The bill for Boris Johnson’s Brexit is coming in and it’s punishingly steep
You would have to possess a heart of stone not to weep with laughter at some of those who are now suddenly complaining about Brexit. It is a bit late for Northern Ireland’s Democratic Unionist party, those lusty sponsors of the great experiment with the UK’s prosperity, to be wailing that they have been betrayed. I smiled to see that Roger Daltrey, the Leave-supporting lead singer of the Who, has joined the chorus of rock stars furious that the post-Brexit visa rules will ruin their prospects of touring across the Channel. Mr Daltrey will have to sing Won’t Get Fooled Again to himself before moving on to Boris the Spider and I Can’t Explain.
It is particularly rending for the soul to witness the rightwing press discovering that the cause they so noisily championed is not the nirvana that they sold to their readers. They were cheering when Boris Johnson flourished the Brexit deal that he concluded on Christmas Eve and proclaimed: “This is a cakeist treaty.” The UK would be having the sweet stuff and eating it by gaining lots of shiny new benefits from being outside the EU while still enjoying the historical advantages of frictionless trade with its closest neighbours.
All those acquainted with Mr Johnson and his casual relationship with the truth will have taken that with a juggernaut of salt. Consider the prime minister’s specialist subject of cake. Anyone trying to take a fresh cream cake across the Channel now does so at the risk of having it impounded at customs because it is a dairy product. A Dutch TV report, which has since gone viral, shows border officials confiscating sandwiches from motorists arriving in the Netherlands from the UK. One driver agrees to surrender the meat in his sandwich, but pleads to be allowed to hang on to the bread. The frontier guard responds: “No, everything will be confiscated. Welcome to the Brexit, sir.”
Comedic tales of travellers being deprived of their snacks are the funnier side of an otherwise deadly serious story. The bill for Mr Johnson’s Brexit is
coming in and that bill is a punishingly steep one. It is being paid by the fishing fleets in Scotland and the West Country that are tied up because they are unable to export their catch. It is being paid in a slump in activity at Welsh ports because the trade they used to handle is being diverted to France and Spain. It is being paid in billions of pounds worth of transactions disappearing from the City of London, which may not be much loved by all that many Britons but employs a million people, because the deal was so threadbare for the financial sector. It is being paid in car manufacturers shutting down some production because they can’t get parts across borders in time. It is being paid in tonnes of British meat exports rotting at European harbours. It is being paid by many UK businesses, especially the kind of smaller, exporting enterprises that the Tories always profess to love, which are being overwhelmed by the heavy burdens and high costs of the thin deal the prime minister rushed through parliament at the turn of the year.
You will recall that it was one of the Brexiters’ signature promises that departure from the EU would be a liberating moment. A buccaneering free trade Britain would flourish as wealth creators were unshackled from the stifling regulatory chains of Brussels. What Brexit has actually done is impose a vast amount of cumbersome and costly new bureaucracy on exporters and importers. British companies have been put in a chokehold of regulations, customs declarations, conformity assessments, health and rules-oforigin certifications, VAT demands and inflated shipping charges. While some ministers talk about reducing worker protections in the name of “cutting red tape”, a move for which there is little demand even from employers, Brexit is ensnaring British businesses in writhing snakes of the stuff. I guess Jacob Rees-Mogg, he who thinks that fish unable to reach EU markets are “happier” knowing they are British, will claim that struggling British exporters should be patriotically proud to be throttled by red, white and blue tape.
Multinationals are not complaining so much because they are often wary of picking a fight with government and have resources, staff and facilities that make them better able to cope. The greatest burdens of Brexit are falling on smaller enterprises, collectively employing a lot of people, who trade with Europe. As my colleague Toby Helm reports in this newspaper, they are hurting badly. The post-Brexit world is so tough for many that the government’s own trade specialists are advising afflicted British entrepreneurs to relocate some of their operations out of the UK and to the EU. This has to be one of the greater absurdities of Brexit. British companies are being told by the British government that the way to survive is to lay off British workers and transfer their jobs to folk across the Channel.
Ministers like to insist that we’re experiencing nothing worse than “teething problems” as exporters and importers come to terms with the most radical change to the way we have traded with our neighbours since Margaret Thatcher pioneered the creation of the single market more than 30 years ago. For sure, snafus and bottlenecks at borders caused by faulty documentation may be smoothed out over time as companies become accustomed to dealing with so many complex new procedures. But a lot of these problems are not temporary rites of passage into a brave new world – these are permanent liabilities. A massive increase in border friction and all the expense that comes with it are baked-in consequences of Mr Johnson’s Brexit. The thicket of bureaucracy imposed on companies means enduring and added costs for their businesses. It does not feel like “teething problems” to them. It is more like root canal surgery performed without any benefit of anaesthetic. This was a predictable – and predicted – result of wrenching the UK out of the single market and the customs union. Thinktanks, some politicians, some business leaders and some newspapers, including this one, warned about the job-costing and investment-sapping consequences of erecting high new barriers to trade. But it is fair to say that this issue was never front and centre of the arguments that raged about Brexit. Evangelists for the adventure tended to dismiss the impacts on companies as mere minutiae compared with immigration levels or the meaning of sovereignty. Remainers struggled to find ways to make technical-sounding issues matter to the public. Among many voters and many politicians, the great benefits of being inside the single market were taken for granted right up until the moment when they vanished.
Some did understand that there would be a price to be paid. One of them was Boris Johnson. He knew enough about the importance of this issue to fib about it. On Christmas Eve, when he was hailing his agreement with the EU as a fantastic new chapter in our island story, he claimed that “there will be no non-tariff barriers to trade”.
This was self-evidently untrue even at the time that he said it. His government accepts that companies will collectively need to employ 50,000 additional customs agents in a postBrexit world. Industry figures suggest that less than a quarter of that number had been trained by the time Britain left the single market.
The HMRC estimates that Brexit demands that British companies complete 215m additional, often highly complex, documents a year with a mirroring amount of extra paperwork also being generated by EU counter-parties. The cost of that alone on British businesses is thought to be around £7bn a year. If you make exporting and importing more difficult and more sluggish, at the same time as making crossborder transactions a great deal more costly, then it stands to reason that there will be less trade.
Faced with the heavy burdens imposed by Brexit, some companies will stop exporting to the EU because they can no longer find any profit in it. Other companies will move elements of their operations – and, in some cases, all of their business – out of the UK to inside the EU. Investment, jobs and tax revenues that would have benefited the UK will in future go to countries in the EU instead. This is already happening. Other companies will simply find that Brexit has left them unviable. Overwhelmed by the new costs, they will go to the wall. That will be especially so for those who were already struggling to survive because of the coronavirus crisis.
British business lost to European competitors. British entrepreneurs crushed. British jobs exported abroad. Welcome to the Brexit.
• Andrew Rawnsley is Chief Political Commentator of the Observer
British companies are being told by the British government that the way to survive is to lay off British workers and transfer their jobs to folk across the Channel