The Foggy UK Economy
UK Companies Await Disruption After Brexit
New research shows that more than half of UK companies have faced difficulties in doing business with Europe since Brexit and expect business disruptions to continue in the long run. The UK withdrawal agreement with the EU has been in force since the beginning of January. Now, UK companies have to adapt to new trade rules and regulations.
A new London First survey in February found that although faced business disruptions. More than a third of UK companies said they had stopped doing business with Europe, and 49% said they expected the disruptions to continue in the long run. Of the 1,040 businesses surveyed, 29% said their base costs had increased, and half said they would pass those costs on to consumers.
EU and UK Await New Cooperation Document
New trade rules have disrupted business with the EU. Increased customs controls and delays have meant legal obstacles and reduced trade with former EU partners where this was carried out smoothly before Brexit.
Official research and statistics also confirm this. Many industries, including the fisheries and tourism, are on the verge of bankruptcy with no hopes of improvement in the short term. Many have had to reduce their workforce and lay off workers as conditions continue. Most companies believe that the economic consequences of leaving the EU will continue for many years to come.
Cumbersome Laws Damage the Economy After Withdrawal
Results of studies in the UK show that the consequences of Brexit and the pandemic have led to delays in the exchange of goods and services between UK and EU markets and inflicted losses on 74% of companies and businesses in the country. Three months after the withdrawal, 74% of leading UK companies are facing delays in the exchange of goods and services according to a survey by the manufacturing trade group Make UK. The survey shows that more than half have complained about rising costs and disrupted global trade due to the pandemic, Brexit and customs inspections. In addition, more than a third of commercial companies have lost their sales, and fears that this situation will continue have led to a downturn. Recently, fishing companies gathered in front of the prime minister’s office in the heart of London to protest the new cumbersome customs regulations imposed by the Brexit.
The Poor Shoulder the Problems
Whilst closures and quarantines for the pandemic have cost the economy more than last year, the impoverished sectors of the country have suffered the most. According to official reports, the £251bn damage to the UK economy last year was the equivalent of the entire annual output for south-east of England, or nearly twice that of Scotland. The Centre for Economics and Business Research (CEBR) has said that a number of disadvantaged areas have suffered the most, while the country as a whole has been severely affected by the pandemic. The CEBR has warned that the gap between the north and south of the country will widen if the government does not help the deprived areas.
Gross value added (GVA), representing the value of products and services in an economy, fell by £251bn in the UK last year after deducting input costs from raw materials, according to the report. Gross value added is the surplus wealth that a company or a manufacturing entity generates through production or services, obtained by deducting intermediate inputs from revenues. London is the region with the highest losses in activity (£54.1bn), followed by the south-east and east of England, with losses of £34.7bn and £26.6bn respectively.
But despite London’s losses being the highest, the capital’s contribution to the £251bn UK-wide loss was “smaller than expected given the size of its economy”, the CEBR adds. The Office for National Statistics said output in the production sector fell by 1.5% in January 2021, after manufacturing contracted for the first time (by 2.3%) since the initial pandemic-driven fall in output in April 2020.
The consequences of UK’s reckless and unplanned withdrawal from the EU, regardless of the possible damages, have manifested within three months. These problems have led many people to consider re-joining the EU, because they believe that the continuation of the current situation will disrupt their lives and they will not be able to cope with the cost of living. The situation has also led to increased dissatisfaction with the inadequacy of the Boris Johnson government in improving the economic situation and has exposed the UK to a substantial economic crisis.