The Economic Reality of Brexit

Brexit, economy, Labour Party

The Independent reports today that a majority of voters believe the economy will be negatively affected by Brexit.

The last few months have proven difficult for the Government’s economic policy, with Philip Hammond engaging in what appears to be damage limitation, rather than enthusiastically embracing the so-called “opportunities” which Brexit promised. However, last week was when the economic impact really began to hit home.

Firstly, it emerged that there was no guarantee that Britain’s membership of some 65 EU trade deals would roll-over during the transition phase, potentially leaving the UK subject to EU trade rules without any of the benefits. Indeed, some non-EU member states such as Chile, who would have to agree to the UK remaining in trade deals, are already demanding concessions from the Government on issues such as agriculture.

On Monday, stock markets tumbled with the FTSE 100 falling 1.9%. Most economists indicated that this was a correction and not a cause for concern in itself, given recent market stability. However, it could indicate a more volatile global economy in the future with some alarm bells already sounding.

On Wednesday the Government’s regional impact assessments of Brexit were leaked, revealing an 8% drop in GDP if we crash out of the EU with no deal, and a 5% drop under the Government’s preferred option of a bespoke trade deal. Even leaving the EU and remaining in the Single Market will cost us 1.5% of GDP. To give you an idea of what this means in reality, UK GDP growth hit -2.5% at its peak during the 2008/9 recession.

Of course, these impact assessments are based on models, predictions and assumptions. However, most Government policy, especially economic policy, takes into account an impact assessment so that ministers can make an informed decision about what is likely to happen as a result of said policy.

A responsible Government would not push ahead with any economic policy when faced with such dire numbers, especially when the global economic outlook is somewhat less certain than it was in 2016.

It’s time for the Government to come clean about the true cost of Brexit, and let voters decide for themselves whether it is really worth it.

Brexit Chaos and the Will of the People

Brexit, Labour Party

I have never known such chaos in government. I speak as someone who was a Labour Party member in the dim and distant 1970s when a Labour Prime Minister, James Callaghan, like Theresa May, presided over a minority administration. True, Callaghan brought us the winter of discontent. However, prior to this ignominious end and after securing a loan from the International Monetary Fund, the 1974 – 79 Labour government carried out a number of reforms – establishing the Advisory Conciliation and Arbitration Service (ACAS) and the Health and Safety Executive (HSE), SERPS (state earnings related pension scheme), plus an invalidity pension amongst many other social measures. It was a difficult time but the Labour government delivered.

Compare this to the current mess. Brexit is the biggest issue to face the United Kingdom since the country joined the Common Market in 1973, later confirmed in a referendum in 1975. In charge we have the most divided and incompetent minority administration since Ramsay MacDonald’s National Government in 1930.

I truly fear for our country. The catalogue of errors and chaos is legion: a Prime Minister who doesn’t seem to know whether she is coming or going, a recent reshuffle which had all the power of a damp squib, a divided Cabinet with no idea of what it wants Brexit to look like on top of a disastrous general election and a hopeless Prime Ministerial speech at the Tory Conference. In the interests of brevity, I will stop here.

The Twitter hashtag #brexitshambles is kind. Chaos and confusion without end would be more accurate.

The Labour Opposition in the House of Commons isn’t much better, though hopefully it may be moving away from the “will of the people” mantra.

The fact is that the kind of Brexit that may be emerging from the Tory chaos in no way reflects what the referendum campaign was about. There is no £350 a week for the NHS – in fact there is a massive winter crisis. There is as yet no sign of any trade deal. Britain is not ‘taking back control’. In fact all we are seeing is pathetic pleas by a country of 60 million people to a trading bloc of 500 million.

The Government and the Opposition should take more notice of the closeness of the referendum result. The Tories do not have meaningful support for a ‘hard’ Brexit and Labour would do well to remember that much of its support comes from young people in Britain’s major cities the majority of whom voted Labour because they thought Labour would stay in the European Union.

Division and disunity are rarely positive. Britain deserves better. The least damaging way forward would be to maintain the status quo and remain in the EU until the true will of the British people becomes clearer.

Government pays platitudes to the Business community on VAT payments

Brexit, Labour Party

Platitudes were paid to the hundreds of thousands of businesses which are
set to be hit by the new rules stating VAT must be paid upfront on
imported goods from the European Union following Brexit.

