The British have been really happy about gaining back their individuality in the economic realm. The Brexit was pitched as an independence of Great Britain from the shackles of the EU economic bloc. The individuality was only realized on 1st January 2021, hurdles have started to emerge in less than a month. With Brexit, the immigration and customs procedures apply to trade with the EU as it would apply to any other country.
The increased paperwork and the time it takes is causing frustration among the business community.
Although the business companies in Britain were already suffering a lot from the corona pandemic. While the trade had not been properly restored hence companies have not recovered their financial conditions this new issue has emerged. Statistics from a recent survey showed that Brexit is causing more damage to the economy already under strain.
As reported by IHM Markit, service firms and manufacturers have been struck hard by these export and supply disruptions. According to Purchasing Managers’ Index (PMI) by IHS Markit last week, UK has the highest increase in supplier delivery time. The index was a comparison among France, Japan, UK, USA, Germany, and Australia.
HIS Markit remarked that the reason behind such increase was disruption caused by Brexit and sever unavailability of international shipping.
Even though there was a trade deal entered between the UK and EU on the last day of 2020. The deal was made to continue tariff-free trade between the UK and EU without quotas. However, Brexit meant a full customs border meaning thereby every good will be checked and additional paperwork to be filled.
Prime Minister Boris Johnson described the issues as “teething problems” which have somehow intensified by the corona pandemic. Johnson exemplified the issue in such a way to encourage people to bear with it and soon they will have fruits.
Market experts believe that some of the extra costs implied and the bureaucracy will stay. Supporters of Brexit argue the in the long run it will be beneficial for the people and businesses. They say UK will have the freedom to make its own trade deals for the benefit of its people. UK will not have to worry about the interest of others especially the EU they say.
Chief Economist of IMF, Gita Gopinath said that such disruptions were expected in the first three months of 2021. About 1% of the reduction in the UK’s economy was expected post-Brexit she said on Wednesday.
British services-sector generates the surplus in trade for the British economy in trade with the bloc. HIS Markit reported that it was hit really hard this month.
According to the PM Index, the services exports in the UK dropped faster than in other countries.
Pros and cons of Brexit are expected to emerge after these initial disruptions. Most businesses have shown their distrust in Brexit and have no hope for things to get better. Only time will tell, whether it would be beneficial or not for UK.