Business

On 22 June 2016 – the day before the Brexit referendum – more than 1,000 business executives signed a letter backing the UK’s membership of the European Union.The group, which including the bosses of half of the companies in the FTSE 100, stated: “Britain leaving the EU would mean uncertainty for our firms, less trade with Europe and fewer jobs”.
Business lost that battle of course. The electorate voted by 52 per cent to 48 per cent to leave.
And the stark reality is that business has lost just about every battle since.
After the referendum, corporate Britain fought for the UK to remain, if not in the European Union itself, then at least in the EU’s single market and the customs union. They lobbied for a liberal immigration regime.  But the customs union membership is going, single market membership will soon be history and the incoming new immigration regime will be much more restrictive.
And now, if Boris Johnson fails to conclude a free trade deal, there is the prospect of tariffs on exports to and imports from a region with which we do almost half our trade. All from the end of this month.“It’d be hard to imagine a worse outcome than this,” admits one weary business representative.
Even a thin free trade agreement would be well below the worst fears of many firms and lobby groups on that morning after the shock referendum result back in 2016.As ministers freely admit, the UK government has been battling for the abstract conception of “sovereignty”, not concrete business interests, in the negotiations with Brussels.Deal or no deal, business has lost the Brexit war.
So how did it come to this?
In June 2018 Boris Johnson, then Foreign Secretary in Theresa May’s government, was at an event for EU diplomats.  Belgium’s ambassador to the EU asked about businesses concerns about the possibility of a hard Brexit, which in those more innocent days was defined as the UK leaving the single market and customs union.
“Fuck business,” was Johnson’s reported response.So whose fault is it that business has lost the Brexit war?
Was it the fault of a Conservative Party driven by pro-Brexit ideology? Was it because ministers were too afraid to challenge the prejudices of party members? Or was it a failure of businesses to lobby effectively? Did corporate Britain fail to grasp the nature of the post-referendum world and the new priorities of the public?  Did politicians fuck business or did business, to some extent, screw themselves?  Opening the closetIt was this decision by Ms May which set the UK on an early course to a hard Brexit.
“If we [business] had been bolder during that first six-month period and more collected that would have made a difference,” says Ms Sykes. More

On 31 December the post-Brexit transition period ends and, with or without a free trade deal with the European Union, the UK will start life outside the EU’s single market and customs union.That will, pretty much all economists tell us, have a substantial economic impact on our lives.  But what exactly will those impacts be – and how will ordinary people experience them?
Below we describe how the two varieties of Brexit are likely to impact house prices and mortgages – two areas which people commonly equate with their wealth and personal finances.Leaving the EU with a free trade deal would, according to the Treasury’s independent Office for Budget Responsibility be a long-term drag on the economy, reducing economic output by around 4 per cent relative to otherwise.
But it would mean any short-term disruption, above and beyond the huge coronavirus impact, would be avoided.
During the lockdown earlier this year the housing market largely ground to a halt, with the number of transactions collapsing in April.But the traded price of the average house hasn’t collapsed this year. And the market has been bolstered by a stamp duty holiday from the chancellor announced in the summer, which lasts until March 2021.All this suggests that leaving the EU with a successful trade deal probably won’t have a short-term negative impact on house prices.
In the longer term, the price of housing will be determined by the balance of supply of new housing and the demand for it and also interest rates. Moving from EU membership to a free-trade deal with the bloc is unlikely to directly influence these major structural determinants.As for mortgages, most borrowers’ repayments are indirectly determined by the main national interest rate set by the Bank of England. Leaving the EU with a trade deal would be a more benign economic scenario from the point of view of the Bank’s rate setting committee.It might bring forward the date at which the Bank raises rates, relative to a no-deal scenario on 31 December. And that could push up mortgage repayments for many households.Yet the Bank is mindful of the overall economy, which is still in the grip of the coronavirus emergency, and financial markets are not expecting significant rate rises from the Bank any time soon, whether there is a Brexit deal or not.Some surveyors are nervous about the impact of a no-deal Brexit on the UK housing market.  Several cite it, alongside the impact of Covid, in the latest survey by the Royal Institution of Chartered Surveyors (RICS) as a potential dampener on the market.  If unemployment rises sharply next year because of the coronavirus crisis and a no-deal Brexit that’s unlikely to be positive for house prices.Yet it’s hard to say with any confidence that house prices would fall in the event of a no-deal Brexit, especially as they have held up extraordinarily well in the face of the coronavirus crisis, which has seen the biggest shock to the UK economy in some three hundred years.
