Brexit Denialism: The Customs/Border Problem and the Curious Case of the Pallets

England, home of many important Industrial Revolution innovations, appears to have suffered a form of generalized cognitive decline as a result of its embrace of neoliberalism and the financial services industry. More and more people in positions of power seem to be adopting the behavior we first called out with Obama, of seeming to believe that every problem could be solved with better PR. That is now starting to look like a widespread behavior of the elites in late-stage neolibearlism. People in the financial services industry too often believe that if they can make something work on a spreadsheet, it actually works in real life. The problem is that making spreadsheets sing actually is a very successful approach as far as the financiers are concerned, since that helps them sell deals and investments, while the hapless chump buyers find out that later that they’ve been sold the informational equivalent of adulterated goods.

One of the examples of the refusal to engage with messy real world issues is the la-la land thinking that is almost pervasive when it comes to dealing with border and customs issues post Brexit. More and more Conservatives are starting to recognize that more needs to be done than they can possibly complete by March 2019, hence more and more willingness to contemplate a “transition” or other forms of a softer Brexit. But even these ideas are typically wooly-headed, not worked out in adequate detail, and often would be as undoable as a Brexit (for instance, the fans of a Switzerland-type solution, when Switzerland has negotiated roughly 120 bi-lateral deals, something that would be at least as time-consuming as hammering out a Brexit and a new trade deal with the EU).

The fact that the Irish border question is one of the three first issues to be resolved in the Brexit talks, and no one has a clue how to do that, has put a bit more light on the question of managing borders generally. Consider this high-level discussion from one of the LSE’s blogs (hat tip micael):

…all businesses trading across any customs border will have to find the resource to meet the very significant administrative burden of making electronic declarations for all goods imported and exported. This will have a chilling effect on growth of north/south trade, regardless of whether tariffs are imposed or not. Documentary evidence of proof of origin is another potential new and costly burden. Even if special measures are introduced which help reduce customs burdens at the time and place of import it is highly likely that additional record keeping would be needed to support the maintenance of extended auditable business records….

As we have explained elsewhere, customs administration is difficult – especially in the absence of adequate preparation, capacity for data exchange (ref: the current problems in the development of the customs declaration system due to replace CHIEF), and the paucity of highly experienced customs officers. We have also shown that, while the US-Canada border experience does demonstrate increased efficiency in processing customs clearance through the use of technology, it also shows that successful cross-border trade thrives on regulatory harmonisation and the movement of people to accompany the movement of goods – two points that the UK government seems determined to block post-Brexit.

Let us look in more detail as to what happens if the UK continues down its track of insisting, bugger all, that it won’t harmonize standards with the EU. Reader vlade provided this comment on a post last October, contemplating both scenarios, the “what if you aren’t synched up” versus what you needed to do to achieve that:

I will still claim that tariffs are the easy bit. The hard bit (and your customs IT system needs to deal with that, and a lot of complexity comes from that) is the NTBs. I keep saying Mutual Recognition Agreements (MRA) over and over – but it really is important, and even a number of Brexiters (the ones not blinded by power, history, or whatever) even reconigsed it and were saying as easly as Feb this year WTO is not an option (even assuming can opener – i.e. full and proper WTO membership on day one).

The country of origin rules are massively complex, and what Yves describe (tarrifs based on that) is one potential. What happens is that the tarifs are based on the “last substantial value add”. So if you import chinese stuff, and just package it and sell to EU, the tariffs will be the same as if it come straight from China.

On the other hand, if you incorporate a part into a whole that is substantially more valuable (and how do you decided that is part of the fun) than the other parts, the tariffs are now based on the country where that last ad-valorem happened.

There are other rules, but I’m not going to turn this into a specialist post (especially since I haven’t read the WTO rules in full yet) – but you get the idea.

Now though, it get even more complicated. On the top of being able to determine whether or not a tariffs applies, any goods imported must meet the standards of the importing country. And EU has lots of them (even if it DOES NOT have a standard for how curved bananas shoud be, as the british press told us).

