Trade takes centre stage
MANY moons have passed since anyone paid any attention to the UK’s monthly trade figures. These days it is gross domestic product, the total output of the economy, which is seen as the barometer of economic performance.
Britain outside the EU is changing that. As the country seeks to assess the effect of Brexit, it is impossible to ignore the impact on trade flows. After nearly 50 years as part of a trading bloc, being outside is going to make a big difference. January’s data is truly shocking. UK goods exports to the EU tumbled by 41.7pc and imports dropped by 28.7pc.
There are multiple reasons for this dramatic outcome. Goods were stockpiled in the final months of 2020 in anticipation of Brexit. Covid-19 restrictions meant that trade volumes fell off a cliff with border closures. Containers have been piling up in the wrong places because of shipping and air freight interruptions.
Huge confusion has raged over the Northern Ireland protocol affecting commerce with Ireland, the UK’s top trade partner.
Even if we were to regard the January data as an aberration, there is still much to worry about. The erection of non-tariff barriers is causing great damage to niche food industries from Scottish seafood to Stilton cheese. Customs bureaucracy, health certifications, a £180-charge for exported items among other things is proving devastating. And we should not discount the unwanted possibility of tit-for-tat discriminatory measures.
Talking trade rather than putting up barriers can have enormous benefits. We saw that this month when the US lifted its tariffs on single malt Scotch. Similarly, Boris Johnson’s upcoming trip to New Delhi should pave the way for freer trade and investment.
The paradox of Britain’s January balance of payments with the EU is that the bigger fall in total imports than exports actually meant the deficit narrowed emphatically from £6.5bn to £1.6bn. That, perversely, should boost GDP in the first quarter of the year. It comes as no surprise that those suffering most from January trade disruption were Irish food producers and German car makers. What is critical for the UK is that the ace in the hole, financial and professional services exports, are not stymied.
The migration of euro-denominated share trading to Amsterdam has been a setback. The reaction in the City is moving rapidly to embrace change by easing listing rules and getting behind the fintech revolution. Being flexible and fleet of foot is everything, as the vaccine roll-out demonstrates.
Tinker tailor
THE ‘Made in Britain’ label on clothing was once a source of pride. The decline for Marks & Spencer began when a new generation of executives decided to switch fashion production from the UK to the Far East so it could compete better. The result was poorer quality and a blow to M&S’s reputation for being a cut above the rest.
One applauds the re-shoring of the rag trade to the UK, but there has been a betrayal. Successful online retailer Boohoo failed UK garment-making by sourcing from sweat shops to which it claimed no connection. An excoriating report by Alison Levitt QC knocked that on the head. What is galling is that lousy conditions in Leicester textile factories besmirch the reputation of everything made in the UK.
Burberry’s classic trench coat has been manufactured in Castleford, Yorkshire for more than five decades with the company’s signature plaid lining produced at nearby Keighley. The brand is an enduring triumph for global Britain as shown by a trading update predicting sales 28pc to 32pc higher in the fourth quarter.
It would be terrific if all UK clothiers operated to Burberry standards.
Environmental, social and governance (ESG) investing demands companies selfregulate. But some do not. This makes the proposal by the Commons Environmental Audit Committee to create a Garment Trade Adjudicator an attractive option. Made in Britain needs to kite-mark the highest standards in the workplace.
Labour canard
AMONG the current big lies in politics is the charge by Labour’s deputy leader Angela Rayner, Jeremy Corbyn and Rachel Reeves (she should know better) that Serco has gobbled up £37bn of our money through test and trace. In a documented research paper, Full Fact finds the claim to be false since the vast majority of cash spent on the system does not go to Serco. Chief executive Rupert Soames deserves an apology.