As for mortgages, financial markets are currently pricing in the Bank of England cutting interest rates below zero in the coming months to help support the economy. Many analysts think a no-deal Brexit could be the factor that pushes the Bank to take such a plunge into negative territory for the first time.While negative interest rates probably wouldn’t result in a fall in average mortgage repayments from their current ultra-low levels, it would ensure they didn’t rise.  This could help cushion the financial blow of a no-deal Brexit for some households. But for those who work in sectors such as manufacturing, which are especially exposed to the shock of a no-deal Brexit, the bigger threat to their livelihoods would probably be redundancy than rising mortgage repayments. More

On 31 December the post-Brexit transition period ends and, with or without a free trade deal with the European Union, the UK will start life outside the EU’s single market and customs union.That will, pretty much all economists tell us, have a substantial economic impact on our lives.  But what exactly will those impacts be – and how will ordinary people experience them?
Below we describe how the two varieties of Brexit are likely to impact peoples’ wages, benefits and taxes.There are various ways of modelling the economic impact of the UK leaving the EU.  One is to analyse the likely overall economic impact on the UK economy of higher trade barriers with the EU, the bloc with which we currently do around half of our trade.Virtually every macroeconomic trade model shows that leaving the EU with a free trade deal would hold back the UK economy’s growth relative to staying in the bloc. The Office for Budget Responsibility, the Treasury’s own independent forecaster, this week estimated it would impede UK GDP growth over the next 15 or so years by around 4 per cent relative to where it otherwise would have been.  This picture would be roughly the same if we successfully concluded ambitious trade deals with the likes of countries such as the US, Australia and New Zealand.  The Government’s own economic modelling team estimates all these deals combined would add a maximum of 0.2 per cent of GDP in the long run.This 4 per cent of GDP loss accounts for £80bn in today’s money, or around £3,000 for each of the UK’s 28 million households. This could be experienced in the form of lower wages, lower benefits and higher taxes than otherwise would have accrued to households.  £3,000A rough indication of the size of the economic pain that would be borne by the average household from leaving the EU with a Brexit dealIt’s impossible to say exactly how much individual households would suffer financially, because this will depend on which sectors of the economy members of a household work in and the decisions of future politicians about redistribution through benefits and taxes. But this £3,000 figure gives a rough indication of the size of the economic pain that would be borne by the average householdAnother way to model Brexit is to examine different sectors such as agriculture, finance, fishing, manufacturing and so on. These exercises show that some sectors, specifically those that do a great deal more in trade with the Continent than others, would face more damage.  Modelling suggests clothing, chemicals, pharmaceuticals, motor manufacturing, agriculture and financial services would be hit the most.  This implies that workers in those industries would likely face a more severe economic hit. But firms in sectors that don’t trade much with Europe, such as construction, might well be relatively unaffected. However, it’s important to stress that such sectors could also be negatively impacted by future restrictions on EU migration, which would have implications for the wages of those who currently work in them.Leaving the EU without a trade deal on 31 December would, according to the UK’s independent Office for Budget Responsibility (OBR), hold back UK GDP growth by around 2 per cent in 2021, or £40bn.  That translates into a loss of £1,500 per UK household. And over 15 years the OBR estimates, based on the modelling done by a host of independent researchers, that the damage would hit 6 per cent of GDP, or around £120bn, or around £4,000 per household.
Again, it’s impossible to say precisely which households would suffer because this would depend on which sectors people work in and the decisions of future politicians about benefits and taxes.  Yet this is a rough indication of the size of the economic pain that would be borne – in some way – by the average UK household.
