Pandemic plus Brexit equals trouble
As if a pandemic accompanied by a global economic downturn were not trouble enough, manufacturers in Britain are confronting the intensifying possibility that their country may soon crash out of the European Union without a deal governing future commercial relations across the English Channel.
The prospect of a nodeal Brexit has long threatened to trigger jobkilling, investment-discouraging mayhem in Britain and in major European economies, impeding the flow of goods through ports and rendering uncertain the rules applying to major industries — from finance to agriculture to manufacturing.
Now, that prospect is growing increasingly real. A transition period during which nothing has changed is set to expire at the end of the year. Barring a trade deal between Britain and the European Union, the transition will end abruptly, with the terms of trade unclear. Given that Britain sends nearly half its exports to the European bloc, a rupture in dealings could bring profound economic damage.
Prime Minister Boris Johnson of Britain has long sold Brexit as the beginning of a glorious new era that will bolster his country’s fortunes through expanded trade with the world. But his primary aspiration — a trade deal with the United States — was always more about political optics than economic gains. An agreement looks less likely with the electoral defeat of President Donald Trump, a Johnson ally and Brexit champion. The incoming American president, Joe Biden, has favored multilateral trade blocs, such as the one that Britain is abandoning.
British factories are bracing for fresh pain. Already battered by the pandemic, which has played out with especially lethal force in the Britain, and suffering lost sales in the face of the global recession, manufacturers in England are strongly inclined to view Brexit as another wound to manage and not the spur to commerce portrayed by the government.
Only 3% of small and medium- size factories express confidence that Brexit will have a positive effect on their efforts to recover from the pandemic, according to a survey released Monday by a pair of trade associations: the South West Manufacturing Advisory Service and the Manufacturing Growth Program.
Small and medium- size manufacturers “have been battered by COVID- 19, and now they have the additional challenge of recovering with Brexit looming large on the horizon,” Nick Golding, managing director of the manufacturing advisory service, said in a statement accompanying the release of the Manufacturing Barometer. “It’s like a perfect storm for management teams trying to plan.”
The report draws on surveys with more than 400 companies in England, polling them on their experiences between July and September. It found that 47% were confused about how the departure from the European Union would affect their businesses — a worrying finding given that 62% overall said their businesses remained below volumes before the pandemic.