BEERG Newsletter - Brexit: Slowly, the UK begins to admit to Brexit failure

A few weeks back, one of the architects of Brexit, Nigel Farage, admitted in a BBC interview, that Brexit had failed. But, of course, he went on to blame anyone but himself for the failure, saying that the Conservative government which has been in power since Brexit was voted through had failed to deliver on the opportunities that Brexit opened up. Easy for Farage to say as he has never held a government position and has never had to deliver on anything himself, never had to deal with the compromising realities of politics as opposed to the fantasies of “Global Britain”.

The realities of Brexit, as opposed to “Farage fantasies” are more and more breaking through. We reported in a recent issue on the threat to the UK car industry, and 800,000 jobs, over the imminent introduction of tougher “rules of origin” for car manufacture. “Rules of origin” refer to the amount of UK or EU produced material in a finished product. That amount has to hit certain percentages to allow the goods in question qualify for tariff-free trade. When it comes to electric cars, the UK looks like falling short of the necessary amount because, for now, it has no battery manufacturer located in the country, though it looks like Tata will locate one there shortly. 

As food price inflation in the UK continues in the high teens, a recent report from the LSE finds that British households have paid £7bn since Brexit to cover the extra cost of trade barriers on food imports from the EU. The university’s latest report estimating the impact of leaving the bloc on UK food prices found that trade barriers were consistently hampering imports, pushing up bills by an average £250. And that is before the UK starts to impose border check on imports from the EU, now due to come into effect from later this year. According to Shane Brennan (£), the Chief Executive of the Cold Chain Federation, the association for businesses involved in the frozen and chilled food sector, the proposed controls will be “a step back to the 1950s in terms of the types of supply chains options we have, in terms of getting hold of goods from Europe”.

But on the bright side, Brexit has resulted in record level of Foreign Direct Investment (£) not for the UK but for Germany as companies seek to maintain a foothold in the single market. 

All of which has resulted in a growing number of people in the UK, now estimated at over 60%, saying Brexit was a mistake. However, any suggestion that the UK will be looking to rejoin anytime soon can be ruled out for two reasons. First, even if public opinion is moving against Brexit, none of the major political parties seem ready to catch up with that change of mood for now. The Conservative government remains steadfastly committed to Brexit, while the Labour Party, leading in the opinion polls ahead of the next election, will not even contemplate rejoining the Single Market or the Customs Union, much less the EU. It believes it can “Make Brexit Work” by negotiating “sectoral deals” with the EU. Not a chance, as Labour, if it is in government, will soon learn. 

Second, even if a future (Labour) government wanted to take the UK back into the EU, would the EU be prepared to take it back? Would it want the cuckoo back in the nest? Especially if the Conservative Party remained committed to a “sovereignty first” agenda and made taking the UK back out of the EU a policy objective when it was again in government. Who wants to have a “hokey cokey” member state, in again, out again with each change of government? The EU has more pressing priorities than constant negotiations with a UK that does not know what it wants.

So, for now, we need to work on the assumption that the UK will be outside the EU for many years to come.