Costs from regulatory divergence likely to be at least as important as border costs in the long run, but not immediately 2/
A few thoughts on how Brexit is likely to affect the UK economy in 2021 - with the caveat that much remains uncertain 1/
Costs from regulatory divergence likely to be at least as important as border costs in the long run, but not immediately 2/
However, I do not anticipate shortages of essential goods, as imports can be expedited if needed, e.g. air freight, priority customs processing 3/
- Red tape, e.g. need for customs workers wastes resources & lowers productivity
wasting resources
- Tariffs (if no deal)
- Rules of origin (if deal)
- Lost market access for services
https://t.co/07wNehNn7z 5/
Fwiw I get told that economics and process considerations (haulage, logistics, manufacturing etc) play limited role in #brexit inner circle decision-making. Belief it\u2019ll be messy but business will adjust. Q is more short term political embarrassment. 2/2
— Peter Foster (@pmdfoster) December 13, 2020
Consumer price rises likely to be moderate (low single digits?) but will gradually erode living standards similar to post-referendum https://t.co/l7Zyegk7MZ 6/
Cost of living
— Thomas Sampson (@thom_sampson) June 22, 2020
Leave vote caused sterling to fall by around 10% raising import costs & consumer prices
Breinlich, Leromain, @DennisNovy & I estimate depreciation increased cost of living by 2.9% by Q2 2018, costing average household \xa3870 per yearhttps://t.co/FsI5enlGfk 4/
https://t.co/d2r6M1GlvB 7/
Which industries are most exposed to EU tariffs under no deal?
— Thomas Sampson (@thom_sampson) December 7, 2020
12 sectors (HS 4 digit) have exports to the EU above \xa3350 million & would face an average EU tariff (ad-valorem equivalent) of at least 10% under no deal
Motor vehicles, clothing, meat & dairy feature prominently
time passes. 8/
And, as the Bank of England has noted, monetary policy cannot offset the impact of a permanent negative supply shock 10/
costs to tax payers rather than solving underlying problem of higher trade costs 11/
https://t.co/2ZULlcIotu
Excellent @UKandEU report on implications of new deal. @anandMenon1 @jdportes @jillongovt: https://t.co/OV0XXk5ypk
Interesting @JohnSpringford @tomashirstecon piece on interactions between Brexit & Covid:
https://t.co/pgasjQHwzw
More from Brexit
The likelihood of continued trade problems for a £650 bn trade relationship is why there should be a huge cross-government effort led by the Foreign Office and Department for International Trade to put in place the necessary resources to seek best results.
There isn't.
So the UK's relationship with the EU currently consists of two not particularly good deals and no consistent effort to manage current problems or prevent future ones. Joint committees are a second order problem to putting in place the right internal structures.
But that's been the consistent UK problem in relations with the EU since 2016. Lack of focus on getting the right internal structures, people, asks, strategy, too much attention on being tough and a single leader.
News just in. This doesn't necessarily mean the right structure being put into UK-EU relations. I suspect Frost's main role is to ensure no renegotiations with the EU.
Also, wonder what this says about the PM's trust in Michael Gove?
NEW: David Frost is joining Boris Johnson\u2019s Cabinet! The peer has been appointed a minister at the Cabinet Office, effective March 1.
— Sebastian Payne (@SebastianEPayne) February 17, 2021
Frost will also chair the partnership council overseeing the UK-EU trade deal and oversee reform to "maximise on the opportunities of Brexit"