most exporters gave up.

  15. Auldyin says:

    Makes you feel sorry for all those poor EU citizens desperately waiting for that superb UK product they ordered online to be delivered doesn’t it. Not to mention all that wonderful fresh fish they used to get so easily. How much longer will they put up with all that BS it in this instant supply age do you think? There’s not much we can’t buy more easily and more cheaply from elsewhere. Australian and Californian wine comes to mind.

    • c_heale says:

      You can buy stuff from other places, but probably not as cheaply. And you’ve lost your biggest market. You’re not going to have the money to buy stuff.

      • auldyin says:

        Hi c
        I’m a consumer not a producer. The Eu is a producer protection racket. If the UK govt acts in the interests of the mass of consumers rather than producers I can only be better off as an individual.
        We can always just print the money like the ECB does in any case.

    • nick kelly says:

      You aren’t suggesting that anyone in the EU was importing English wine?

      • auldyin says:

        No Nick
        I had Scottish malt whisky in mind. The rich man’s ultimate treat.
        I know I would be angry if I couldn’t get it or I had to pay more for it because of a bunch of political To—-s

    • char says:

      Lidl still have their English week so getting stuff over can’t be that bad.

      • auldyin says:

        Spot on Char
        Lidl and Aldi are great. They can do it in spite of BS.
        I always like to imagine how much better they could be freed from all that bureaucratic BS

        • nick kelly says:

          The whole result of Brexit is a vast expansion of bureaucratic BS. For example, 80 % of fish caught by UK goes to EU. It now takes 80 pages to clear a shipment, including a vet’s declaration. The outfit that handles the catch of the fleet in Lyme Bay, says he is going have to hire someone just to do the paperwork.

  16. Brad Tifman says:

    Those that know know that the BREXIT is really just the mooring of the UK to the sinking US. Americans and Brits better get their “life-jackets” on. “Is the band ready, Mr. Hartley…”

    • Auldyin says:

      It’s all about getting bureaucrats (overheads) out of the way of what free people want to buy freely and cheaply. Whoever does that best will be top dog no probs. Uk has made a huge step in that direction by dumping the EU. Have you ever watched an EU debate live on TV? A relentless clamour for new rules.
      China and GM together have a functional electric car which will retail at<$4000 ie <£3000 now that really should put the fear of sh– up all interested parties. A 10yr old Audi costs that in UK.

  17. Avraam J. Dectis says:

    .
    Archaic duct-taped economic practices barely achieving substandard performance.

    Odd how nobody seems interested in re-engineering that jalopy.
    .

  18. Edward Xylem says:

    1500 EU companies has set-up shop in London alone since start if Brexit in order to maintain exposure to tge British regulatory regime.

    Don’t mention covid too. The EU response has been a shambles, even some German press have said it makes Brexit look like a good idea.

    UK now has political responsibility back in Parliament – no hiding place. Not so in the EU. It matters that politicians know fear and responsibility for their decisions and not hide behind pen pushers in Brussels.

    The UK was employer of last resort to Eastern and Southern European youth, keeping wages down and cost of UK housing up.

    It will be a hard road but give it 15 years and then look back. Judging on the short-term inconvenience……..

    • Kenny Logouts says:

      Indeed.

      It’ll take 4000 days to judge the effects fairly.

      Trying to gauge brexit on 40 days, is like gauging a human’s likely lifetime achievements on their first 40 days of life.

    • nick kelly says:

      How would ‘cheap labor’ keep the cost of housing up?
      The main variable in the crowded UK is land costs.

      • Whatsthepoint says:

        All those extra people gotta live somewhere….even 4 to a room. It creates artificial shortages. Plus a lot of (largely higher end) property is purposely off the market as its primary function is as a laundromat…and of course currency depreciation plays its inflationary part in RE inflation.

    • char says:

      B 1.1.7 for British Covid response.

  19. Dale says:

    It sounds like extremely poor negotiating on the part of the UK.

    All impediments to UK exports would have been removed if the alternative had been to ban UK import of all vehicles made or branded in the EU.

    • fajensen says:

      I wish the UK would try it*. The UK will get the chance when they have to implement the UK-side of the incoming customs inspections required by Brexit, starting in April, I think. Nobody does queuing and red-tape quite like the British so it’s gonna be a good show, I think.

      *)
      The EU counter move would simply be some tough visa requirements keeping the “Golden Sands” and “Benidorm” holiday crowds cooped up inside of the UK.

      That, and those vacationers well known behaviour, should give the Daily Mail and the Brexiteers their daily anger fix for quite a while.

  20. WES says:

    If I remember correctly, Europe exports more to Britain than Britain exports to Europe. Germany is probably hurting.

    • nick kelly says:

      There is hurt alround. Hurt no problem to arrange.

      One thing to keep in mind:

      ‘The 1976 UK Sterling Crisis was a balance of payments or currency crisis in the United Kingdom in 1976 which forced James Callaghan’s Labour government to borrow $3.9 billion ($17.5 billion in 2019) from the International Monetary Fund (IMF), at the time the largest loan ever to have been requested from the IMF.’

      The UK has already gone bust once. Before the approach to the dreaded IMF it twice tried to borrow from West Germany. 30 years after Berlin was rubble.
      In 1975 VW had it’s first strike. It lasted two days.
      That same year one UK car plant only had two weeks of uninterrupted production.

      The UK does not print the world’s reserve currency. It is by miles the smallest economy supporting a SDR reserve currency. It has to trade to feed itself. It is not in a position to undertake a ’15 year experiment’ to see how a massive interference in trade works out.

