The weeks following Brexit brought unwelcome news, as new regulations took hold across a number of countries.
Germany recently announced that trade with the UK in January had fallen by around a third year on year, a substantial drop. The pandemic had played a part, although Germany’s worldwide trade only fell by 10%.
There were other short term issues, stockpiling at the close of the year is not new in the UK and was heightened by the impending completion of Brexit. Even so, trade was clearly down to a greater extent than expected.
Figures from French customs, pre adjusted for coronavirus times, also showed a notable fall, as did those from other EU countries.
Just a couple of months on, available data shows that the January position was anomalous, loss of trade may be more like 20%, with part of this still pandemic related. Nobody is however suggesting this is positive, or likely to improve.
A report from the LSE proposed that UK trade with the EU could fall by around a third over the next decade, as contact and existing contracts gradually fade away. This might be pessimistic but again not a positive.
The loss of people may have had an impact. One study suggesting 1.3 million overseas workers had recently left the UK was perhaps similar to Germany’s January trade figures. 500,000 appears more likely and whilst most were young workers, there is an effect on trade.
As much as hospitality sector closures due to the pandemic were a prime cause, the gradual evacuation is also an indication of sentiment. Part of this feeling arises from dwindling belief in the ability of politicians to offer solutions.
Around the same time that ASEAN nations reconfigured their ties, to remove thorny issues on rules of origin, we became entwined in them. Service sector access remains problematic, qualifications are not automatically recognised.
Neither is there an EU wide position on numerous aspects, with UK businesses needing to comply with each individual country’s regulations. The less than specific deal we have fails to resolve much, so we must help this to happen.
Building The Future
UK and EU representatives pledged to keep talking, to try to improve the position. Every one of us should encourage them to do so at any opportunity, in a way which makes clear likely loss of support if they fail.
Any emphasis on the UK and EU punishing each other for misdemeanours needs to take a back seat. Business relationships are built by shared opportunity, by the will to work together for mutual benefit.
50 years ago, we moved from preferential ties with former colonies (and economic stagnation) to a joined up but competitive environment. That did see a few companies go but at the same time, brought improvement in business management and productivity.
We need to treat Brexit in the same way. There will be casualties but many businesses will learn to cope and become more efficient. Neither will we be obliged to trade in new regions, if we offer EU partners deals which make sense to them.
Yes there are hurdles, from visas, to recruitment. You also need an ATA carnet for temporary exports to the EU but there are positive aspects to this, compared to other options. Opportunity has not vanished, just changed, which we have coped with before.