Teething problems? Bumps in the road? The consequences of adjusting to life outside the EU in the midst of a pandemic are starting to become clear. Official figures show a drop in EU trade of almost a quarter at the start of 2021 compared with the same period three years ago.
Far from the “minimal” disruption observed by ministers earlier this year, the figures confirm Brexit came with reasonably substantial short-term costs. It turns out that handing exporters reams of paperwork and border checks on EU shipments, just as the pandemic worsened, isn’t an ideal recipe for a booming global Britain.
This much we knew. What is more difficult is to unpick the impact of Brexit from the Covid-19 catastrophe, and to know whether the early results are evidence of a long-term trend taking root.
China replaced Germany as the UK’s biggest import market because of pandemic trends, not because London thumbed its nose at Berlin to become a global trading powerhouse overnight. Chinese textiles, vital for face masks and PPE, were in hot demand, as were electrical goods being snapped up by locked-down British consumers. Car production in Germany was down sharply, while UK car showrooms were also closed.
A drop in trade was always likely after a stockpiling rush in late 2020, as companies built up supplies in anticipation of border disruption, and delayed sending shipments at first. Exports have recovered in recent months closer to normal levels.
However, with several months of data to analyse, the figures from the Office for National Statistics suggest there is far more to overcome than simple “teething problems”, as Boris Johnson called the disruption at UK ports.
The Office for Budget Responsibility expects additional trade barriers to reduce the size of the British economy by about 4% compared with EU membership, with the full impact taking 15 years to be realised. The full impact of Brexit will take much longer than six months to mature.
FirstGroup rebels may have missed the bus
The first instinct is to cheer an example of rebellious shareholders resisting the sale of a company’s prime asset to private equity at what they see as a lowball price. The scrap at FirstGroup is not quite that simple, however, writes Nils Pratley.
For starters, the rebels – led by hedge fund Coast Capital with a 14% stake – aren’t opposed to the principle of selling First Student, a US school bus operator, and First Transit, a North American bus business. They just don’t like the £3.3bn price-tag on the proposed disposal to Swedish private equity house EQT.
Coast has fired a barrage of statistics to make its case that the “crown jewel assets” would be departing at less than their true worth, and it’s not alone in its view. Schroders, almost the opposite of a mouthy New York hedge fund, will be voting its 12% against the deal on Thursday. That’s their choice.
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