This can be fundamentally met only in two ways. Either via MRA (where you recongise each others standards setting bodies, standards, rules and regulations etc.. Remember – this is not just a snapshot in time, but also takes into account that the bodies/standards etc. evolve with time, so extra layer of complexity there).

Or, that you take a sample from each shippment, and test it. Of course, the owner of the samples (importer) pays the cost of the testing, and it also pays the cost of storing the freight while it’s being tested. So it costs the importer time and money.

TBH, I can’t see how could you possibly trade something complex like cars or plane parts (where safety is involved) w/o an MRA.

And your customs IT system has to support all of that!

Oh, but you say “well, let’s set tariffs to zero for everything!”. Well, that may sort out your customs IT problems – around the tariffs. Unless you want to throw out of the window all YOUR standards, that means you still need to establish the compliance. And I can assure you that if you do throw out all your standards, getting an MRA with somoene else is going to be a nightmare.

So your exporters rather get going on implementing the MRA-less trading processes right now, and hope to get there in time. A friend of mine runs a small caliber ammo manufacturer (very highly policed stuff), and based on what I heard, I doubt he would be able to get their processes and systems in place in two years, and that’s knowing what needs to be done and how.

The LSE article similarly underscores the downside if the UK refuses to comply with EU standards, focusing on an issue important to Ireland, that of cross-border agricultural trade:

Similarly misleading is the claim that the ‘UK can use the WTO Agreement on Sanitary and Phyto-sanitary measures (SPS Agreement) to put pressure on the EU to agree suitable mutual recognition provisions on the date of Brexit’ (p.14) – even going so far as to suggest that it can take legal action to ensure it can continue to export to member-states.

But if the UK were to do a deal with another third country that would allow the free import of agricultural produce (that yummy prospect of chlorinated chicken), the EU has an absolute right to impose barriers to agricultural goods from the UK in order to effectively maintain food safety standards. Any legal case from the UK against this would not get beyond the initial phone call to the lawyers.

For the Special Trade Commission to get this so wrong either implies wilful ignorance (or misrepresentation) of the laws and norms of EU membership and international trade, or else complete indulgence in delusional old-school British nationalism.

And separate from the issue of “harmonize or not,” consider the problem of the pallets, from andy b at Medium via our Richard Smith:

In less than 2 years the UK will be leaving the EU becoming a third country. I am looking in this blog at wooden packing requirements as a third country exporting to the EU. These standards include wooden packing cases and in particular wooden pallets which everyone uses. This is entirely separate from what is in or on that packaging.

The EU requires all imports that have wooden packaging from third countries to conform to ISPM 15 standard http://www.ispm15.com as set out in http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX%3A32004L0102

Currently as the UK is trading within the single market shippers do not have to conform to this standard. If you export to the single market you can use less strict standards as set out by HMRC https://www.gov.uk/wood-packaging-import-export , in reality it means in practice you can use any old pallet that is laying about as there is no control point that checks this requirement.

At 2300 (the UK being an hour behind) on the 29th March 2019 we will have to conform to ISPM15. At that point there will be a control point at the border doing these checks that we are meeting that requirement. A certain amount of trailers will be stopped and checked that the packaging is conforming to the standard. This will cause delays as every wooden pallet will have to be checked for the required marking. In practice this would mean being very careful of how the vehicles are loaded. With a curtain sided vehicle with all the pallet markings on the outside then easier, with a solid sided vehicle everything will be offloaded and checked.

Typically all Customs world wide work via risk profiling. If the ones they do check are fine then they will stick to minimum checks, if (and as I expect) the ones they stop particularly groupage trailers do not conform they will have to check more and more.

This is difficult enough but even then I am assuming there will be a deal on trade and mutual recognition agreements that the notifiable institution (in the UK it is the Forestry Commission) that oversee standards will be recognised by the EU. This isn’t looking currently likely in the event of a hard Brexit, At a stroke we would find that they would not recognise the markings on the wooden packing and would either mean it cannot cross the border or requires fumigation.

