The vaccine row and covid continue to grab the headlines this morning but don't be fooled they are only temporary problems which will go away. Brexit is a chronic condition that we will be living with for years. I don't know if you saw the very odd statistics coming out of the UK labour market in the last few weeks which seemed to show employment in London rising during the pandemic. Dr Jonathan Portes at the think tank The Economic Statistics Centre of Excellence (ESCoE) wrote a blog post about it and the FT have a piece HERE.
The FT say:
With officials unable to collect data in the usual way at airports and other transport hubs owing to the pandemic, the ONS has faced severe difficulties in measuring migration numbers. However, the agency has continued to measure employment trends during the pandemic through its labour force survey and has used this to form the basis of its regional population analysis.
This is a huge number and in London, represents 700,000 foreign-born residents having moved out, a potential 8 per cent drop in the capital’s population last year. They put this down to covid but Brexit probably had an impact and it will certainly have an impact later this year.
New immigration rules will act as a non-return valve for many because EU nationals who left the UK in the past year will need work visas to return and work in Britain. Anyone with settled status would be able to return to to their old job but new migrants would not. This is, as far as I know, something not foreseen and may well have a huge impact on the economy particularly in the restaurant and hotel business and on the care sector.
Even this may be downplaying the impact of Brexit. The Observer are reporting today that Holland seems to have been a significant beneficiary of Brexit. They claim that by 1 January this year "some 500 businesses – mostly UK-owned, or UK-based with overseas owners – were already making inquiries about setting up branches, depots or warehouses in the Netherlands alone, for 'Brexit-related reasons'. Since then the number of inquiries from UK companies has increased further."
The figures come from the Netherlands Foreign Investment Agency, while the Netherlands British Chamber of Commerce, say they have been working “night and day” on inquiries from UK companies in recent weeks.
The Observer also clams that enquiries from UK businesses about moving to Austria had increased threefold since 1 January.
An economy cannot sustain that level of outflow of viable businesses without it being noticed sooner or later in the official statistics and remember this doesn't include companies who have reduced or stopped exporting to the EU altogether or the others who can't get imports from the EU. This is either because the paperwork burden is too much or the additional costs makes their business uncompetitive.
I intend to watch the official figures closely this year because I think the real cost of Brexit is about to be paid. Early indications come from this report on Reuters about the IHS Markitt survey of purchasing managers.
The survey shows British factories reported the steepest increase in supplier delivery times among the six “flash” preliminary Purchasing Managers’ Index (PMI) surveys published by IHS Markit last week for the UK, France, Germany, Japan, Australia and the United States.
IHS Markitt say, "This was almost exclusively linked to both Brexit disruption and a severe lack of international shipping availability.”
So, Brexit may have happened but we are not out of the woods yet, in fact we are just entering them.