      • Auldyin says:

        Got it in one. Nick
        A Labour government. Nobody in the world does economic destruction better than a UK Labour government. I was there! from 1945 and every performance since. I think the kids have all learned by now though.

  21. GotCollateral says:

    > The UK’s share of the Euro-denominated swaps market has also decreased, from 40% in July 2020 to 10% in January 2021.

    Yup, according to clarusft[dot]com asof Feb 9th, US SEF’s now have 20%-40% of market for European derivatives.

  22. Realist says:

    GDPR will have an interesting impact on UK business. Datacenters in the UK are off limits for EU data.

  23. Sound of the Suburbs says:

    The UK lashed out and placed the blame on the EU because no one had the faintest idea what the real problem was.

    Free markets, free trade and EU membership will bring us all prosperity.
    Did you mean ten years of austerity?
    Obviously something had gone badly wrong.

    “Try and pretend it never happened” the Remainers
    Oh dear, they are not going to get very far that way.

    You need to place the blame somewhere and then explain how you’ll fix it.
    The Conservatives blamed it on the EU and everything would be fine after Brexit.
    This is where the trouble starts, because the EU wasn’t actually the problem.

    You can’t just say the status quo is fine, when it isn’t.
    Liberals really need to start putting a bit more effort in to find out what is causing today’s problems.
    Populists just have to find a scapegoat, and say they have found the problem.
    Trump just had to find some scapegoats to blame and the next thing you know he was the President of the US.
    Liberals don’t seem to know how to fix things.

    You liberals only have yourselves too blame for this situation.
    Put some effort into finding out what is going wrong.

  24. John says:

    Nick,
    Interesting thanks. Could Brexit be about the currency?

    • fajensen says:

      Very long term: It *could* be about a bunch of squillionaires* with privileged acces to climate science data. In response to what the data tells them about the future, they have, through Brexit, been acquiring a defensible island fortress with enough military and ressources to feed them well, protect them and generally keep them in the style of living they are accustomed to.

      Of course, Once the population has been just pruned back a little to a sustainable level. Since we are long term: 60 years of austerity, a couple of more pandemics with contracts awarded to screw-up companies, and this pruning process can happen quite naturally.

      In reality, I think it is just the normal smash-and-grab capitalism, applied on a somewhat larger scale, this time. Maybe getting lucky by riding in on the coattails of US and Russian anti-EU information operations.

      *) https://thebrexitsyndicate.wpcomstaging.com/

  25. Giacomo Cambiaso says:

    The worst article ever read on your website Mr Wolf, infact it is not one of yours. I mean, com’on, the author is blaiming brexit for the turism industry, really? Furthermore, as UK imports from EU way more than what exports so how can this new reality be causing more problems to UK than EU??? And what about the services crisis? Can this author tell us in which western country the service industry is not in deep recession due to these crazy restrictions? Typical remainer crap which indeed does not re-open any debate despite someone looks like still attempting to keep it open also once has been finally closed and forever. I must admit it is rare to find something stupid written on Wolfstreet website, which i truly love, but this man made it! The growing pain is caused by Boris handling of the covid pretended emergency like in most of the western world, not to Brexit!

    • char says:

      The article didn’t talk about the tourism industry. And the UK imports more but it is a much smaller share of EU output than British exports to the EU. The export service sector is white collar, high paid. Not cleaners but lawyers/advertising/architects stuff and they can’t work, not because of covid but immigration.

  26. JM says:

    Europe is a Titanic that sinks under its bureaucracy and suffocates all European countries unable to free themselves from absurd laws; Now Great Britain is free to make bilateral trade agreements with the business world, 5 years time and it will return for the better economically, judging now does not matter you have to look at the medium term.

    • MonkeyBusiness says:

      Maybe. Maybe not. Certainly Uncle Sam has said that he will not bend over backwards to help GB.

      And if Scotland were to leave, GB will be renamed to LB i.e. Lesser Britain ;)

      Maybe the rest will join the U.S.A.

      • VintageVNvet says:

        I say old chaps,,,
        Everyone who has ever gotten almost or totally drunk with any native of Ireland, Scotland, Wales, and probably a few other such parts of the group formerly known as Great Britain and its global cohort, ”The Commonwealth” etc., knows full well after just one such session that EVERY other part of GB will be gone in a NY minute asap.
        And IMO, that would be the very best thing for England per se.
        Time and enough for those nations named to reclaim not only their name, but their national ”rights”,,, as should have been done directly after WW2.
        If that had happened then, all of those countries AND England would be far and away the most successful countries in or near the continent of Europe,,, and their only modern/contemporary ”problem” would be limiting the torrential flood of folks from around the world wanting to relocate/immigrate into them.
        Same thing will happen as soon as USA gives us their notions of being the global bully/police,,, and just concentrate on being and especially making the very best of everything once again, as was very clear we did in 1942-45.
        OK, maybe Leica, Nikon, etc., were exceptions, eh??,,, but really not much else.

        • nick kelly says:

          ‘I see that the Americans have yet to drop a single bomb on Germany’

          Churchill Jan 3, 1943

      • Javert Chip says:

        MonkeyBusiness

        Problem is, Scotland is a very poor “region”, with massive financial dependance on the rest of the UK (read: southern England).

        If you loved how the EU “helped” the Greeks with their finances, you can imagine what the EU will do for Scotland.

  27. marc says:

    As long as lockdowns kill the British economy and society there’s no hope for them. Brexit was a great chance for them.
    It seems the insiders are taking revenge.

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