Two reasons why the UK will take generations to recover from the shock of leaving the single market and customs union

Regarding the UK’s post-EU prospects, Boris Johnson has been reaching new heights of pseudo-Churchillian grandiosity. But I was taken by this remark, reported by the Guardian:

Johnson says Liam Fox and his team cannot “ink in” trade deals with other countries now. But they can agree them in pencil.

He’s bluffing isn’t he? He really hasn’t got a clue what he is talking about, has he?

Compare his words with those of former EU ambassador, Sir Ivan Rogers:

Serious multilateral negotiating experience is in short supply in Whitehall, and that is not the case in the [European] commission or in the council…Contrary to the beliefs of some, free trade does not just happen … Increasing market access to other markets and consumer choice in our own, depends on the deals, multilateral, plurilateral and bilateral, that we strike.

43 years of EU membership has left us with a complete dearth of trade negotiators. More, it has left us without a national trade negotiating culture. This will obviously cause problems when we try to negotiate but it has already put us in a terribly dangerous position. Politicians like Theresa May are making decisions without the visceral awareness of trade negotiation which is necessary to inform those decisions. Instead, imbued with high-octane bovine scatological confidence, they are taking grave risks with our country’s future.

The second reason we are heading for a disaster is due to the complexity of modern supply chains. Again, over 43 years, British-based companies have been able to build up complex cross-border supply chains. One such enterprise, with which I am familiar, has hundreds of thousands of goods units criss-crossing EU borders every day. The idea that we are risking customs inspections on such transactions is the stuff of nightmares. Ask anyone who has ever tried to expedite goods through customs. I recall some computer equipment being held up in one country’s customs for over a year. Delays of days and weeks are routine. You simply cannot run efficient modern supply chains with such delays.

The basic problem in our collective UK post-EU thinking is this. We think we are the centre of the world. We still remember most of the globe coloured pink on the map. The world speaks our language. Time starts at Greenwich. The world revolves around us.

Except, of course, it doesn’t. There are 7.5 billion people in the world. The U.K has 63 million people. Post-EU, in the world trade stakes, we won’t even figure as also-rans.

Photo: Some rights reserved by mental.masala

* Paul Walter is a Liberal Democrat activist. He is one of the Liberal Democrat Voice team. He blogs at Liberal Burblings.

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16 Comments

  • This is all predicated on a particular mindset. The division in politics today is whether we surmount obstacles to gain the right sort of globalims or perpetuate systems that serve those at the top.

    Apparently, according to the LIb Dems, we shouldn’t be leaving the EU because we haven’t developed our own trade negotiators. This is basically a `capture stance` as it means we would never leave the EU. Unless of course the Lib Dems were proposing training up new trade negotiators while they were in power. No, didn’t think so. So we perpetuate a subservience to an ideology through the power of that ideology good or bad.

    I wonder how mobile phones are ever bought in the UK – you know designed in USA, made in China, Cobalt from slave labour in Africa – oops, keep looking at the screen while tapping away about fair trade.

    I call the second problem bowing down to `institutionalism` ie putting institutions above trade. May wants frictionless trade. The fact of the matter is that we sell more to them than they do to us. So perhaps we can boycott some of their cheese and wine. Politics abhors a vacuum and if we’ve learnt anything from the past two years people abhor bullying obstructionisgs and demand imaginative, innovative solutions. One thing they don’t want is the status quo on the things that are holding the UK back – unbalanced migration (due to the EU using the UK as a doormat to keep the Euro going thus the UK soaking up Southern Meditteranean unemployment and the lack of FTAs with other countries. It’s like acting as a concubine.

    I just think the LIb Dems are in paralysis – to the EU, to a fixed hyper-globalist view on migration and to thinking that for unemployed Brits (of which where are over a million) as a price worth paying.

  • Delusion and a sense of over importance, tends to go in hand with nationalism. We are better than everyone, everyone respects us and want to help us (because we are special), the only thing holding us back is the dastardly other (Muslims, Jews, English, Americans, Whites etc etc take your pick there’s a dastardly other to suit all strands), then they meet the real world and it tends to go very badly. Not to worry though you can always blame the dastardly other. In the case of the nationalist strand in the Brexit camp I’ll wager they will blame the EU and immigrants, but never themselves.

    Evidence cry the brave Brexiteers, you only need to look at UKIP my brave Brexiteers

    Ukip’s former leader, Nigel Farage, has accused the party’s only MP of preventing it from becoming a radical anti-immigration party.

    In an increasingly hostile war of words with Douglas Carswell, Farage said the Clacton MP, who defected from the Conservatives to Ukip in 2014, had undermined his attempts to equate EU membership with increased levels of immigration.

    https://www.theguardian.com/politics/2017/mar/01/nigel-farage-carswell-stopping-ukip-becoming-radical-anti-immigration-party

    Blame the immigrants not the UK politicians who fail to invest in our people, well saves coming up with a functioning education policy I suppose.

  • William Ross 1st Mar '17 - 10:19am

    Paul

    Forgive me but I cannot see how any single unit can cross EU borders hundreds of thousands of times a day?

    As for being a country of 63 million, we are the fourth largest economy in the World.
    How many major trade deals has the EU done in its long mediocre history. Virtually none of importance, but its so nice to know that they have all that wonderful expertise. ……

    Try to show a little realism.

  • Michael Cole 1st Mar '17 - 10:56am

    Paul Walter: “He really hasn’t got a clue what he is talking about,” I’ve long thought that about Boris Johnson.

    @James: “May wants frictionless trade.” Surely, that’s what a single market is for.
    Your logic is full of holes and false assumptions. ‘Frictionless trade’ with the rest of the world is the stuff of dreams.

