• BREXIT ANNIVERSARY

    Posted on: 23/06/2022


    23 June 2022 is the sixth anniversary of the vote that endorsed the United Kingdom’s exit from the European Union.

     

    Identifying and determining the exact consequences of the British people’s decision is still very complicated even though, as will be seen below, there are already strong indications that the much-promised economic strengthening by the ‘leave’ faction will not come.

     

    In fact, although six years have already passed, Brexit is far from over and finished, but rather is still in a negotiation phase, has registered a sharp decline in the available workforce, London’s attempts to conclude free trade treaties with non-European trading partners have left much to be desired, and there are many disruptions that have already occurred affecting imports and exports.

     

    Regarding the first point, the fact that the Brexit negotiations are far from being finalized is witnessed by the new tensions with the European Union of a few days ago, following the new proposal to create a different customs regime between Great Britain and Northern Ireland. Specifically, Downing Street’s aim would be to create a ‘green channel’ in the British ports concerned, for goods coming from England, Wales and Scotland and destined only for the Northern Irish market. This specific scheme would provide for a priority channel that would allow Northern Ireland to benefit from the same tax benefits as the rest of the UK and replace the jurisdiction of the European Court of Justice with that of an independent arbitration court. London argues that this measure is necessary in order to preserve the integrity of the United Kingdom’s territory.

     

    The EU’s reply was very quick and Maros Sefcovic, Vice-President of the Commission, stated that this proposal would yet again prove the unconstructiveness of the British contribution to the negotiations, given that implementing the British proposal would result in an unnecessary increase in bureaucracy. Therefore, after six years, it is clear that a solution and an end to the Brexit negotiations are still a mirage.

     

    A further indication that the highly acclaimed economic strengthening will probably not occur, can be seen in the severe shortage of available labour, which is a real ‘staff emergency’ in certain sectors.

     

    According to a recent survey by the Institute of Directors, 44% of British companies are experiencing difficulties due to staff shortages. Four out of ten attribute this to a lack of workforce from EU member states.

     

    As of 1 January 2021, not only is it much more complicated for EU citizens to move to the UK, but British employers wishing to employ European staff are also facing considerable red tape and increased costs. They are in fact forced to acquire a sponsorship licence, which can cost between £364 and £1,820 for a small company or charity organisation and between £1,000 and £5,000 for a medium-sized or large company, depending on the length of the employee’s stay.

     

    In addition to sponsorship costs, the fees that need to be paid to request and obtain a licence must also be taken into account. Furthermore, the employee must speak English and hold a suitable occupation. The required skills may be lower for ‘deficient occupations’ or if the applicant has a PhD.

     

    Below are two concrete examples of businesses that have clearly suffered in this area due to Brexit.

    Stonegate Pub Company is the largest pub owner in the UK, with 4,600 pubs. The company’s HR director, Tim Painter, considers the new criteria imposed by Brexit as being too stringent.

     

    Stonegate employs about 15,000 people. Before Brexit, 10 per cent were from the EU and the rest were British citizens, even though there were regional differences across the country, particularly in London, where EU citizens accounted for 35 per cent of the workforce. The group currently has 1,000 job vacancies, due to precisely the lack of a European workforce.

     

    Another case in point is Corbetts The Galvanizers, one of the oldest galvanising companies in the UK.

     

    Corbetts currently employs 105 workers and has around 20 vacancies. Dodwell, the company’s chairman, states that filling these jobs would only fulfil existing contracts and would not meet growth expectations and increased demand from customers.

     

    With regards to the UK’s relations with the rest of the world, the situation is certainly no better. In fact, after leaving the European Union, London has to negotiate and conclude individual trade treaties with its partners, since in general, it can no longer rely on those concluded by the European Union. For the time being, Downing Street has not managed to sign any free trade treaties with world economic powers, except for the agreement reached with Australia, which however raises many concerns and perplexities. In particular, the president of the National Farmers Union said she was very concerned about the new ‘tariff-rates’, i.e. quotas imposed on Australian meat, which will drastically increase its supply in the United Kingdom by competing directly with the supply of British farmers.

     

    Another equally worrying aspect for the Johnson government is undoubtedly that it has not yet concluded any kind of free trade agreement with the United States.

     

    Finally, as outlined in more detail, in our newsletters of 29 April 2022 (Brexit update on UK imports), Brexit has caused considerable inconvenience to UK importers and exporters.

     

    Most worryingly is that although the new customs regulations have not yet been implemented, there have been major disruptions and a substantial increase in the costs that small and medium-sized enterprises have to pay in order to export their products to continental Europe. Moreover, this is made even more complicated by the total unpreparedness of UK customs, which are currently not adequately equipped to cope with the new regulations.

     

    In conclusion, it is still very difficult to be able to predict the final outcome of Brexit, but what is certain is that after six years, the signs are not at all encouraging for the UK.

     

     

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