During yesterday’s debate in Parliament, Mel Stride, a Treasury Minister
said, “It is an issue, (for) which the government and the Treasury has
sympathy. “It is something that we will be closely looking at.”

But those affected don’t want the Treasury’s sympathy they want an
assurance that their businesses won’t be jeopardised, or jobs threatened
because of cash flow problems which will arise from the requirement to make VAT payments up front.

Following yesterday’s debate business groups warned that companies may be forced to look at costly bank or insurance guarantees if they are expected to make the payments upfront.

The chair of the Treasury Select Committee acknowledged the problem and assured Parliament that her committee will be considering the issue…and this is probably the closest we will get to anything akin to an impact assessment.

Brexit has an unworkable timetable

Brexit, Labour Party

When Norway held its referendum to join the EU in 1994, the results were very similar to the UK’s to leave, being 52% against joining to 48% in favour. It was, however, a fair vote and a truthful campaign and the status quo won.

In the spirit of reasonableness and wishing to heal the divisions, Norway’s politicians at the time sought to compromise and come up with a settlement which took on board the fact that the country was divided on the issue.

In stark contrast, Theresa May’ decision to go with the hard-line Brexiteers reflected her desire to pacify noisy elements in her own Party. We are all now paying the price for both her and David Cameron’s unprincipled actions.

Incredible though it may seem, there is effectively only 10 months to go before the EU and the UK hope to sign off a formal “divorce” agreement and some kind of outline of a future trading relationship by October this year. This timetable would allow the 27 remaining EU countries to approve the package before the Article 50 deadline runs out at the end of March 2019.

Put starkly in black and white this looks an impossible task. Trade talks have not yet started, and given it took seven years to negotiate the much vaunted trade deal with Canada, 10 months is surely an impossibility.

The truly intractable problems, at least it you’re a Brexiteer or a Theresa May will o’ the wisp, such as the border with the Republic of Ireland and Gibraltar, are unlikely to go away by October. Incredibly May and Davis continue to insist that a “creative”, “deep and special” relationship holding on to most of the benefits of EU membership is within their grasp. In your dreams, Mrs. May. The EU has made it clear that unless the UK changes its tune, the final outcome can only be a trade deal along the lines of Canada’s, plus some extra cooperation in areas such as defence and justice but with customs barriers and little provision for services.

This is the biggest political muddle I can ever remember, and it’s the British people who are suffering. The 52% who voted leave expected extra money for the NHS not a staggering winter crisis, and no-one voted to be poorer, now happening as inflation rises.

Come on Mrs. May, come on Jeremy Corbyn. The UK will never get a deal that’s as good as actually being a member of the EU. That is the truth, the whole truth and nothing but the truth.


Businesses to be hit by tough VAT rules following Brexit

Brexit, Labour Party

Statement from Mary Honeyball MEP

8 January 2018 LONDON

Businesses to be hit by tough VAT rules following Brexit – The Government
need to commission immediate impact assessments”

More than 130,000 firms are expected to be hit when new rules, and red
tape, stipulating businesses must pay VAT upfront on imported goods come
into force, if Britain leaves the EU.*

As the UK Parliament today debates the issue, Mary Honeyball, MEP London,
warned:  “Everyday there is a new unforeseen consequence of Brexit which
is hitting small and medium size businesses, in particular, very hard.

“It’s only recently we discovered the Government has not done any impact
assessments or due diligence in this area (as well as many others). Even
at this 11th hour the Government should commission immediate impact
assessments across the whole range of industries goods and services.

“This is a huge shift which will have a massive and detrimental impact on
thousands upon thousands of businesses which we were never told about
during the referendum campaign.

“The impact cannot be underestimated particularly for small businesses,
but which remain above the VAT threshold.

“Many companies simply don’t have that sort of cashflow available and it
could seriously jeopardise their ability to operate and it will cost


Notes to editors:

Call: Sarah MacKinlay for further information 07956443393 or email

*Currently firms which register with HMRC can import some goods from the
EU free of VAT, with the charge being added to the price of the product
and paid by the customer. Under the new system firms will have to pay the
levy upfront then claim it back later.