And on top of that, we flagged, nearly a full year ago, that a major customs system upgrade was due to conclude a mere two months before the Brexit date of March 2019. As any IT professional will tell you, large IT projects have a high failure rate, meaning they don’t get completed at all. “Success” in large IT project merely means running not too horrifically behind schedule and over budget.

From an October 2016 post (there is way more detail in the original for the curious):

What has escaped the notice of many observers is that “tariffs” for manufactured goods means that the charges are levied based on the country of origin of the constituent parts. This means a very elaborate customs declaration and tariff computation for goods of real complexity. And yes, there are customs inspections too (I assume on a sampling basis; readers can clue me in)….

While that is bad enough, a looming problem is far worse. All this border documentation is managed by computer systems. The UK’s present system for handling non-EU-related trade is almost 25 years old and was set for replacement. The new system, called CDS for Customs Declaration System, to be ready by 2018 and to have the capacity to handle 100 million transactions,. At double the current level of 50 million, that would have seemed to be ample headroom.

Reading between the lines of the Financial Time story, there seems to be some doubt as to whether the original spec could have been pulled off in time. But now with Brexit, the project suddenly has a major spec change: it has to handle 350 million transactions.

And what the story does not mention, but seems likely to be the case, is that there are tons of other spec changes that have yet to be identified and documented related to EU and UK tariffs on specific goods. And if the system tracks things like port of embarkation and disembarkation, more data fields need to be added for all the EU ports and air cargo locations. And of course, the Euro currency data field needs to go in too.

In other words, there is a ton of very nitty gritty work that needs to be done to have any form of Brexit not be a train wreck. Not only is that not being done, no one in the Government seems to think that anything remotely like that level of specificity needs to happen. So regardless of the timetable, unless the officialdom gets some sense knocked into it, the UK is going to have a very bad time.

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34 comments

  1. Colonel Smithers

    Thank you, Yves.

    This post is timely and allows me to relay tidbits from friends and former colleagues, all political activists in France (Les Republicains) and Germany (Christian, Free and Social Democrats) and who have worked in the City. I have been driving around the western half of France for the past month and am working from my German TBTF’s Paris office for a fortnight (until the Arc week-end :-)). Three are working on Brexit (the German trio).

    Brexit is perceived as the UK’s problem, especially as such a big percentage of the UK’s trade is with the EU. The EU27 are moving on after the initial shock of the summer of 2016. The media and locals I talk to hardly mention Brexit. The Member State governments seem content to let Barnier get on with it. The British government’s attitude is alienating its natural supporters, often, but not always, neo-liberal. East European Member States who have little trade with the UK, but have many emigrants in the UK, and are looking at either lower EU subsidies or higher contributions are the ones the UK should be wooing. These newer members are likely to play hard ball. My friends, former colleagues and I mused at what sort of EU the UK will re-join within a decade. We agreed that the UK is about to learn a lesson in how the world works now, and the rest of the world no longer cares for and is intimidated by Brits with cut glass accents. We did not quite say, but implied, that it will be funny to watch the Blond Bombshell et al try to make the best of what is coming. I added that many innocent people will suffer.

    It was funny to hear the BBC, Fox and CNBC say how France was a basket case due to its labour laws and the lifestyles preferred by its citizenry. Normandy, the Loire Valley, the Limousin, the Bordelais and Paris seem in far better shape than the UK and US, although locals see there’s a lot of discontent, often expressed in roadside graffiti, and increasing cynicism about Macron. The BBC’s Sally Bundock and Katty Kay asked viewers to contact them about how they were faring in “paralysed” France on the day of the strikes, 12 September. I was driving around Bordeaux, Margaux and Pauillac that day and tempted to contact them and ask what they were drinking or smoking. Deirdre on Fox, late of Bloomberg, was no better. The Brexiteers who say that “they need us more than we need them” or neo-liberals who BS that France needs Anglo-Saxon reforms are deluded beyond belief.

    On other notes, it’s refreshing to get away from the UK and US media’s obsession with every Trump utterance and bowel movement, and the identity politics and atomisation of society promoted by the Anglo-Saxon media. The French media may be parochial, but it tends to address issues of relevance to one’s day to day existence, rather than, say, the latest neo-con whizz of using the Rohingyas and demonising Myanmar’s leadership.

