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Johnson and Hunt's Brexit pledges irresponsible, say manufacturers Johnson and Hunt's Brexit pledges irresponsible, say manufacturers
(4 days later)
The battle between Boris Johnson and Jeremy Hunt to outdo each other in offering the hardest Brexit with “no deal” pledges is the “height of irresponsibility”, showing “zero understanding” of the consequences, business leaders have said.The battle between Boris Johnson and Jeremy Hunt to outdo each other in offering the hardest Brexit with “no deal” pledges is the “height of irresponsibility”, showing “zero understanding” of the consequences, business leaders have said.
The trade body Make UK spoke out after manufacturers suffered the sharpest fall in activity in six and a half years, adding to signs of economic weakness.The trade body Make UK spoke out after manufacturers suffered the sharpest fall in activity in six and a half years, adding to signs of economic weakness.
Seamus Nevin, the chief economist at the organisation, said: “Given this outlook, increasing competition to see who can race to the bottom and act tough on ‘no deal’ is the height of irresponsibility with zero understanding of the consequences.” Make UK represents companies ranging from Jaguar Land Rover, Nissan, BMW, Toyota, Airbus and BAE Systems to Lush Cosmetics, Warburtons and Ikea.Seamus Nevin, the chief economist at the organisation, said: “Given this outlook, increasing competition to see who can race to the bottom and act tough on ‘no deal’ is the height of irresponsibility with zero understanding of the consequences.” Make UK represents companies ranging from Jaguar Land Rover, Nissan, BMW, Toyota, Airbus and BAE Systems to Lush Cosmetics, Warburtons and Ikea.
The latest purchasing managers’ index (PMI) data showed that the decline in manufacturing activity in May was not a one-off related to the aftermath of Brexit stockpiling in March and the stoppages of some car manufacturing in April.The latest purchasing managers’ index (PMI) data showed that the decline in manufacturing activity in May was not a one-off related to the aftermath of Brexit stockpiling in March and the stoppages of some car manufacturing in April.
Nevin said: “Businesses are cutting back on both day-to-day and capital spending with the contraction in output a reflection of growing Brexit uncertainty and, worsening global trade winds.Nevin said: “Businesses are cutting back on both day-to-day and capital spending with the contraction in output a reflection of growing Brexit uncertainty and, worsening global trade winds.
“Looking ahead the picture shows little sign of improvement with signs of weakness now spreading across the eurozone.”“Looking ahead the picture shows little sign of improvement with signs of weakness now spreading across the eurozone.”
His comments came as the Tory leadership hopeful Jeremy Hunt set 30 September as the deadline to decide whether the UK would get a deal or no deal.His comments came as the Tory leadership hopeful Jeremy Hunt set 30 September as the deadline to decide whether the UK would get a deal or no deal.
At the weekend, Hunt upped the ante on no deal in an effort to make up ground on the favourite, Boris Johnson, who has pledged Brexit come what may, “do or die”.At the weekend, Hunt upped the ante on no deal in an effort to make up ground on the favourite, Boris Johnson, who has pledged Brexit come what may, “do or die”.
Brexit: both Tory sides play down risk of no-deal after business alarmBrexit: both Tory sides play down risk of no-deal after business alarm
Hunt, asked by the BBC’s Andrew Marr whether he would be willing to look the owners of family businesses “in the eye” when saying they should be prepared to see their companies go bust, said: “I would do so but I’d do it with a heavy heart precisely because of the risks.”Hunt, asked by the BBC’s Andrew Marr whether he would be willing to look the owners of family businesses “in the eye” when saying they should be prepared to see their companies go bust, said: “I would do so but I’d do it with a heavy heart precisely because of the risks.”
At 11pm UK time on 31 October the UK would, by default, become a “third country” in terms of relations with the EU, with no post-Brexit plan in place, and no transition period. The UK would no longer be paying into the EU budget, nor would it hand over the £39bn divorce payment.At 11pm UK time on 31 October the UK would, by default, become a “third country” in terms of relations with the EU, with no post-Brexit plan in place, and no transition period. The UK would no longer be paying into the EU budget, nor would it hand over the £39bn divorce payment.
The UK would drop out of countless arrangements, pacts and treaties, covering everything from tariffs to the movement of people, foodstuffs, other goods and data, to numerous specific deals on things such as aviation, and policing and security. Without an overall withdrawal agreement each element would need to be agreed. In the immediate aftermath, without a deal the UK would trade with the EU on the default terms of the World Trade Organization (WTO), including tariffs on agricultural goods.The UK would drop out of countless arrangements, pacts and treaties, covering everything from tariffs to the movement of people, foodstuffs, other goods and data, to numerous specific deals on things such as aviation, and policing and security. Without an overall withdrawal agreement each element would need to be agreed. In the immediate aftermath, without a deal the UK would trade with the EU on the default terms of the World Trade Organization (WTO), including tariffs on agricultural goods.
The UK government has already indicated that it will set low or no tariffs on goods coming into the country. This would lower the price of imports - making it harder for British manufacturers to compete with foreign goods. If the UK sets the tariffs to zero on goods coming in from the EU, under WTO ‘most favoured nation’ rules it must also offer the same zero tariffs to other countries. The UK government has already indicated that it will set low or no tariffs on goods coming into the country. This would lower the price of imports – making it harder for British manufacturers to compete with foreign goods. If the UK sets the tariffs to zero on goods coming in from the EU, under WTO ‘most favoured nation’ rules it must also offer the same zero tariffs to other countries.
