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INDUSTRY in FOCUS
What is Brexit and what does it all mean?
So the UK has now voted by a narrow
majority to leave the European Union,
I could go on for pages about how the
vote could be challenged – less than 35%
of registered voters said leave, many of
them now say they were registering a
protest rather than a real intention to
leave and then some of those that were
serious seem to have voted for a wide
range of reasons that are unconnected
to membership of the EU, while others
were persuaded by statements the Leave
campaign has now admitted are not
accurate. This aside, the Leave vote does
seems to have been fully accepted by
politicians that count, while others dare
not ignore the vote of a vociferous and
angry part of the electorate.
Given the introduction above it is
probably obvious I did not vote to
leave. There are many reasons for this,
but the key thing now is: what are the
implications for the UK, the EU and the
rest of the world after this shock result?
The immediate aftermath has seen stock
markets fall and the value of Sterling
plunge to a 31 year low against the dollar.
This will push up the cost of imports to
the UK including oil, food, cars machinery
etc…At the same time it does provide
an immediate bonus for British exporters,
but only short term because most
manufacturers import a good portion of
the componentry and raw materials they
use so eventually the higher cost of these
items will force the Sterling price to rise.
In the meantime if you have your eye on
a piece of British built machinery, such
as a Niftylift boom, or a Power Towers
platform, this might be the time to grab
a bargain. In the longer term it does not
bode well; in a poll we conducted at
Vertikal Days this year almost 60% of
the visitors who voted said they wanted
to leave, and one of the main ‘beefs’ of
small businesses against the EU is ‘red
tape’ the problem is most UK red tape
is created by the UK government – not
the EU – and the UK is apparently the
third least regulated country in the
world! However for those companies
that export, the red tape will mushroom
as export documentation and customers
declarations to other European
countries become a reality.
Add to that the horrendous
task of filing all the paperwork
to bring in non UK nationals.
Currently UK employers can
recruit workers from anywhere
in the EU as easily as in the
UK itself, while recruiting a
non EU person is a six month
nightmare – if you are lucky
and have a good lawyer.
The talk during the referendum
was about the risk of tariffs,
but this was non argument
as tariffs are not the real
challenge and can be fought
with counter tariffs. The big
issue is non-tariff barriers to
trade and that is what the single market
is all about. Whose idea was it? Margaret
Thatcher: – yes it was a British idea as
are a good number of EU innovations.
She pushed for it in the early 1980s
and it finally came into force in 1992.
This involved CE marking and common
standards across Europe which has made
business infinitely easier. I know because
I am old enough to have had to do
business before the arrival of the single
market and I cannot begin to express
how much it simplified cross border trade,
in both manufactured goods and rental.
The single market for services is only now
reaching the point where it is beginning
to revolutionise cross border trade in such
things and it now looks as though the UK
will suffer from its implementation rather
than reap the benefits it has hoped for by
pushing it through. Why suffer? Because
banks, financial companies and insurers
have said they will shift some of this
business to Dublin, Paris or Amsterdam to
benefit from the single market.
But enough about the effect on the
UK. What about elsewhere? Well the
biggest effect will be felt in Europe, in the
other 27 countries of the EU. Only now
recovering from the downturn, the EU
economy will be hit by the removal of one
of its biggest members. Also surprising
to many Leave voters, one of its most
influential. Yes, unlike the picture Leavers
painted of some faceless undemocratic
Brussels entity beating poor little Britain,
the UK mostly teamed up with Germany
to make the running in the EU. It got its
way over 90% of the time. With the UK
gone France will become more influential,
and it tends to push protectionist closed
border policies and a more socialist
agenda. Not good for importers to the EU.
But much worse than this is right wing
factions across the continent come to the
fore, leading to a break up of the EU and
failure of the Euro – this would indeed
create a worldwide crisis and deep
recession – just from the uncertainty
alone. How that will benefit the UK
is hard to imagine. A second steep
recession in less than a decade will push
several countries into meltdown. At
times like this extreme leaders tend to
pop up and then it can be a short step to
war. This seems incredibly far-fetched at
By Leigh Sparrow – Editor and Publisher of Vertikal.net.uk
Leigh gives us a run down on Brexit (British exit from the European Union) – what
happened, possible outcomes and the potential fallout economically and from a
manufacturing perspective – both for Europe and the rest of the world.
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HIRE AND RENTAL NEWS • AUGUST 2016
"The immediate
aftermath has seen
stock markets fall and
the value of Sterling
plunge to a 31 year low
against the dollar. This
will push up the cost of
imports to the UK..."