    Coverage of the cyclones in the Caribbean and Gulf are also revelatory. The French media has more scientists on the airwaves and is exploring the link to warmer seas and global warming. The BBC has the odd Met Office presenter on, but steers well clear of the climate change elephant in the room.

    I apologise profusely for going off piste.

    1. PlutoniumKun

      Its great to have you back commenting, CS.

      I think your reports on attitudes in Europe chime with everything else I’ve read – Europe has simply moved on, and has no real interest any more in Brexit. There is no political will to make a quick and favourable deal for the UK. A lot depends of course on what Barniers private instructions are – has he been told to work hard at a compromise deal, or has he been told to only agree to what he is certain he can get past the EU27 and the EU Parliament? I think this is a key to knowing whether any sort of cobbled together compromise is possible. The one thing for certain I’ve seen is that Britain has been hopeless at recruiting friends or allies in Europe. They seem to have managed to alienate pretty much everyone, including right wing European eurosceptics.

      As for France, I’ve been reading about Frances imminent economic demise since I started reading economics and business news in the mid 1980’s. And somehow, it still hasn’t happened, much to the thinly veiled disappointment of much of the English language media. I’ve travelled enough in France to have seen its many deep problems – the poverty stricken suburbs of Paris, the many failing small towns and cities. But if I had to live in poverty, I’d choose France in a heartbeat over the US or UK. The overall quality of life in France is so very high, despite the grumbles (and boy, do the French love to grumble about everything).

      1. Colonel Smithers

        Thank you, PK. I am glad that you are back, too, and enjoy your comments.

        On another note, the Irish influence in and around Bordeaux is still widely felt. There are many youngsters studying there. Many former students stay.

        The tour guide in Margaux did not explain why so many Irish families migrated in the 18th century. I didn’t ask why.

        It is rather sporting of the French to have a main road in Castillon la Bataille named after the English commander who lost there in 1453, thus bringing an end to the 100 Years’ War. There’s also a monument to John Talbot.

        1. Anonymous2

          Good to hear from you again Colonel.

          Do you know if the Irish diaspora to Bordeaux was C18 or late C17? My recollection is that some of James II and VII’s followers went to France with him after the Boyne and settled there. The Dillons among them IIRC.

          1. Colonel Smithers

            Thank you.

            The guide said 18th century.

            I know what you mean by the reference to the 17th century migrants. They did not appear to go around the south west.

          2. PlutoniumKun

            There were links between that part of France and the south-east of Ireland for a long period. Many of the towns in SE Ireland were founded by Quakers and Hugenots of French extraction going back to the late 17th Century. From what I know, the main driver of Irish settlement in Bordeaux was the extablishment of the Barrow Navigation and Grand Canal in the late 18thC, which linked the south-east coast with Dublin, making it an effective trade route between Ireland and France (and to Britain via Ireland, during the Napoleonic Wars).

            There was a roaring trade with ‘beefes’ and wheat going to France, with wine and brandy coming the other way. The custom among wealthy catholic families was to send one son to Paris to train as a priest (no seminaries were permitted in Ireland), with another son going to establish connections with prominent Bordeaux families for trade. Hence the presence of Wexford and Waterford names such as Hennessey, Barton and Lynch in vineyards there.

            All this more or less ended at Waterloo, which meant that Britain could trade directly with France and there was less demand in Europe for Irish wheat.

  2. Colonel Smithers

    Thank you, Yves.

    I forgot to add that one should not be surprised at what Legatum’s Special Trade Commission does or, more accurately, doesn’t. I wasn’t aware that they / the STC pair seconded to the British Government were interested in any sort of deal and / or transition. Just look at who funds and is funded / employed by Legatum. When Shanker Singham is not “working” with his Atlantic Bridge friend Liam Fox, he’s on the airwaves gunning for Trump and promoting Calexit. Singham doesn’t adhere to the MAGA agenda, sadly.

  3. Anonymous2

    Thanks Yves for another intelligent contribution.

    Business people I know are already preparing for the possibility of a real disaster by arranging to move all the business activity that needs to be outside the UK into other EU countries before March 2019. I.e. keep within the UK only that business which is internal to the UK. This may offset some of the problems with cross border trade by reducing the volume of business. It rather cuts across the Brexiteers idea that UK businesses will switch their attention to exporting to non-EU markets as it means they may in significant degree move the business activity outside the UK instead. Of course the effect can be offset by reducing the value of sterling and cutting living standards. The problem is that many of the 51.9% who voted to leave the EU thought they would be better off as a result. They will be unpleasantly surprised once they realise their mistake.

    1. Darn

      If Brexit causes a new recession the 51.9% will be very unhappy indeed. If the only transitional deal after Article 50 that can be obtained is to stay in the EU with the exact same rights and obligations, and I suppose without the budget rebate and so on, as the deadline approaches I expect the British willingness to accept this will increase among the electorate and the government (which will be under business pressure). Then EU membership can be dismantled slowly step-by-step, if at all, which is the only form in which it should have been attempted.

  4. divadab

    “while the US-Canada border experience does demonstrate increased efficiency in processing customs clearance through the use of technology, it also shows that successful cross-border trade thrives on regulatory harmonisation and the movement of people to accompany the movement of goods – two points that the UK government seems determined to block post-Brexit.”

    There is no free movement of people between Canada and the United States – it is all regulated. I accept the author’s argument that a great deal of effort is required to set up and maintain an efficient cross-border goods clearance regime – and I know from personal experience that it took several years for systems to run without hiccups post-FTA and -NAFTA between Canada and the US. That 90% of Canada’s exports are to the USA has been highly motivating! However, any Canadian who shows up at the US border expecting to enter freely is in for a rude shock. He can enter only as a tourist and is not permitted to work, and if the border guard thinks he intends to work absent a permit, he will be denied entry. And it works the same way for USians entering Canada.

    A customs union need only be for goods – IMHO most of the intra-EU friction, and certainly the major cause of Brexit is the free movement of people from poor countries to rich creating problems for the less able in rich counties – the UK in this case.

    1. Darn

      Yeah I was gonna ask about that! I found it hard to believe Canadians could work in the US without a visa, or vice versa. The Irish border does raise the issue of keeping free movement of ppl while preventing it being used as a back door for illegal immigration from the EU via the Republic. In which case it means identity (citizenship) checks at the border, and if that was considered too much I assume they will start doing it in Great Britain for arrivals from NI and the RoI, if Brexit isn’t stopped.

      1. Joel

        My guess as to what is meant: there isn’t free movement of people among NAFTA countries, but the bar for immigration sponsorship is much lower than for any other country. It’s definitely a paperwork headache but it’s far more feasible as a US employer to hire a Canadian than any other nationality.

        Also, these countries are already pretty lax about business travelers. AFAIK, with just a tourist visa or visa waiver you can sign contracts, conduct sales, make presentations, do research, form corporations, open bank accounts (for the few banks that will take your money) etc. as long as you aren’t working for a US entity and don’t stay more than 6 months in a year-long period. Maybe that’s not the case in the UK/EU? Certainly not the case in much of the rest of the world.

        1. Nick

          Not really — Canadian immigration follows a points system, and though an American would get a benefit from fluent English, that’s about it. It is possible for Canadians, Mexicans, and Americans to work in each other’s countries, but those possibilities are limited and sometimes uncertain. For example, a Canadian, if they get a job offer in the United States in a field that qualifies, can show up at the border with all of their documentation, including education and professional qualifications, and if the border agent approves, they are issued a TN (treaty national) visa on the spot. This has to be renewed each year at the border, and becomes less likely as time goes on (it is not meant to be a residence visa). It’s not a really great process, success isn’t known until one is actually at the border.

          It’s not quite ‘sponsorship’ or ‘immigration’ so much as a limited right to work that can be jerked away capriciously.

  5. kurt andersen

    With 30 years of experience working on manufacturing compliance, I can attest that
    1. the British blame the EU for legislation – or the Greens, who seem to have an insidious influence, despite their small representation
    2. the UK doesn’t need to comply, they can just do their own thing
    3. companies that tried to do their own thing suddenly found out that their thing was no longer manufactured anywhere on earth because of global regulatory changes
    4. the UK has often led changes, then blamed the EU for what it has done
    The UK is heading for disaster with its exit attempt to be separate, which will either result in non compliance and no global market or it will have to keep adopting EU rules and laws

    1. Synoia

      Yes, and the EU is a wonderful paradise which has the proven track record of helping its less affluent member countries. Or is it becoming the next German Empire? All previous of which have historically ended with huge wars.

      Please pardon my skepticism of the EU, as I view it as a bastion of neo-liberalism, with benefits for some (The Rich and Germany), and not so much for the remainder (Workers and the PIIGS).

      My tentative view is better off out than in, especially if it demolishes the UK’s over reliance on the finance industry and forces focus elsewhere, which would be a welcome change since 1979.

      The EU will punish the UK, out of spite and a to make an example of those who want to leave. The Tories will want to loose the next election, the one after Brexit, and leave both the mess and the blame with the new labor Government, and a Woman Prime Minister, – a set of poisoned chalices.

  6. marku52

    Here is a blogger who is pro-Brexit but recognizes that the Tories are making a massive mess out of it.
    “The report in question is more or less a micro version of their broader approach to trade which assumes that the UK can have bespoke mutual recognition agreements on standards and conformity assessment along with the ability to diverge at will without consultation. Categorically this is not going to happen.

    They also assume that the customs controls on the border can be replaced with behind the border controls based on advanced technology, some of it barely in its infancy. This would be a stretch even if there were no time constraints.

    As outlined before, the only way we can ensure an open border in Ireland is to replicate as much of the existing regulatory infrastructure as possible – and since the customs aspects of these arrangements will be unprecedented exceptions the whole settlement will have to be an NI specific special status.

    The reason for this being that the NI border also becomes the EU’s outer frontier – which we are effectively proposing to demilitarise (for want of a better word). No such arrangement presently exists anywhere in the world and were the EU to make exceptions for the UK in this regard it would have to make the same exception for all. That is how the rules based system works.”

    The whole thing is pretty on point.
    http://peterjnorth.blogspot.com/2017/09/smelling-like-set-up.html

    1. andy blatchford

      Yep pretty much Pete is spot on (in my pallet piece above I thanked his father for the EU link).
      There are 2 options for Northern Ireland either it stays part of the UK with a hard border with the ROI or the border is moved to the middle of the Irish Sea where essentially NI is reunited with the ROI. neither is politically acceptable.

      What he hasn’t said is the border isn’t just a customs border it is also a tax border, the tax is VAT which is always collected at the border (it’s a reclaim system), without that hard border it is a VAT fraudsters nirvana.

      1. marku52

        It’s hard to see any possible way this can work. And it’s one of the first three things that have to be settled. What a mess! And the Tories are just walking eyes wide open into a disaster. I suppose they’ll just blame the EU.

        Good point on the VAT.

      2. Darn

        A customs border shouldn’t be assumed to be politically unacceptable, as nationalists have no means of rejecting it. Northern nationalists can do nothing, and the Republic can threaten to veto a transitional deal for the UK, but that would itself cause a hard Brexit, with customs checks on day 1. It would also maximise the economic damage to the Republic which Brexit will cause. Since the volume of trade with GB is far larger than with NI, they must prioritise the least-worst option, which is to avoid an Irish Sea border.

        Varadkar has already suggested the UK could be in a customs union with the EU, since there is already a (limited) one with Turkey. In this way we might see a transitional deal followed by a soft Brexit that includes a customs union, unless the UK gives up on Brexit altogether. http://www.bbc.co.uk/news/uk-northern-ireland-40827798

        That leaves the matter of the dissident republican terrorists. A reminder that it’s hypothetical. Although their attacks are common they usually fail; examples in the next link. Border posts could be given a lot of security like the police are. In the last 20 yrs, the only security forces deaths have been 2 soldiers, 2 policemen, and 2 prison officers. That’s been unpopular. The idea customs officers would make such easy or popular targets is fanciful. https://en.wikipedia.org/wiki/%C3%93glaigh_na_h%C3%89ireann_(Real_IRA_splinter_group)

        1. marku52

          My understanding was that the border was very porous, with a lot of small roads that criss-cross the border many times. Any type of customs control would be very difficult.

          Maybe not politically unacceptable, but unworkable.

          1. Darn

            It is true that the border is very crinkly with many crossings; I take issue only with andy’s point about political acceptability. And not unworkable either, since there were customs controls even after joining the EEC in 1973 all the way until the completion of the single market in 1993. That’s far from “unworkable”. Brexit is still a terrible idea, but the politics and economics of the border are a minor part of the damage, even for Northern Ireland.

        2. andy blatchford

          A customs union isn’t the same thing as a single market. All a CU does is set a common external tariff and no duties between the 2. There will still be customs entries from day 1 and the VAT issue.

          1. Darn

            Well, it was Varadkar who suggested it; it may thus be he doesn’t much care about border posts compared to just preventing tariffs.

  7. David

    No worries, King Charles will get it sorted. /sarc

    Having a new, unpopular, meddlesome head of state will make Brexit much more painful.

  8. Joel

    As a small business owner, what shocks me most is the “leaders” who say that British businesses can just get new customers to replace their EU customers once they become un-competitive.

    Two of the most valuable assets for any business are its customer list and its leads list. Those reflect massive investments and can’t just be recreated at a moment’s notice. In fact, businesses that otherwise have negative equity (see some of the failed banks in the financial crisis) have been acquired just for these assets.

    Anyone who says “just find new customers” without realizing that they’re saying “torch a substantial part of your business’s asset value” has obviously never worked at the head of an actual business (as is the case with so many “pro-business” conservative ideologues).

    1. marku52

      Yes, most of the UK’s trade is with the EU. That’s going to be hard to replace. Even ignoring the import replacement problem.

  9. ChrisPacific

    Thanks for this summary. The vlade comment made an impression on me at the time, and has been in the back of my mind every time I read the latest offhand remark by government on how they will easily be able to deliver several mutually contradictory outcomes at the same time through the magic of technology.

    Large IT projects are like icebergs in the sense that you can only see about 10% of them on the surface. Perspectives like vlade’s are worth their weight in gold because they give you visibility of some of the other 90%. The more of them you can gather, the greater the chance that it won’t all end up in a life-destroying career-ruining disaster. The government should be seeking them out every chance they get. Instead they seem to be ignoring or marginalizing them.

  10. animalogic

    I wonder could someone comment –speculate — on how a Labour government — should it win the next UK election — might handle (presumably) the “post” Brexit situation ? Thanks

  11. Patrick Donnelly

    Brexit is another ploy by Perfidious Albion.

    The exchange rate has to drop for the UK to fully join the EU, by adopting the Euro. A staggeringly inept attempt to leave should allow many opportunities for FX movements and to assemble the momentum to drive down the GBP.

    “With one bound, he was free!” This Euro love is to happen when a pro EU party assumes power. The EU would have to be in on this at a high level.

    It is also a useful distraction from bank and business failures in the UK. It may be apocryphal that Stalin said that those who count the votes have the power, but the Crown, as opposed to the Monarchy, decides.

  12. SA

    The UK seems to be under the delusion that it is negotiating with the EU. It is not; the EU has already laid out the terms for the UK: settle up accounts, present a solution to the Irish border problem, and guarantee the rights of EU citizens living and working in the UK. The UK will go on trying to talk about other issues (including a transition period), and the EU won’t budge because they have no reason to: pressures on the UK government will rise more and more as time passes, and once it becomes clear that the only Brexit available outside the terms set by the EU is a hard Brexit, there will be economic chaos in the UK, and the UK will either have to accept the EU’s terms or rescind the Article 50 notification.

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