Brexit has gone far enough.
Here is a brief summary of UK economy.
Primary Industry: Financial Services. This is arguably the least dependent on Trade deals in that most the Banking Institutions already have subsidiaries in all the markets to which they do not have direct access. It is unlikely that any trade deal would grant them the right to participate in retail markets without also being capitalised in those markets. The so called passporting rights that the industry currently enjoys with the EU.
Primary Exports: Oil, Bulk Chemicals, Motor Industry, and Weapons.
- Oil. We are no longer self sufficient in Oil and in fact import slightly more than we export. Our exports are mainly as a result of our importing oil from countries to whom we export arms. The result of this is that neither devaluation nor increases in the Oil price benefit the UK economy as the trade deficit in Oil simply widens when expressed in Sterling terms. The Oil industry is also now largely foreign owned which means the only benefit to the UK economy comes from the wages paid to British employees and the tax collected … the profits are largely repatriated.
- Bulk Chemicals. Here we see a net gain in Sterling terms coming from devaluation. This to a degree, is offset by our need to import other primary raw materials needed by industry.
- Motor Industry. Fundamentally our motor industry exists to service the EU market, and is not sustainable based on the size of the UK market. It is also mainly foreign owned and therefore the benefits to the UK economy only come from wages paid and tax collected, with profits generally being repatriated. The foreign ownership also points to loyalty to the UK being very dependent on privaleged access to the EU markets.
- Arms Trade. Once again we see the main player (BAE Systems) being 75% USA owned with the UK holding only a 25% stake. The same comment about minimal benefit to the UK economy applies, because, of the predominance of foreign ownership in this industry.
From this we should see that the survival of the motor industry is dependent on us maintaining regulatory alignment with the EU, but, that such regulatory alignment is likely to make Foreign Trade deals increasingly more difficult. Whether any of the UK business sector benefits from Foreign trade deals is also a mute point. Providing others who might have a lower cost equation free access to our own markets could damage large parts of our economy.
Let us look at the rest of our economy.
By far the largest sector is Retail,, which we conveniently lump together with other services, including the financial sector. All indications are that this sector is under severe threat. The allowing of Internet companies to ply their trade freely in the retail sector without them being subject to the same requirements, business rates and taxation to name two, can only result in this sector being skewed away from bricks and mortar traditional retail. The cost structures are totally different and skewed in favour of the internet trader who is not subject to any licensing requirement.
The Agricultural Sector. It is doubtful that this sector can withstand competition from countries which are not required to follow the EU regulations and standards. This prevents the UK from being able to offer “free trade deals” on a carte blanche basis, unless we are prepared to carry the cost of supporting the agricultural sector at approximately three times the level currently provided through the EU.
The NHS, by far the largest employer of people in the UK. We are currently incapable of training sufficient Doctors and Nurses to sustain the NHS. The prospect of us leaving the EU has already created a staffing crisis as potential staff from the EU are less willing to come to the UK, particularly as the devaluation of Sterling have made wages far less attractive. Yes we could get people from other parts of the world, but this does not in any way curb migration. Solution to a staffing shortage has always been to increase wages, but, the UK taxpayer is not prepared to foot the bill or so the politicians tell us.
Care Industry is facing a funding and staffing crisis very much in the same fashion as the NHS. The taxpayer is not prepared to fund this beyond a superficial level, nor are the citiizens prepared to part with any of the wealth accumulated over the years to take responsibility themselves. This poses a real problem to the UK, regardless of Brexit, it has to be faced within the next decade.
Hospitality Industry, increasingly has become dependent on migrant workers. Yes we may be able to replace EU nationals with people from elsewhere in the world, but this hardly deals with the migration issue. The solutions are straight forward increase prices and wages so that more British people are prepared to work in this industry.
Construction Industry, has also become dependent on EU trained Artisans as we decided that we are better than skilled workers, we have University Degrees! We might be able to get Artisans from elsewhere in the world, but surely good goverance would be ensuring that we train the people required to support our industries.
What went wrong?
Fairly simply ever since Margaret Thatcher’s later days we have mistaken Cash Flow for income. We hear politicians talking about inward investment, largely these are either foreign borrowings or foreigners taking over UK assets weakening the economy each time as profits instead of become a source of true investment, are leaked out of the economy by way of dividends and interest to foreigners as we continue living beyond our means, This can be witnessed in our current account deficit.