The impact of a no-deal Brexit on particular sectors would be even more unequally felt than leaving the EU with a free trade deal.  Many exporting firms would face EU tariffs, which would make those exports less competitive and likely reduce demand for them, blowing a hole in the incomes of people working in these sectors.The impact on the automotive sector would be especially severe because all cars exported to the EU ( the destination of half of UK-manufactured cars), would be hit by a 10 per cent tariff.The OBR thinks unemployment would rise by around 300,000 next year, relative to otherwise, if we left the EU without a free trade deal. It’s likely that these lost jobs would be concentrated in those sectors which are heavily reliant on EU trade. Researchers at the Institute for Fiscal Studies calculate that lower-skilled workers more likely to be hit economically by a no-deal Brexit.“These tend to be older men with skills specific to their occupation who, history suggests, may struggle to find equally well-paid work if their current employment were to disappear,” they note. More

On 31 December the post-Brexit transition period ends and, with or without a free trade deal with the European Union, the UK will start life outside the EU’s single market and customs union.That will, pretty much all economists tell us, have a substantial economic impact on our lives.  But what exactly will those impacts be – and how will ordinary people experience them?
Below we describe how the two varieties of Brexit are likely to impact peoples’ wages, benefits and taxes.There are various ways of modelling the economic impact of the UK leaving the EU.  One is to analyse the likely overall economic impact on the UK economy of higher trade barriers with the EU, the bloc with which we currently do around half of our trade.Virtually every macroeconomic trade model shows that leaving the EU with a free trade deal would hold back the UK economy’s growth relative to staying in the bloc. The Office for Budget Responsibility, the Treasury’s own independent forecaster, this week estimated it would impede UK GDP growth over the next 15 or so years by around 4 per cent relative to where it otherwise would have been.  This picture would be roughly the same if we successfully concluded ambitious trade deals with the likes of countries such as the US, Australia and New Zealand.  The Government’s own economic modelling team estimates all these deals combined would add a maximum of 0.2 per cent of GDP in the long run.This 4 per cent of GDP loss accounts for £80bn in today’s money, or around £3,000 for each of the UK’s 28 million households. This could be experienced in the form of lower wages, lower benefits and higher taxes than otherwise would have accrued to households.  £3,000A rough indication of the size of the economic pain that would be borne by the average household from leaving the EU with a Brexit dealIt’s impossible to say exactly how much individual households would suffer financially, because this will depend on which sectors of the economy members of a household work in and the decisions of future politicians about redistribution through benefits and taxes. But this £3,000 figure gives a rough indication of the size of the economic pain that would be borne by the average householdAnother way to model Brexit is to examine different sectors such as agriculture, finance, fishing, manufacturing and so on. These exercises show that some sectors, specifically those that do a great deal more in trade with the Continent than others, would face more damage.  Modelling suggests clothing, chemicals, pharmaceuticals, motor manufacturing, agriculture and financial services would be hit the most.  This implies that workers in those industries would likely face a more severe economic hit. But firms in sectors that don’t trade much with Europe, such as construction, might well be relatively unaffected. However, it’s important to stress that such sectors could also be negatively impacted by future restrictions on EU migration, which would have implications for the wages of those who currently work in them.Leaving the EU without a trade deal on 31 December would, according to the UK’s independent Office for Budget Responsibility (OBR), hold back UK GDP growth by around 2 per cent in 2021, or £40bn.  That translates into a loss of £1,500 per UK household. And over 15 years the OBR estimates, based on the modelling done by a host of independent researchers, that the damage would hit 6 per cent of GDP, or around £120bn, or around £4,000 per household.
Again, it’s impossible to say precisely which households would suffer because this would depend on which sectors people work in and the decisions of future politicians about benefits and taxes.  Yet this is a rough indication of the size of the economic pain that would be borne – in some way – by the average UK household.
The impact of a no-deal Brexit on particular sectors would be even more unequally felt than leaving the EU with a free trade deal.  Many exporting firms would face EU tariffs, which would make those exports less competitive and likely reduce demand for them, blowing a hole in the incomes of people working in these sectors.The impact on the automotive sector would be especially severe because all cars exported to the EU ( the destination of half of UK-manufactured cars), would be hit by a 10 per cent tariff.The OBR thinks unemployment would rise by around 300,000 next year, relative to otherwise, if we left the EU without a free trade deal. It’s likely that these lost jobs would be concentrated in those sectors which are heavily reliant on EU trade. Researchers at the Institute for Fiscal Studies calculate that lower-skilled workers more likely to be hit economically by a no-deal Brexit.“These tend to be older men with skills specific to their occupation who, history suggests, may struggle to find equally well-paid work if their current employment were to disappear,” they note. More