During the referendum campaign I had a couple of email exchanges with Dominic Lawson, Sunday Times columnist and son of the former chancellor and now climate change denier, Nigel Lawson. In one I raised the issue of Britain becoming a less attractive place for EU companies to invest money to help our exports to the rest of the world. This is what I emailed to him on 15th March 2016 after something he said in his column:
"We have an insatiable appetite for foreign goods. To pay for our imports we need to export. We already rely excessively on foreign businesses to make the goods we export. Being outside the EU we will be a less attractive place to invest. Over time, some manufacturers may reduce output to the level of domestic demand only. Others may relocate into the single market. This will have a double effect of reducing our exports and increasing our imports as well as unemployment.
"If this happens I cannot see what would attract any British (or indeed other foreign) business to build new plants from which goods can be exported if we are on the periphery of the largest single market but not actually in it. I may be overstating the risk but I don’t believe we can conclude there isn't one. At least inside the EU we will continue to be an attractive base from which to sell goods into Europe".
This is his reply:
"Perhaps what this actually suggests is that we have made a big error by concentrating on the EU for our foreign trade-- an EU which is actually not a free trade area but a customs zone. (which means that we can't negotiate other free trade deals with the rest of the world for ourselves), A tiny example: what would a free trade agreement with India mean for our whisky distilleries? Currently they face a 150 per cent tariff and our whisky has barely a one per cent share of that market. Imagine the prospects for growth there--dwarfs any future they have for increasing sales in the EU." DL
I am not sure he followed my logic - although it's not that difficult - but if so he might want to read this story (HERE) in the Suffolk Free Press. It's about a Philips plant at Glemsford. Philips Avent make baby care products and employ about 500 people. It is threatening closure if we leave without a deal. The local MP says the company is not bluffing:
"James Cartlidge [the MP] met the company’s chief executive, Frans Van Houten, and Neil Mesher, who heads the operations in Glemsford, on Thursday to discuss the issues, and determined it is clear there is a very real risk the site would close if a ‘hard Brexit’ occurs.
"If such an outcome transpired [a hard Brexit] it would immediately implement an existing plan to relocate production elsewhere, most likely to mainland Europe".
Philips Avent make sterilising products and I assume must import supplies from the EU - otherwise a hard Brexit makes no difference to them - but as the MP noted, "“It is striking to hear of the way in which Philips exports all around the world from its Glemsford plant,”
This is precisely the problem I mentioned to Lawson. An EU company investing here not just for the home market but as a base to export to the rest of the world and so reduce our trade deficit in goods. So, when I hear people talking about the UK becoming global and exporting more to the rest of the world I wonder just who is going to do it? Many of "our" exporters are actually EU exporters that we risk losing after Brexit.
This is one of the reasons our exports to the EU are falling (because the maker probably has a facility in mainland Europe already) while our exports to the rest of the world are rising (EU companies like Philips manufacturing here to export world-wide).
I wonder how many of the 500 employees at Glemsford voted to leave the EU?
