Brexit - The Grim Reaper Has Come Knocking

The benefits of EU and Single Market membership have been illusory, while its costs are real, onerous and unacceptable to the majority of the British people.

Michael Burrage 2017

To remain in the single market the UK must apply all regulations and controls as defined by the EU to its entire economy. So where is the problem? The problem is, only 12% of our total GDP goes direct to the EU, the rest we export to countries outside of the EU. The anomaly in all of this; even from the 12%, approx. 2% travels to Rotterdam or Antwerp for further export leaving the EU. Therefore, you could argue 90% of our GDP carries a burden of EU regulations that are not necessary. This is costly to UK businesses.

Consider rules and regulations governing employment law. Nearly all of our GDP comes from the domestic market: Whether it is health and welfare services, the retail trade, utilities, entertainment, bars and restaurants, services such as dry cleaning and home repairs and maintenance.

The rules and regulations are having and have had a serious impact. Particularly affected by this are the NHS. The EU issued a working hour directive in 2009, limiting the hours a person can work, to 48 hours a week. They must have designated rest periods and regular breaks. Therefore, and as an example, Junior Doctors are restricted as to the number of hours they can work. I can hear you say, so they should be they seem worked to death, but consider that as a Junior doctor you must attain certain skills and experience in order to progress. Individuals are taking much longer to reach the level required, to be proficient, let alone to attain “Consultant” status.  This has a serious impact on staffing levels.  Experience is low, a reduced numbers of Consultants able to practise. This issue is right across the NHS. This is not what a junior Doctor wants when entering this career / vocation.

These rules and regulations apply right across the service sector. A sector that the ‘single market’ has no benefit. It only applies an onerous cost, as Michael Burrage claims refer in the snippet above. 

Membership of the single market is not the same as the customs union. The customs union has been around since the very beginning of the EU, whereas the single market only since 1993. lt is the customs union that decides our tariffs. Within the custom union there are three (3) elements. 

1. Members may not impose tariffs or non-tariff barriers on imports from other member states; 
2. They do, however, impose the centrally agreed tariff rates on imports from the rest of the world, the so-called Common External Tariff (CET); 
3. They give up the ability to negotiate trade relationships with other countries. This power is transferred to the EU. 

Where Theresa May has come unstuck with the negotiation:

1. She wants tariff free trade with the EU whilst not applying tariffs on product and services brought into the UK from the rest of the world. Hence, the cake and eat it scenario. 
2. The election, the result weakened her hand considerably. Although in many ways it should not have done, 80% of the votes were won on a Brexit manifesto.

To achieve 1 above this was always a tall order, a modicum of compromise was always inevitable. But to find ourselves in the situation we are today well, that is due to dishonesty on the part of MPs that have obfuscated beyond their mandate.

For the EU to agree to 1 above this would result in the rest of the world driving their exports to the EU via the UK, therefore avoiding the CET. This would be folly on the part of the EU, not least for the loss of revenue. Of course advocates of the Customs Union are keen we remain a member. But again there are no intrinsic benefits to our membership. Food, clothing and footwear would still have considerable tariffs applied, and of course we would not be able to strike free trade deals from around the world. As I've said before the EU take less of our exports at a time when WTO countries trade has grown substantially. 

Not to make light of the tariffs more to show the bizarre way in which they are applied. Unicycles have a 15% tariff applied, whereby a sub orbital spacecraft has only a 4% levy. Food and beverages are subject to considerably more. Confectionery has a tariff just shy of 30%, some dairy products that's around 50%, Grapes 17% and frozen prawns 20%. If you research the tariff regime it's clear there is no logic to this and nor can anyone explain the rational, it is purely arbitrary. 

I'll leave this blog here. I continue to hope we follow through and free ourselves from these shackles. 

As Margaret Thatcher said: