Brexit : Ian McConnell: Menacing narrative – but no hiding from numbers

It is advanced by a broad range of people, united often it seems by nothing more than Brexit ideology, from Cabinet members who continue to refuse to take the blame for their grave mistakes to online trolls. Those who would analyse the actual effects are shouted down noisily, and often aggressively.

All the while, businesses and households continue to endure on a daily basis the negative effects of the Brexit folly. And then there will be the grinding long-term damage over many years, as laid out in the Theresa May government’s late-2018 economic forecasts, from the utterly lamentable decision to leave the single market.

There is no hiding from what we have seen with our own eyes on the Brexit front, and continue to witness. For example, we read and hear daily about the dramatic effects on export businesses which have come hard on the heels of the December 31 end of the transition period. There is also the huge disruption in Northern Ireland caused by the Tory hard Brexit. And all of this is before we get to the huge long-term drag on the economy and living standards from clamping down on immigration from European Union countries.

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There should be absolutely no hiding from the hard numbers revealing the aggregate effects on trade.

Chief Brexit negotiator David Frost, a former chief executive of the Scotch Whisky Association, last week appeared at pains to play down official trade figures showing a calamitous drop in UK goods exports to the EU between December and January.

Given the extent of the UK Government’s post-Brexit circus, the numbers were no surprise.

And it is surely impossible to argue away a 40.7 per cent or £5.6 billion fall in UK goods exports to the EU between December and January, revealed in the seasonally adjusted figures published by the Office for National Statistics last Friday. This key measure of goods exports, highlighted by the ONS, excludes precious metals.

However, the huge scale of the fall did not stop Lord Frost, who became a full Cabinet member at the start of this month, taking to Twitter to claim there had been a “unique combination of factors”. He seemed to have been raking around for any potential reasons other than the obvious effects on trade of the short-term chaos and permanent woe for exporters arising from the hard Brexit deal he negotiated.

He tweeted last Friday: “I have been looking at today’s trade numbers. This month’s unique combination of factors made it inevitable that we would see some unusual figures this January. As @ONS has pointed out, caution should be applied when interpreting these statistics. Why?

“2. As well as changes to our trading relationship with the EU, we also saw: Evidence of stockpiling late last year (as @ONS note). This meant less need to move goods in January.

Covid lockdowns across Europe bringing reduced demand for goods overall.”

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A few points are worth noting here. Firstly, the ONS saw signs of stockpiling late last year. But the effect of this is very small relative to a 40.7% month-on-month drop in goods exports to the EU.

Secondly, there have been very lengthy and strict Covid lockdowns in many European countries over large parts of the last year, so why the effect in January would be wildly dramatic is entirely unclear.

And, thirdly, we should look at what the ONS says in relation to “caution” in interpreting the statistics.

It says in the January trade statistics release: “Trade has not been typical in recent months and, because of the practical challenges and temporary factors outlined in section 3, we would encourage users to apply caution when making short-term comparisons of trade movements.”

In section 3, it adds: “In this month’s bulletin we focus heavily on monthly trends, however, it should be noted that monthly data are erratic and small movements in these series should be treated with caution.”

Surely Lord Frost does not consider a 40.7% drop to be a “small movement”?

Imports of EU goods to the UK (excluding precious metals) plunged by £6.6bn or 28.8% month-on-month in January, again not a small decline.

Members of Boris Johnson’s Cabinet have consistently refused to take responsibility for their hard Brexit, and for a lack of preparedness which, even by the standards of this bombastic and detail-light Conservative Government, is truly breathtaking.

In any normal world, it would have been astonishing to hear that a UK Government apparently so keen to rile up our European neighbours had felt the need to push back for months the implementation of customs checks on goods imports from the EU. For key food imports, checks have been delayed from next month to October, with the latest plan being to phase them in from that point.

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The British Retail Consortium declared many key border control posts were “currently little more than a hole in the ground”.

The UK Government delay was greeted with relief by the retail sector body. The BRC warned consumers might, without the extension, have “seen empty shelves for some products”.

Andrew Opie, director of food and sustainability at the BRC, said: “We are pleased that the Government has listened to us and postponed border checks until the systems and border posts are ready. With many of the key border control posts currently little more than a hole in the ground, the six-month easement comes in the nick of time. Until the infrastructure is in place, with IT (information technology) systems ready and established processes for checks and paperwork, it would be foolhardy to introduce full requirements for EHC (export health certificate) documentation, pre-notification of imports, physical checks and more.”

David Frost Picture: Gordon Terris

This delay is certainly good news for UK companies and households, in that they will be able to secure the goods they need from EU countries without being subject to further major additional disruption right now.

And this is a matter for celebration. It is good that trade is as frictionless as possible. However, the Johnson administration’s need to delay checks on imports will weaken its hand further in any attempts to try to ease the passage

for goods going out from Great Britain to the EU.

This assumes there is a will on the part of the Johnson Government to actually behave in a way that might help mitigate what will in any case be huge damage, rather than favour jingoism. It remains very far from clear that such a will exists.

It must be emphasised the massive and damaging friction for which UK exporters are lamentably having to pay the price has been caused in large measure by the Conservative Government’s persistent refusal to accept regulatory alignment. The EU is merely implementing the terms of the narrow free trade agreement and the hard Brexit desired by the Johnson administration.

It appears the UK is not yet implementing some of the agreed measures in significant part because of its lack of preparedness. Perhaps the Johnson administration is also privately at pains, with the delay on import checks, to avoid the unfolding shambles that is plain for all to see getting even worse, but who knows? The Government was, after all, willing to take us down this hard Brexit route for ideological reasons. And, no matter how pumped up Cabinet members were with their ideological Brexit, they must have realised there would be myriad and major detrimental consequences of their crusade, and decided to embrace these.

Of course, what will be very damaging in terms of the UK Government’s ability or otherwise to try to help the country’s exporters, if it has a will to do so, is the Johnson administration’s behaviour in relation to the Northern Ireland protocol.

Its decision to act unilaterally to extend the grace period for introducing customs checks on food products and parcels entering Northern Ireland from Great Britain has understandably upset the EU.

Boris Johnson Picture: Dominic Lipinski/PA

The EU has – unsurprisingly given the binding nature of the agreements between the two sides on the future relationship including the “protocol” painstakingly formulated to avoid a hard border on the island of Ireland – launched legal action over the move.

The whole thing is a mess, and the UK Government’s refusal to take responsibility for it and act in a meaningful and effective way to mitigate the damage is unacceptable, as businesses and households pick up the huge tab for the Brexiters’ ideology.

A £5.3bn fall in the UK’s global goods exports in January was the steepest monthly drop since comparable records began in 1997. It arose plainly from the plunge in exports to the EU following the end of the transition period – there was a slight rise in overseas sales to non-EU countries.

It is surely the dramatic collapse in UK exports to the EU which should prompt “caution” on the part of Lord Frost and the Johnson administration, not interpretation of the trade figures. Something a lot more dramatic than caution is surely in order. However, the way the Conservative Government has been behaving, caution would be a start.

An analysis of the trade figures from James Withers, chief executive of industry body Scotland Food & Drink, was both on the money and in stark contrast to Lord Frost’s view.

Mr Withers said: “There is no sugar-coating these statistics – they are grim. We know Covid has reduced demand and there was stockpiling of products before the end of the year. However, right at the heart of this trade collapse is Brexit, and the creation of huge, new, non-tariff trade barriers with our biggest export market.

“This simply can’t be talked away as a Covid issue. The crash in UK trade has not been seen in sales to non-EU markets, despite it being a global pandemic. Also, we did not see a fall like this at any point during the first lockdown.”

He is right. This must not be “talked away” as a coronavirus-related issue.

It is high time the UK Government accepted the reality of its hard Brexit, and started atoning for it with some meaningful help for those affected so badly.