  • Single market SHOULD be for that – however it’s come to include an ever-encroaching mass migration scam where they don’t face up to the EURO failure so as to use the UK as a place to soak up some unemployment (saving face) and delaying the inevitable – AND ensuring that we can’t do our own trade deals. We are paying to be part of a club that exports more to us than we do to it!

  • Arnold Kiel 1st Mar '17 - 11:13am

    To add to your entirely correct assessment, Paul:

    Te UK today enjoys access not only to 27 EU member-states, but also to 53 further countries with which the EU has trade agreements.

    No penciling will happen, because no prospective trading partner wants to jeopardise its much more important EU-relationship by violating EU-rules during the Brexit negotiations.

    Extra-European trade deals, apart from being slow and difficult to achieve, will always be less attractive than single market access, because:

    -physical supply-chain integration for industrial products is economically unattractive over long distances
    – the US is the only other high-cost trade partner outside Europe; UK manufacturing will therefore diminish (again)
    – in a greenfield situation in 2020 outside the single market, the UK is no place for any kind of production facility: labor-, energy-, land-, transportation-cost are uncompetitive even at 0 tax
    – UK agriculture is uncompetitive outside Europe and will need even more subsidies
    – Asia’s rich already buy all they want from the UK: central London property, luxury cars, airplane-wings and -engines, investment- and tax-avoidance advice
    – The world’s poor and middle-class cannot afford UK products
    – Populous Asian nations will put the emigration-desires of billions of people on any negotiation table

    Even if all the unrealistic trade-deals Brexiteers dream of became true, the UK would still lose.

  • “As for being a country of 63 million, we are the fourth largest economy in the World.” is that one of those alternative facts we hear so much about William? To be the fourth biggest economy in the world we would have to have a bigger economy than Germany, we don’t. In 2016 the UK was the fifth biggest economy in the world after Brexit it may have become the sixth (France over took us in value on some calculations). Proof cries William, go on then William I will oblige

    In 2016, Top ten countries in nominal terms are : United States, China, Japan, Germany, United Kingdom, France, India, Italy, Brazil and Canada. In ppp terms, Top ten countries are : China, United States, India, Japan, Germany, Russia, Brazil, Indonesia, United Kingdom and France. In top 10, Eight countries are common in both method. Others two are Italy and Canada is in top 10 on nominal basis, while Russia and Indonesia is in top 10 on ppp basis. Contribution of top ten economies is 67.44 percent and 61.21 percent of total global wealth in nominal and ppp terms, respectively.

    http://statisticstimes.com/economy/projected-world-gdp-ranking.php

    UK slips below France in global economy table

    Fall in sterling means Britain now sixth when measured at market exchange rates

    https://www.ft.com/content/7508bf1e-8a46-11e6-8cb7-e7ada1d123b1

  • Arnold Kiel 1st Mar '17 - 11:23am

    @frankie: entirely correct. As it is customary to use the average exchange rate over the period observed, the UK’s falling to No. 6 behind France for the preceding 12 months will become official fact sometime in 2017.

  • Arnold Kiel 1st Mar '17 - 11:45am

    @ Paul, to sum it up:

    The UK will therefore never(!!!!) “recover from the shock of leaving the single market and customs union”, because it will terminally deindustrialize. If that coincides with the demise of an indefensible agricultural sector, no autonomous prosperity will be sustainable outside the big city (ies?).

    In the ensuing service-economy, inequality between skilled (=rich) and unskilled (=poor) service providers will become even more pronounced. The JAMs will disappear, because some will manage very well and most will not manage anymore at all.

  • Jonathan Effemey 1st Mar '17 - 1:10pm

    From here in Manila, I totally agree with this article. All of what has transpired was totally obvious from the start.
    The rest of the world can easily move on leaving the UK (England and Wales?) to sink beneath the waves.
    The world is very joined up now, It is 2017 not 1817.

  • clive english 1st Mar '17 - 2:32pm

    hmm there is no evidence whatsoever that “unbalanced migration” is holding Britain back in any way at all and quite a lot that migration has helped the UK economically. If you want to see what happens without migration try Japan, well into its second decade of a shrinking economy and a welfare system supported by ever fewer tax payers. Now that’s “unbalanced migration” .

  • BoJo couldnt even get Gove to sign a deal in ink and we know how the pencil deal went….

  • Bill le Breton 2nd Mar '17 - 8:29am

    Nevertheless, the single market is regionalism not multilateralism. However the World Trade Organisation continues … viz its Trade Facilitation Agreement coming into force this month : https://www.wto.org/english/news_e/news17_e/fac_31jan17_e.htm

  • The EU has a very strong track record of trade deals as mentioned already above, probably the best in the world, please comment if you believe otherwise. There are plenty of British trade negotiators so I don’t agree with the article on that, I believe Nick Clegg is one example. I would argue that the British have played a leading role in making the single market a success, including trade with the rest of the world. The trade figures speak for themselves. All of this is now at risk.

  • John Littler 20th Mar '17 - 3:06pm

    The web is now swarming with people who have read up on brexit propaganda, lies, selective facts and half truths and now believe themselves to be expert in Trade policy. I am actually involved in manufacturing and exporting around the world and you have not got a clue at what you are talking about.

    Or else they show the purity and extremism of their little englanderisms and are desperate to cut off links with the continent 22 miles away and completely surrounding this little island, even if it causes huge financial damage.

    The little englanders hobbyist hatreds will count for nothing as UK revenues and jobs crash and more severe cuts are applied to public services to try to shore up public finances.

    To any of you little englanders here on a hobby excursion, unfortunately the cuts and job losses cannot be just applied to you as the culprits but will affect everyone. There will be a huge turmoil which will turn out Teresa May and her little nationalists.

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