It's OUT! The first #Brexit Briefing of 2021...which explor…

So take the example this week, where the @Foodanddrinkfed raised the issue that UK-hubs for food and drink were "unworkable" since goods that came in from the EU were attracting full tariffs when the were spun back into Ireland or other EU members /2

https://t.co/PY0ernQ73u

@Foodanddrinkfed They were backed by other EU associations - and both said they would lobby UK govt and @EU_Commission to 'fix' what they presumed was an "unintended consequence" of the deal....except that both EU officials and UK govt have basically shrugged. The deal is the deal. /3

@Foodanddrinkfed @EU_Commission This is in no way confined to food industry - clothes and retailers are also hard-hit.

But lots of industry has wrongly bet that 'common sense' and 'self interest' would prevail once the nasty negotiations phase was out the way...but that's not the signal being sent. /4

As one EU official puts it: “You can’t expect the UK to remain the food import hub for the EU. It’s not sustainable, and makes no sense in the mid-to-longer run." And that applies to financial services, clothing, retail goods....a bureaucratic curtain has descended. /4

So what does that mean?

Well on the 'micro' front it means that businesses will start to split their supply lines between the EU and the UK...shrinking their UK footprint as a result. Take @AstonChemicals which supplies chems to cosmetics industry.... /5

@AstonChemicals As @DanilLoughran tells me, they shipped their last UK-EU load on Dec 18....now all the EU product will go into Poland. As a result her UK warehousing staff headcount has shrunk by one third. /6

@AstonChemicals @DanilLoughran Why? Because importing all the chemicals into the UK for distribution to EU makes no sense - they need dual registration, risk tariffs because of rules of origin + all the border delays and paperwork. So she hubs from Poland. /7

https://t.co/KwtJIWTNoa

@AstonChemicals @DanilLoughran It's a similar issue for Premium Plus UK, but as a dental devices importer, their issue is medical services directive that means EU importers must be responsible for goods them import (a legacy of bursting breast implants)...but makes it non-viable to hub from UK too. /8

@AstonChemicals @DanilLoughran For others like @reneewatson77 of Curiosity Box science kits, it's more wait and see if it makes sense to pay for dual certification - EU 'CE' mark and the UK's UKCA mark - which will cost her £20,000 her small business doesn't have. /9

@AstonChemicals @DanilLoughran @reneewatson77 Others like Kiran Tawadey of @hampsteadtea will get through by shift processes - more warehousing in German, but that means bigger loads and £65k-£75k to her base costs. How long she keeps basing of out the UK she isn't sure /10

https://t.co/4DIjZB00bX

@AstonChemicals @DanilLoughran @reneewatson77 @hampsteadtea All this will make life very interesting (to put it mildly) for those at the sharp end like Paul Jackson's @ChilternDist which has invested £1m in recent years in temperature-controlled distribution...and now waits to see how the border shakes down in practice. /11

@AstonChemicals @DanilLoughran @reneewatson77 @hampsteadtea @ChilternDist Which is to say that #Brexit impact is not really about 'delays at the border'...it's the permanent, structural disadvantage of UK businesses vis-a-vis EU counterparts. i.e Those 'non-tariff barriers' that @BorisJohnson said did not exist (in a universe of alternative facts)/12

@AstonChemicals @DanilLoughran @reneewatson77 @hampsteadtea @ChilternDist @BorisJohnson And the idea that UK business can 'just do more exporting to the rest of the world' overlooks the basic fact that they could do that as an EU member - but didn't, for a variety of existing reason. viz someone else doing it cheaper usually. /13

@AstonChemicals @DanilLoughran @reneewatson77 @hampsteadtea @ChilternDist @BorisJohnson Brexiters love to defy economic gravity (particularly when it comes to services) but the economic reality is that competing with advanced economies on your door step is what keeps you productive - it provides economic muscle tone, because you have to compete /14

@AstonChemicals @DanilLoughran @reneewatson77 @hampsteadtea @ChilternDist @BorisJohnson As @JohnSpringford explains to me beautifully, it is about specialisation and exchange: “The UK provides advertising to big business in Germany and big business provides the UK with cars" and it that process that we’re weakening by #Brexit /15

@AstonChemicals @DanilLoughran @reneewatson77 @hampsteadtea @ChilternDist @BorisJohnson @JohnSpringford The net result is that UK workers shift into lower paid, less productive jobs over time and the UK will end up poorer relative to its EU peer-economies. That may even happen without anyone noticing - we don't live the counterfactual. /16

@AstonChemicals @DanilLoughran @reneewatson77 @hampsteadtea @ChilternDist @BorisJohnson @JohnSpringford It may even be that the politicians who rode to power on the back of a bus emblazoned with alternative facts will continue to prosper politically, but you can't escape that they have signed essentially a reverse-cooperation agreement with the EU. Truly unique thing to do. 17/ENDS