Brexit is already causing shortages. In Northern Ireland, the shelves of supermarkets are emptying, because they are unable to get their supplies from mainland Britain, due to all the new paperwork and regulations that now need to be complied with, as a result of Brexit. Its reported that, in mainland Britain, at least one carmaker will have to stop production in the next week or so, because of similar problems getting components on time from Europe, so destroying the Just In Time systems that all modern production is based upon, and which reduces costs of production. Yet, this is just the start. At the moment, Britain is being cut slack by the EU, and the UK has itself had to abandon all checks on goods coming in to the country from the EU, to try to reduce potential bottlenecks. And, everything is still at a low level after Christmas, with many companies able to rely on the stockpiles they built up last year prior to the imposition of the Brexit madness.
The most obvious manifestation is the empty shelves in Northern Ireland. Last year, Boris Johnson, within days of signing the Northern Ireland Protocol, as part of his Withdrawal Agreement with the EU, tried to deny the implications of the deal he had just signed. He denied that it would mean a border in the Irish Sea, and so inevitable checks and rules and regulations on trade between Northern Ireland and mainland Britain, as the only way of avoiding a border on the island of Ireland itself. As with all the other nonsense spouted by the Brexiters, it was a lie. Johnson said, anyone who hands you a form to fill in just refer them to me, and I will tell them to put it in the bin. Well, here we are, and the reality is that businesses importing goods to Northern Ireland from mainland Britain, are facing those goods not being delivered, because their mainland suppliers have not completed all of the many bits of paper now required as a result of Brexit. Just the costs alone of complying with all of the new regulations that Brexit involves is pushing up costs, in some cases to a degree that it means that the trade itself is no longer viable.
The DUP, and some of the Brexiteer backwoodsmen, of course, are demanding that Johnson do what he said, and tells suppliers to put the paperwork in the bin, that he renege on the Protocol, and the Withdrawal Agreement, thereby, breaking international law. But, Johnson was forced to abandon any such thoughts only weeks ago, when he had to scrap those provision of the UK Internal Markets Bill. The Protocol does allow Britain to suspend it, under Article 16, in cases of dire emergency, but its not clear that a failure of British businesses to have produced the necessary paperwork, and to have done the required compliance with regulations qualifies as such, especially as much of that is down to the fact that Johnson to the last minute told they would not need to, and that the government never provided business with any detailed information on what procedures they would need to comply with. If Britain did use Article 16, then its likely that the EU will impose sanctions on Britain, including tariffs, which will cause even greater problems for British companies across the country.
The simple answer for companies in Northern Ireland would seem to be to simply change their sources of supply to the Republic. That would avoid any such paperwork, because no border exists between the Irish Republic and Northern Ireland. It is just one manifestation that Brexit inevitably means that Northern Ireland will be drawn closer into an economic and political relationship with the republic, leading to reunification of the island. But, that is one reason that companies in the North, will be currently reluctant to do that. It would be seen as a political act on their part, by the very DUP that supported Brexit, and helped to create the current chaos. The other immediate reason is that businesses in the North will have contracts for supply with mainland businesses, lines of credit and so on that they will not want to cancel unless they have to. Especially for some of the large supermarkets that are branches of the main British supermarkets that is the case, as they will be supplied from the same warehouses in Britain that supply the British stores, and which get lower prices because of the scale of their purchases.
But, they face an inevitable problem. For ordinary households in the North, facing rapidly emptying shelves, the answer is simple - just drive across the border, and shop at supermarkets in the Republic! Again, it creates an inevitable dynamic towards reunification, but for the Northern Ireland businesses, it means either change your sources of supply to the Republic, or yourself face losing business, as your customers shop in the South.
But, similar problems are going to affect the mainland too. Its not answered by Britain having dropped all checks on goods coming in from the EU, because modern just in time production systems means that components move back and forth across the border with the EU, on average about four times, before they enter the final product. Britain can allow a component into Britain without checks, but then when it has been worked on here, it has to go back to another EU producer, at this point it faces all of the regulations and checks in relation to country of origin, compliance with EU standards and so on, which means it gets delayed. Then it gets sent back to Britain, again there may be no checks, but after being worked on again, it then faces the checks all over again, being sent to Europe. That causes delays and costs, all of the time meaning that capital is tied up unproductively increasing the rate turnover time, and reducing the annual rat of profit. It means increased costs of production in Britain, and a lower average rate of profit, making production in Britain less and less competitive or worthwhile.
It means that over time, more and more business will move out of Britain and into the EU. As a result, Britain will become more and more dependent on the EU for its survival, and so more and more subject to the will and whim of the EU. Such is the reality of taking back control.
At the moment only a relatively few products are not getting through to the big supermarket chains in Northern Ireland and most shelves are pretty full. The real concern of Tesco, Sainsbury's and Asda etc is that up until 31 March simplified rules are being applied. The situation may become much worse when they don't.
ReplyDeleteThe DUP is complaining of having been 'screwed over' and blaming everyone else. Yet another example of Brexit supporters blaming Remainers for the effects of Brexit.
From reports, the bureaucracy between Scotland and Northern Ireland is quite efficient so the problem does not lie in inadequate infrastructure but on the lack of preparation of companies and the complexity of dealing with different requirements applying to different products that are all in one container. This problem isn't going away and companies are asking the European Commission to help. Another example of Britain taking back control!
As you say, the alternative is for the British to invoke Article 16 of the Northern Ireland Protocol, which would be another example of bad faith and would undermine the whole Agreement. The Tories are not going up against the EU over the North of Ireland.
The effects of Brexit in making trade more cumbersome and expensive for Britain's exports to the EU also applies to trade with the south of Ireland and similar shortages of products have occurred there. Again trade through Dublin port has not been up to its usual level although some trucks have been held back either at the port or point of departure in Britain. All sorts of extra costs and lack of supply affects people in the South who would have bought on-line from Britain, including from Amazon. It all adds up to the unpopularity of Brexit on the island.
Sraid,
ReplyDeleteThanks for your comments, which shows the importance of having on the ground reporting, rather than relying on the British media. As you say, the initial relaxed rules will not last long, and then if the current situation is anything to go by, more serious difficulties will be encountered. Already the reports of what is happening with Scottish fisheries indicates the problems ahead. Its interesting though that the reports have focused on Scottish fisheries, because you'd expect that the English fisheries, who were overwhelmingly pro-Brexit must be having the same problems.
What you say about the relation between Scotland and Ireland is interesting. I remain opposed to Scottish independence - though also militantly in favour of Scotland's RIGHT to self-determination - but Brexit means that such independence now seems a real possibility. One saving grace might be if Scotland and Ireland became more closely related as independent states, within the EU.
Johnson may try to threaten to invoke Article 16, both to assuage his Brexiters, but also to test what EU response would be/whether he could get more flexibility, but, as you say, he's not going to do it in the face of opposition from the EU.
I'd also see that in the context of the Republic having already started to re-orientate its trade with the EU, by the introduction of the new larger bulk carriers and so on. A situation with both Scotland and Ireland in the EU creates a corridor that bypasses England, Ireland to France and Spain down the Atlantic, and Scotland to Holland, Denmark etc across the North Sea. Its not ideal, and involves additional costs, but no borders between all these countries could still result in lower costs an greater long-term stability than having to pass all trade through England, involving border checks on at least two points of access.