The podcast discusses the aftermath of Brexit in Britain, exploring the negative impact on trade relationships and regulations. It analyzes the government's response and the potential long-term effects, including the decline of Britain's reputation and global standing.
Brexit has posed significant trade barriers for UK companies, making it harder for them to maintain relationships in Europe and access European markets.
UK manufacturing supply chains heavily reliant on the single market have been negatively impacted by Brexit, leading to a shift in manufacturing activities and a loss of well-paying jobs.
Deep dives
Effects of Brexit on British companies
British companies that trade with the EU are facing significant challenges due to Brexit. Erecting barriers to trade with the EU has made it harder for these companies to maintain trading relationships in Europe, expand their businesses, and access European markets. For example, a company providing gas turbine servicing operations to European companies now faces difficulties due to the need for permits to bring staff over. This has resulted in delays in servicing and loss of business to European competitors. Small businesses have also experienced challenges, with a decline in product trading relationships and the need for additional licenses. These trade barriers pose a significant disadvantage for UK companies compared to their competitors in the single market.
Negative impact on UK manufacturing supply chains
Brexit has had a negative impact on UK manufacturing supply chains, which heavily rely on the free movement of goods within the single market. Companies that export parts and components to be assembled in the EU now face difficulties as these supply chains were built within the single market framework. Manufacturers in the UK are being squeezed out of high-value integrated European supply chains, which may result in less investment and less competitive advantage for the country. The impact is gradually leading to a shift in manufacturing activities and a loss of well-paying jobs, affecting the overall productivity and economic growth of the UK.
Unforeseen bureaucratic challenges and regulatory issues
Brexit has created unanticipated bureaucratic challenges and regulatory issues for British businesses. Outside the single market, UK companies need to comply with different regulations in each EU member state, hampering their ability to trade smoothly across the European continent. For instance, businesses that previously had streamlined operations now face complications in certifying and complying with various regulations specific to each country. This situation has led to difficulties in servicing European clients, disrupted distribution and packing operations, and resulted in the relocation of business activities to EU member states. The increase in paperwork, compliance costs, and regulatory discrepancies has posed a significant obstacle for UK businesses, making it harder to compete and maintain their market positions.
Long-term implications and potential decline
Brexit is not only about immediate challenges but also has long-term implications for the UK. It has affected the country's reputation internationally and created perceptions of the UK as a less attractive investment destination. The slow puncture effect, where the UK gradually faces relative decline, is a concern. As the UK becomes increasingly isolated and faces ongoing trade frictions, difficulties in attracting investment and maintaining its position in the global market could arise. Without a clear and compelling post-Brexit strategy focused on creating a stable regulatory and political environment, the UK may struggle to define its role and value outside the EU.
Opinion polls now suggest that about two-thirds of British people think that Brexit has failed. So was it all a terrible mistake? Gideon talks to FT colleague Peter Foster about his new book, What Went Wrong With Brexit: And What We Can Do About It
