How many times have you and I turned on the TV only to hear that yet another business has decided to close the books, pack the bags, and head over to the continent opposite the Channel?
Ever since 2016 businesses have been left in limbo about the future economic relationship the UK will share with our closest and valuable trading partners of the European Union. Today, we can see from the announcements of the recent past since that vote, that indeed what the business community promised us would happen- actually has.
They told us that headquarters will go, that production will go, and ultimately that jobs will go. And whether one believes that this is the product of ‘short-term pain, and long term gain’, rest assured, that this is not even the real beginning of the long painful road ahead as a result of letting business down, combined with the uncertainty of leaving the EU.
The fallout from the disastrous Brexit vote and the even more tricky negotiations are scaring businesses to death, and continuing apace. House of Fraser has announced it will be closing down 31 out of 59 stores. Airbus and BMW both warned of the severe consequences of a disorderly Brexit. Airbus closing plants in the UK would have an especially bad impact on jobs in Wales, where Airbus has a major plant, that inexplicably voted for Brexit given it has the most to lose of almost anywhere from leaving the EU.
A Baker McKenzie survey of 800 business leaders in France, Germany, Spain, the Netherlands, Sweden and Ireland found that nearly half of respondents say their company has reduced investment in the UK since the Brexit vote. No wonder therefore that many hundreds of thousands demonstrated against the Brexit madness not long ago… This isn’t just bad for businesses, but bad for communities and families, and when I say ‘communities’ I mean those in which the employment provided by those firms is the life support for the local area. They are well and truly irreplaceable and are the backbone for many areas.
It appears that the Brexit vote has already cost the UK between £20bn and £40bn. The ONS reported that in April manufacturing output dropped 0.5%, which is the largest fall since May 2017. GDP growth was 0.1% in the first quarter and the National Institute of Economic and Social Research has forecast it will be only 0.2% in the second quarter. As a consequence, the pound continues to slide on the obvious economic weakness. The pound is worth more than 10% less now than on the eve of the Brexit vote. The bad news continued with the trade deficit rising to the second highest on record.
Brexiteers have claimed that other countries are “queuing up” to strike trade agreements with Britain after it leaves the bloc, and that the supposed benefits of leaving the EU would not be realised under the PM’s plan.
In reality, though, the situation is more complicated. First of all, there isn’t a lot of evidence that signing new free trade agreements (FTAs) would deliver an economic boost anything like enough to compensate for the hit from leaving the EU single market and customs union. The Institute for Fiscal Studies says “simple arithmetic” and “a basic understanding of trade” show the gains from such FTAs are likely to be small.
But another problem is that countries aren’t exactly queuing up to do deals with Britain – or where they seem to be, things aren’t as straightforward as they appear.
A previous US-EU attempt at a trade deal, called the Transatlantic Trade and Investment Partnership, failed after Mr Trump suspended negotiations because it wasn’t favourable enough to the US. But on this side of the Atlantic, even that deal was equally controversial because of US stipulations on scaling back welfare and hygiene rules for farm animals, as well as opening up public services like the NHS to US private corporations.
With polling showing the public firmly against US foodstuff such as chlorinated chicken coming to Britain, any deal likely to be acceptable to Mr. Trump would be sure to contain extremely unpopular and controversial elements – particularly if it were to be negotiated at speed.
The path therefore although seeming long and tough, is a simple one in order to restore certainty and give something for our businesses to cheer about in all this. A close relationship with the European Single Market and Customs Union, is the first stop. Chequers or none, full membership of the EU, or falling back to WTO rules- businesses are looking at the clock and weighing their options…Our time in trying to keep them here is running out.
Stephanos Iannou is a Conservative Party Councillor for Southgate ward in north London, London Borough of Enfield. Stephanos is also Chairman of the Conservative Friends of Greece group, that aims to strengthen the bi-lateral ties between the United Kingdom and the Hellenic Republic.