Monday 5 July 2021

British industry moves to the EU as exports struggle

The BBC’s Panorama programme tonight (Brexit: Six Months On. Today 19:35) is looking at the impact of Brexit on British companies who export to the EU. It should be interesting. The trailer on Radio 4 this morning says the programme asked 27 EU governments how many British companies had set up operations in their country as a result of Brexit. Of the 14 member states that responded, there was a total of over 2,300 UK firms. We can easily see close to 5,000 if all 27 had responded and even this is probably an underestimate. 

The BBC also said this only covered companies who had asked for help from an EU27 government. Some, even many perhaps, had done it themselves and hadn't been counted. And it only included companies that had already relocated.

In March, the BBC reported that Holland alone was in talks with 600 British companies not all of who will have moved  - yet. I would expect to see the numbers rise steadily over the coming years. It also doesn’t include companies who have given up trading with the EU altogether.

Panorama asked the government for a response and were told they (the government) were 'helping companies to increase exports to the EU while taking advantage of increasing exports to the rest of the world.' This is Orwellian doublespeak for doing the opposite.

And to show what a nonsense this is, I noticed in the last few days figures published by IHS Markit which collates the Purchasing Managers Index (PMI) to give policy makers early warning of economic trends.

The PMI survey data reveals that UK's manufacturers have "underperformed their peers in the eurozone to the greatest extent for over two decades so far this year, coinciding with the end of the Brexit transition period."

"UK suppliers of components to other firms, in particular, have seen only a marginal increase in export sales, suggesting the UK is largely missing out on the recent surge in demand for inputs from the world's factories. The eurozone, in contrast, has meanwhile seen record export growth of components.

"While larger firms have enjoyed rising overseas sales on the back of the fastest global manufacturing expansion for a decade, small UK firms have seen an overall drop in export sales so far this year to indicate an unprecedented underperformance by small firms compared to larger companies.

"UK manufacturers reported a slowing in the rate of expansion in June, linked in many cases to a marked waning in growth of new export orders. According to IHS Markit's PMI data, new orders for exports of goods flowing out of the UK have now slowed below that of all other major European peers."

So much for Global Britain re-emerging triumphantly onto the world stage.  It is more like a nervous contestant on the X-factor, screeching out a song before being given the thumbs down by the panel.

I have to say none of this surprises me in the least.  Big companies are usually international businesses anyway, often foreign owned, with plenty of in-house expertise to call on or with the resources to buy it in. They have followed the international trend while smaller British companies are struggling and will find it harder to grow from now on with a diminished home market.

Hopefully, the programme might begin to focus a few more minds on the disaster of Brexit and the nonsense that we can somehow prosper by erecting trade barriers with out largest customer. 

But don't hold your breath.