Monday, May 20, 2024

BREXIT’s long shadow

Soaring prices and shortages of goods and services, complicated by BREXIT and the Covid-19 pandemic, may make this year’s Christmas in the UK less than merry

By Mercy Ette, Huddersfield, UK

Rishi Sunak, the United Kingdom’s chancellor of the exchequer, was optimistic and enthusiastic on October 27, 2021, when he presented his autumn budget to the House of Commons. Cheered on by his Conservative Party colleagues, he exuded confidence as he laid out what he described as a budget for an age of optimism. The budget, he said, reflected unexpected economic recovery from the Coronavirus pandemic and a significant reduction in estimated long term damage to the economy. The Chancellor said his spending plan will deliver stronger growth, improve public finance and employment, and provide support to people on low income.

The chancellor’s optimism is not, however, matched by public mood, which suggests the country is inching towards a winter of discontent. Empty shelves in supermarkets and rising cost of living are making people jittery. Two months before Christmas, shoppers are already stocking up on festive foods because of concerns about shortages of seasonal goods. Frozen turkey, Christmas puddings, mince pies and other Christmas staples and delicacies have been on sale since early September and shoppers are filling their freezers with items that in previous years were last minutes purchases.

The rush to stock up is fuelled by supply chain woes that could get worse in the run-up to the festive season. Already, some supermarkets are streamlining their product lines and reducing the number of options available to shoppers to ensure availability. Even the range of Christmas toys is expected to shrink. To avoid disappointing their children, parents have been advised to shop early for Christmas presents. These challenges are in part due to labour shortages in the UK and a global supply chain problem.

Months of economic shutdown, due to the Covid-19 pandemic, caused a disruption in the delivery of goods around the world. In the UK, the problem imploded in September when it resulted in fuel shortages. The crisis, however, was not caused by shortage of fuel but of drivers of Heavy Goods Vehicles (HGV) who deliver fuel to petrol stations. Up to July 2019, a large number of HGV drivers in the UK were from continental Europe but when the country pulled out of the European Union, under Brexit agreement, many of them returned home. Their departure has created a gaping hole in the labour market and is threatening to ruin Christmas. If urgent action is not taken to resolve the shortage of truck drivers, the Road Haulage Association (RHA), says the country faces a ‘Christmas crisis.’

All is not settled between UK and EU

The fuel shortage crisis caused havoc and led to panic buying as motorists formed long queues at filling stations to stock up despite assurances from politicians that there was enough fuel at depots around the country. Their words, however, sounded hollow when many petrol stations were forced to close after they ran out of stock and could not get deliveries. Although the crisis has been averted, the country is still at risk of shortages this winter.

While queues at filling stations have disappeared, a combination of demand and labour shortage means the supply chain problem is yet to be resolved and is affecting delivery of other goods. Already, many supermarkets have not been able to meet demands for fresh produce and some now use cardboard cut-outs to fill gaps in their shelves. This has prompted speculation that supplies for the festive season could be in short supply and given the washed- out experience of last Christmas, many shoppers are stocking up early to make up for the celebration they missed last year due to COVID-19.

In recent weeks, the pandemic seems to be losing its grip, although its long-tail effects are still being felt in many areas because Britain experienced one of the worst cases of the Coronavirus pandemic among western countries. A recent parliamentary inquiry described government’s response and handling of the pandemic as “one of the most important public health failures the United Kingdom has ever experienced,” noting that many thousands of deaths could have been avoided if the government had acted promptly on scientific advice by imposing lockdown earlier than it did. The first case of coronavirus was reported in January 2020 but the government did not impose restrictions until March.

As the economy is slowly recovering from months of lockdown, the cost of living and shortages of goods are dampening public mood and escalating many social problems. The cautious optimism that marked the end of covid-related restrictions in July appears to be waning with cases of infection on the rise again, speculations continue to grow that restrictions could be reintroduced in some form to protect the National Health Service, NHS, this winter.

Macron’s France at odds with Britian over migrants
Lord David Frost, UK’s chief Brexit negotiator

The ongoing crisis is a confluence of many interrelated problems triggered by the pandemic and accentuated by Brexit. Results? Shortage of workers to harvest crops, process meat, deliver goods and provide other essential services. Without Brexit, the impact of the pandemic would have followed a different trajectory. The UK’s departure from the EU has resulted in labour shortages in several critical sectors because thousands of European and other overseas workers left the country in late 2019. The shortfall of HGV drivers following the exodus is estimated at 100,000. Attempts to lure back the drivers and other workers with offers of temporary visas have so far been ineffective as the response from prospective applicants appears to be beyond lukewarm.

With the cost of living on the rise, the chancellor’s optimism on budget day seems out of sync with public mood as millions of households face a bleak winter due to a rise in inflation, cost of energy and overall high cost of living. While the energy crisis is a global problem brought about by a rise in the price of natural gas, the UK has taken a big hit because of its dependence on gas for generating electricity for manufacturing and domestic use.

The chancellor is confident that the country is on the road to recovery and economic forecasts suggest a brighter future than earlier expected. Still, the full impact of Brexit continues to cast a shadow. It may take a while for the public to share the chancellor’s optimism. Jonathan Portes, professor of economics and public policy at Kings College, London, says Brexit will inflict damage on the economy long into the future. Writing in, he describes Brexit as “a long-term issue.’ The Office for Budget Responsibility also warned that Brexit will have long lasting impact on the UK economy.

A day after the chancellor presented his budget, a major dispute broke out between the UK and France when a British trawler was detained by French authorities over post-Brexit fishing rights. France has also threatened to block British fishing boats from key French ports. This confrontation adds a new dimension to ongoing dispute between the UK and the EU over post-Brexit arrangements. A sore point is the status of Northern Ireland. The UK wants an overhaul of trade rules known as the Northern Ireland protocol that it agreed to two years ago. The protocol has to do with the border between Northern Ireland, which is in the UK, and the Republic of Ireland that is a member of the EU. It was designed to avoid recreating a hard border between the two Irelands. The agreement, the UK insists, is no longer working and should be renegotiated; a position the EU is not keen to consider.

How the tension between the UK and the EU will be eased is not clear but one thing is certain, Christmas cheer and goodwill may be in short supply this year in the UK.



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