HOW MUCH LONG-TERM DAMAGE WILL BE DONE TO REPUTATION OF UK?
THIS ARTICLE APPEARED IN IRISH EXAMINER FEB 22nd 2019
As the Irish Government puts together legislation to deal with the potential fallout from a ‘no deal’ Brexit, the situation in the UK becomes more farcical by the day. Donald Tusk made a fair point a few weeks back when he queried as to what part of hell is reserved for the Brexiteers who ploughed ahead without any plan or notion as to how the UK might disentangle itself from a legal and economic arrangement that has prevailed since 1973. The notion that the UK could exit easily and painlessly was always ridiculous, but those who voted for and pushed Brexit had as much understanding of how the world works as a catholic priest has about marriage.
It is becoming more apparent by the day that the toll being taken and that will be taken on the UK economy could be quite serious. Nissan, Toyota, BMW and Ford have already made significant announcements about how a ‘no deal’ Brexit will impact on their activities in the UK. This week Honda announced that it was ceasing manufacturing in Swindon by 2022, with the loss of 3,500 jobs. While Honda has made it clear that this decision was not motivated by Brexit, the truth is that when decisions are being taken about where to locate mobile manufacturing investment, why would one want to invest in a country that is walking away from free access to a market of 500 million people and a trading block that has and is continuing to negotiate trade deals with many other third countries. Furthermore, the farcical nature and behavior of UK politics over the past three years would not exactly entice investment in the jurisdiction. The future of car manufacturing in the UK is now under serious threat.
Over the past couple of years I have generally believed that the UK would eventually do a deal with the EU and that at that stage, the UK economy would rebound strongly as the paralysis caused to business investment and consumer behavior by the intense uncertainty would dissipate. However, with just thirty-five days to go to the exit date, we are no nearer a resolution and the damage being inflicted is becoming more permanent in nature.
It is hard to know what Theresa May’s strategy is or indeed if she has one at all. Perhaps she will take it to the wire and then present Parliament with a choice between her Withdrawal agreement and a hard Brexit. If that is her strategy, then it is a very risky one that could backfire very badly. The resignation of the seven Labour MPs from that dysfunctional party due to a combination of anti-Semitism and the party’s handling of Brexit is too little too late. The dysfunctional leadership of Jeremy Corbyn has been very obvious over the past couple of years, and he has always been strongly anti-EU. Why it took those seven until now to stand up and walk away from the party is anybody’s guess. More bizarrely, Corbyn has just re-admitted that radical left firebrand from my youth, Derek Hatton, to the party. Then three brave Tories jumped ship to follow the Labour renegades. One could not make it up, but it does not bode well for the UK and its reputation.
Only a fool or a charlatan could claim wisdom on what happens next, but the long-term damage to the UK economy and more particularly its reputation as a place in which to live, work, invest and do business, remains to be seen.
From Ireland’s perspective, the shenanigans across the Irish Sea, makes us look positively sane and sensible at this juncture. In a few weeks, Ireland looks set to become the only English speaking country in the EU (Malta aside); Cork will be the second largest English speaking city in the EU and Waterford will be the fifth largest. That surely will mean something positive for us?
Last week, the Central Statistics Office (CSO) published merchandise trade data for the full year, and it makes for pleasant reading. Overall merchandise exports expanded by 14.8 per cent, with sales to the Euro Zone expanding by 20.5 per cent, and the region accounted for 35.8 per cent of our total exports. Mind you, the increase of 38 percent in exports to Belgium does show how exports of pharmaceutical produces through that country distort the picture. Exports to the UK declined by 2.2 per cent, and the UK’s market share for Irish exports declined to 11.4 per cent. However, for food and live animal exports, the UK still accounted for 36.8 per cent of total export sales from the sector. Therein lies the challenge, particularly given the comments by Michael Gove this week in relation to the imposition of tariffs on agri-food imports in to the UK in the event of a no-deal Brexit.