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Brexit: Ian McConnell: Boris Johnson must heed fears his bonfire could make UK goods ‘unsellable’ in Europe

BORIS Johnson certainly ensured the week got off to the noisiest of starts on the Brexit front.

The Prime Minister told the Sunday Express that he was “proud” his Government was “capitalising on the immense opportunity that our newfound Brexit freedoms bring”.

He spoke of a “relentless drive to deliver on the promise of Brexit”, and declared this was why his administration would be bringing “seven Brexit bills” in the Queen’s Speech, which was delivered by Prince Charles on Tuesday.

A couple of points are worth observing already. Nearly six years on from the Leave vote, the supposed opportunities of Brexit remain entirely conspicuous by their absence. And ramping up the rhetoric by claiming “immense opportunity” does not change this reality.

There has been huge damage wreaked on the economy by Brexit already, with much more to come, so it is strange indeed that pride is what Mr Johnson should feel about what has been happening on this front.

Brexit has created a nightmare for many exporters, fuelled labour and skills shortages, caused enormous disruption to already-challenged supply chains, and exacerbated inflationary pressures. Huge woe has transpired already from the loss of frictionless trade with the world’s largest free trade bloc and the ending of hugely valuable free movement of people.

Households and businesses, already struggling under the weight of the pandemic, have been hit hard.

So just what Mr Johnson has to be “proud” of is surely unfathomable.

Clearly, the Prime Minister and his Cabinet colleagues have never let the realities of Brexit rain on their ideologically driven parade out of the European Union.

However, it is almost as if the worse things get on the Brexit front, the more populist and ebullient the Conservative Government becomes about what is clearly a very foolish case of self-harm from the perspective of the UK economy and society.

So we should probably not be surprised by the degree of excitement about Brexit exhibited by Mr Johnson in his words to the Sunday Express.

Referring to his “Brexit bills”, Mr Johnson declared: “I call them the super seven – and they will benefit families and businesses across the land by changing old EU rules that don’t work for the UK. From data reform to gene-editing to financial services, these bills will allow us to thrive as a modern, dynamic and independent country, and this Government is getting on with the job of delivering them.”

The UK was, of course, entirely independent as part of the EU. As for “modern” and “dynamic”, Brexit has made the UK seem quite the opposite. It has appeared that many Brexiters are longing for days of Empire.

In the end, Mr Johnson’s ramping up of the Brexit bills ensured an inevitable anti-climax when the Queen’s Speech was actually delivered. This is the way it goes with Brexit. There is much big talk of opportunities but the reality is very different.

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One of the Brexit elements of the Queen’s Speech covered introduction of legislation “to enable the implementation of the United Kingdom’s first new free trade agreements since leaving the European Union”, the Trade (Australia and New Zealand) Bill.

These trade agreements, it must be remembered, offer tiny benefits relative to what has been lost by the UK because of Brexit, and they have in any case also been trumpeted loudly on various occasions by the Johnson administration.

The Government’s impact assessment of the Australia deal estimates that the long-run effect of the agreement is to increase UK gross domestic product by 0.08% (by 2035). In relation to the projected effect of the New Zealand deal, the Department for International Trade observes its “sensitivity analysis…suggests the estimated impact on long run GDP could vary between 0.02% and 0.03% (0.023% and 0.034% respectively, to three decimal places)”.

The Theresa May government forecasts, published in November 2018, showed Brexit would, with an average free trade deal with the EU, result in UK GDP in 15 years’ time being 4.9% lower than if the country had stayed in the bloc if there were no change to migration arrangements. Or 6.7% worse on the basis of zero net inflow of workers from European Economic Area countries. The Tories have clamped down dramatically on immigration.

Anyone who has had their heads turned by noisy talk of Brexit “opportunities”, “immense” or otherwise, might want to reflect on how tiny the benefits of the new trade deals are relative to what has been lost by ripping the UK out of the EU.

The Queen’s Speech also included plans for regulations on businesses to be “repealed and reformed”.

It referenced the “Brexit Freedoms Bill”, which we have been hearing a lot about in recent months, to “enable law inherited from the European Union to be more easily amended”.

With Minister for Brexit Opportunities and Government Efficiency Jacob Rees-Mogg having appealed to the public to let him know what rules and regulations they might like to see go, it remains unclear what the Government is actually proposing on this front.

There has, of course, been plenty of loud noise.

Steve Barclay, Chancellor of the Duchy of Lancaster and arch-Brexiter, said in January: “Leaving the EU has given us the opportunity to establish our own rules for how we live and govern our lives in Britain, from how our farmers are funded, our data is managed to unlock more innovation, and our public procurement spent in ways that unlocks greater social value. These reforms will cut £1 billion of EU red tape for businesses and provide them with exciting new opportunities to flourish.”

However, for all this big talk, there remains a distinct absence of any meaningful Brexit benefits, now or in the future.

Meanwhile, there are plenty of storm clouds.

Scotland’s salmon sector this week raised fears of a “trade war” with the EU being triggered by the UK Government over the Northern Ireland protocol, warning this could have a “devastating impact on Britain’s export market”.

Salmon Scotland noted “ongoing media reports suggest that UK Government ministers want to urgently amend the Northern Ireland protocol”, declaring this had “sparked concerns of retaliatory action by the EU”.

The Northern Ireland protocol in the UK-EU Withdrawal Agreement was formulated to avoid the re-emergence of a hard border on the island of Ireland, and creates a customs and regulatory border in the Irish Sea.

READ MORE: Ian McConnell: Why did Tory Brexiters think this was a good idea?

Northern Ireland, to avoid checks and controls on the island, is required to apply EU customs rules and align with a list of single-market regulations.

Meanwhile, some of the business reaction this week to the latest loud noises around the Tories’ much-vaunted Brexit red-tape bonfire was most telling.

Business tends often to be all for deregulation. However, in the context of Brexit, the response of business to what is being proposed is, to say the least, somewhat wary. Crucially, there appear to be major worries about further divergence from EU regulation, which would make it even more difficult for UK businesses to harness the opportunities of trading with this huge bloc. The last thing under-pressure businesses need is further dampening of export activity, and even more supply-chain woe.

British Chambers of Commerce’s response to the Queen’s Speech highlighted its view that the priority for the UK Government should be addressing costs crises for businesses and households.

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It said the Queen’s Speech “had some welcome measures for business, but unless the Government takes immediate action on the economy, they will come too late to help many firms”.

British Chambers added: “An emergency budget is needed to provide firms with the breathing space they need to raise productivity and strengthen the economy. The costs crises facing firms and people in the street are two sides of the same coin. If we can ease the pressure on businesses then they can keep a lid on the price rises being driven by surging energy bills, staff shortages and higher taxes.”

As the Johnson administration bangs its Brexit drum, these are the realities facing businesses and households.

Appearing keen to try to find positives, British Chambers said the “Brexit Freedoms Bill has the potential to unlock innovation and expansion in a range of new and developing technologies, especially the expanding world of net zero products and services”.

However, it added: “We will want to look closely at how any changes will help business domestically but also their impact on our trade links and exports with the EU. What we don’t want to see is deregulation for its own sake. We should not complicate our trading relationship by diverging so far it makes UK goods and services unsellable into Europe.”

This urging against measures which make goods and services “unsellable” in Europe is a crucial point.

It is one the Johnson administration must listen to but, on past experience, will probably not.



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