UK business suffers due to Brexit, pandemic

Photo: EPA

UK industry and trade showed evidence of serious distress as consequences from country’s exit from the EU mounted on top of slowdown caused by the Covid-19 pandemic. Official data quoted by Reuters showed alarming sighs related to the UK economy.

Manufacturers and services firms have been hit hard by supply chain and export disruption, according to data company IHS Markit. British factories reported the steepest increase in supplier delivery times among the six “flash” preliminary Purchasing Managers’ Index (PMI) surveys published by IHS Markit last week for France, Germany, Japan, Australia and the United States as well as the United Kingdom. “This was almost exclusively linked to both Brexit disruption and a severe lack of international shipping availability,” IHS Markit said.

Under a deal struck last month, trade between Britain and the European Union remains free of tariffs and quotas but a new full customs border means goods must be checked and paperwork filled in. Using a phrase that has angered many business owners, Prime Minister Boris Johnson described the disruption as “teething problems” which have been exacerbated by the Covid-19 pandemic. Trade experts think some of the extra cost and bureaucracy will be permanent. Proponents of Brexit say Britain will benefit in the long run by striking its own trade deals and forming its own regulations outside the EU. Brexit disruption in the first quarter of 2021 was likely to reduce British economic output by around 1%, International Monetary Fund Chief Economist Gita Gopinath elaborated.

Services companies - which account for the bulk of the British economy and generate a surplus in trade with the bloc - were hit this month, the IHS Markit survey showed.

Services exports deteriorated faster in Britain than in any other of the six flash PMIs published this month, bucking a trend of improvement seen in most other countries.

Similar articles

  • World food prices slump for first time in a year

    World food prices slump for first time in a year

    United Nations food agency (FAO) announced that world food prices posted in June their first fall in 12 months. The decline in prices was largely driven by cheaper vegetable oils in addition to cheaper cereals and dairy products, Reuters elaborated. FAO also said that worldwide harvests of cereals would result in almost nearly 2.817bn tonnes in 2021. That estimate is slightly weaker than previously forecast, but still on course to hit an annual record.

  • UK aims to join Asia-Pacific free trade accord

    UK aims to join Asia-Pacific free trade accord

    The United Kingdom plans to launch negotiations to join the Asia-Pacific free trade pact, BBC reported. Those intentions are targeted to secure to businesses from Britain to "some of the biggest economies of the present and future", the government said. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) consists of 11 countries and includes Australia, Canada and Japan. Membership in the pact would result in reduction of tariffs on exports such as cars and whisky.