WTO rules only cover goods - they do not apply to financial services, a significant part of the UK’s economy. Trading under WTO rules will also require border checks, which could cause delays at ports, and a severe challenge to the peace process in Ireland without alternative arrangements in place to avoid a hard border. WTO rules only cover goods – they do not apply to financial services, a significant part of the UK’s economy. Trading under WTO rules will also require border checks, which could cause delays at ports, and a severe challenge to the peace process in Ireland without alternative arrangements in place to avoid a hard border.
Some ‘no deal’ supporters have claimed that the UK can use article 24 of the General Agreement on Tariffs and Trade (Gatt) to force the EU to accept a period of up to ten years where there are no tariffs while a free trade agreement (FTA) is negotiated. However, the UK cannot invoke article 24 unilaterally - the EU would have to agree to it. In previous cases where the article has been used, the two sides had a deal in place, and it has never been used to replicate something of the scale and complexity of the EU and the UK’s trading relationship. Some no-deal supporters have claimed that the UK can use article 24 of the General Agreement on Tariffs and Trade (Gatt) to force the EU to accept a period of up to ten years where there are no tariffs while a free trade agreement (FTA) is negotiated. However, the UK cannot invoke article 24 unilaterally – the EU would have to agree to it. In previous cases where the article has been used, the two sides had a deal in place, and it has never been used to replicate something of the scale and complexity of the EU and the UK’s trading relationship.
The Director General of the WTO, Roberto Azevêdo, has told Prospect magazine that "in simple factual terms in this scenario, you could expect to see the application of tariffs between the UK and EU where currently there are none." The director general of the WTO, Roberto Azevêdo, has told Prospect magazine that "in simple factual terms in this scenario, you could expect to see the application of tariffs between the UK and EU where currently there are none".
Until some agreements are in place, a ‘no deal’ scenario will place extra overheads on UK businesses - for example the current government advice is that all drivers, including lorries and commercial vehicles, will require extra documentation to be able to drive in Europe after 31 October if there is no deal. Those arguing for a ‘managed’ no deal envisage that a range of smaller sector-by-sector bilateral agreements could be quickly put into place as mutual self-interest between the UK and EU to avoid introducing or rapidly remove this kind of bureaucracy. Until some agreements are in place, a no-deal scenario will place extra overheads on UK businesses – eg the current government advice is that all drivers, including lorries and commercial vehicles, will require extra documentation to be able to drive in Europe after 31 October if there is no deal. Those arguing for a ‘managed’ no deal envisage that a range of smaller, sector-by-sector, bilateral agreements could be quickly put into place as mutual self-interest between the UK and EU to avoid introducing or to rapidly remove this kind of bureaucracy.
Martin BelamMartin Belam
His remarks provoked criticism but will be seen in a fresh light after the latest manufacturing activity figures.His remarks provoked criticism but will be seen in a fresh light after the latest manufacturing activity figures.
The PMI is based on a monthly survey of supply chain managers across 19 industries and is a measure of the prevailing economic trends which analyses whether purchasing managers are expanding, staying the same or contracting.The PMI is based on a monthly survey of supply chain managers across 19 industries and is a measure of the prevailing economic trends which analyses whether purchasing managers are expanding, staying the same or contracting.
The output component showed a drop to 47.2 from 50.3 in the index from May – pointing to the biggest contraction since October 2012.The output component showed a drop to 47.2 from 50.3 in the index from May – pointing to the biggest contraction since October 2012.
Make UK said businesses were reporting loss or decline in export contracts, with confidence in UK suppliers dropping because of Brexit.Make UK said businesses were reporting loss or decline in export contracts, with confidence in UK suppliers dropping because of Brexit.
The British Chambers of Commerce reported the weakest picture for domestic manufacturing orders in seven years, while the Confederation of British Industry said on Sunday that private-sector activity fell by the most since 2012 in the April-June period.The British Chambers of Commerce reported the weakest picture for domestic manufacturing orders in seven years, while the Confederation of British Industry said on Sunday that private-sector activity fell by the most since 2012 in the April-June period.
Official data last week showed the UK’s economy grew 0.5% in the first quarter of 2019, but that growth was boosted by factories stockpiling supplies ahead of expected disruptions when it was expected to leave the European Union on 29 March.Official data last week showed the UK’s economy grew 0.5% in the first quarter of 2019, but that growth was boosted by factories stockpiling supplies ahead of expected disruptions when it was expected to leave the European Union on 29 March.
The stockpiling boost has now gone into reverse, and many economists – including Bank of England forecasters – think overall growth slowed to a halt in the second quarter, exacerbated by widespread Brexit-related stoppages in the car industry in April.The stockpiling boost has now gone into reverse, and many economists – including Bank of England forecasters – think overall growth slowed to a halt in the second quarter, exacerbated by widespread Brexit-related stoppages in the car industry in April.
BrexitBrexit
Boris JohnsonBoris Johnson
Jeremy HuntJeremy Hunt
Manufacturing sectorManufacturing sector
Trade policyTrade policy
Conservative leadershipConservative leadership
ConservativesConservatives
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