Wednesday 16 June 2021

Digging a hole for ourselves

While the government trumpets the Australian trade deal being agreed in principle, we shouldn’t forget that it’s worth very little in trade terms. According to the UN's Comtrade database, our exports to Australia are worth about $5 billion (£3.5bn) a year. Exports to Holland, were worth nearly five times as much despite the old colonial ties and Holland having a population of 17 million compared to Australia's 24 million. In trade gravity matters

According to the Australian government website their major imports from the UK are motor vehicles, medicaments and alcoholic beverages.  The tariff on UK cars is 5% so not huge and I assume the shipping costa are pretty high anyway. This is hardly likely to boost car exports by a significant amount.

The major impact - if there is one -  is likely to be on the UK agricultural sector fighting lower priced imports. And if there isn't an impact one must question what it's all for.

Simon Jack made the point in a Tweet that you would need 200 (not 2000, he made a mistake and corrected it later) Australian trade deals to replace lost EU trade over the same period:

But consider this, on the same day, the BBC's NI Economics editor John Campbell tweeted that UK exports to Ireland in the first four months of this year have fallen by nearly 40%:

If this continues for the rest of the year the reduction in exports to Ireland will be worth about twice the total of our annual exports to Australia.  Sobering isn't it?

Campbell contrasts Irish goods exports to GB over the same period and found they increased by 5% (€3.8bn - 4bn) and exports to NI went up by 40% (697m - 977m).

Irish goods imports from NI in the same period were up even more, by 60% from €656m to just over €1bn. He acknowledges this is only four months but says "it looks as if the UK’s traditionally chunky goods trade surplus with Ireland (£8bn in 2019) could be coming to an end."

And this will be repeated in many of our closest trading relationships which will increase our trade deficit in future years. Brexit might have made sense if the UK was already a global trade giant with a healthy surplus like Germany. But it is the equivalent of throwing our struggling exporters in at the deep end before they have learned to swim in the hope they can quickly discover how to do it before sinking beneath the water.

You might also be warned about the pending problem of a serious shortage of HGV drivers as reported by The Loadstar, a website for UK supply chain professionals. It reports:

"Chief executive of the Federation of Wholesale Distributors (FWD) James Bielby said the situation had become so extreme, with the shortage hitting 70,000, he recommended the government having army trucks on standby 'to ensure… enough vehicles and drivers to distribute food'.

"However, an RHA spokesperson questioned the validity of using the military, noting that at any rate army drivers 'would certainly need retraining'.

“'We need sensible short- and long-term solutions to tackle the driver shortage, army drivers have different jobs on different vehicles from those in civilian logistics, and the numbers of them are not large in any case,' the spokesperson told The Loadstar."

Only a few days ago the RHA was warning that 15,000 East European drivers had returned home after Brexit and this was likely to result in shortages and price increases of goods on supermarket shelves. 

We may not have long to wait. The former Labour MP and Brexiteer Gisela Stewart was complaining that her pineapple from Tesco wasn't fresh - I wonder why that might be?
Finally, The Daily Mail (the Daily Mail!) is reporting a 90% drop in fruit pickers from the EU with the shortfall said to be in hundreds of thousands:

Stephen Taylor of Winterwood Farms Ltd says, “95 per cent of all fruit and produce picked and packaged in this country is done by eastern Europeans. We are not talking about a few tens of thousands, we are talking hundreds of thousands of people less to work in the UK. That’s a massive hole.”

It is a massive hole - one we have dug for ourselves.
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