Brexit matters

[najaB]

So if more tax is being paid by consumers to the treasury by that source, then less tax will be required from the same consumers by other sources. All things being equal, it should be neutral overall.

Surely it would be better for the economy for the government to be taking actions that increase tax revenues by encouraging business growth, rather than increasing tax on their inputs (and so suppressing growth)?

Edit: As an aside, it's interesting to see a Brexit supporter who isn't right-wing. Who would have thought someone would support both Brexit and increased taxation to provide public services, rather than being pro-free market, small government.

 

[37424]

However the more difficult the EU makes non tariff regulatory barriers the better it is for domestic UK businesses as there is a £70 billion a year trade deficit with the EU.

Except of course that works both ways and the EU will buy less from the UK, and a lot of that lost business to the EU is not forced to go to alternatively UK companies.

It would seem to me that for smaller businesses we are heading to an effective No Deal Brexit, and an LSE report last week suggested an eventual loss of trade with the EU of about 30% on the current deal which is on the lower end of previous estimates for a No Deal Brexit.

 

[Typhoon]

As most things are imported bulk and sold at retail level by UK companies its not going to affect the majority much at at all. However the wealthy (mostly) who like to buy niche items direct from the EU get to pay extra tax for the privilege.

Indeed, the wealthy having to pay an "import tax" to buy things from the EU instead of buying domestically will I suspect play rather well in "red wall" constituencies.

Oh, come on. My last purchases from the EU have been a second hand cd that I should have purchased when it first came out (only available in the UK as an import at a massively inflated price) and a couple of puzzle books to wile away the Covid hours - published in the UK about 10 years ago, similar ones last seen in The Works about 5 years ago being sold cheap. Total cost, don't know but certainly less than £25. I don't suppose I am unique in this type of purchase. Ok, you get the bloke who is collecting obscure German pottery or the woman who buys designer handbags from France making the news but for every one of them there are a dozen who buy stuff from Europe because it is cheap and resent the prospect of paying an inflated price to a company which pays about as much tax as the average man in the street (slight exaggeration but you take the point). If I was wealthy, I would have bought the import and kept the label on!

 

[Dave1987]

So you have to pay a customs charge, same as when you order stuff from Japan or the USA?

Hardly a surprise, given we are now in a separate customs area now, and more income for the treasury.

As most things are imported bulk and sold at retail level by UK companies its not going to affect the majority much at at all. However the wealthy (mostly) who like to buy niche items direct from the EU get to pay extra tax for the privilege.

Indeed, the wealthy having to pay an "import tax" to buy things from the EU instead of buying domestically will I suspect play rather well in "red wall" constituencies.

I think you will find lots of “red wall” constituencies voted Brexit under the vision that British heavy industry would miraculously come back into being. Lots felt left behind from the southern end of the country. Brexit was seen as a protest vote. There were interviews done with many who had aspirations of old industries coming back. Absolutely nothing to do with sticking two fingers up at Brussels or about calling the nasty EU a “dictatorship” blah blah blah. Most didn’t understand the consequences of Brexit because they were constantly being told about £350m a week to the NHS etc. I wonder now how many would still vote Brexit now they know what Brexit really means when they might not be entitled to rest breaks or overtime payments or holiday pay. You make out like Britain is fighting a Cold War against an evil dictator.

I’m still really waiting to hear the benefits of Brexit rather than just someone trying to push an opinion that the EU is a ruthless dictator that the UK has escaped.

 

[21C101]

Except of course that works both ways and the EU will buy less from the UK, and a lot of that lost business to the EU is not forced to go to alternatively UK companies.

It would seem to me that for smaller businesses we are heading to an effective No Deal Brexit, and an LSE report last week suggested an eventual loss of trade with the EU of about 30% on the current deal which is on the lower end of previous estimates for a No Deal Brexit.

Our domestic businesses will benefit disproportionately compared with the EU's as the UK has a £70 billion trade deficit with the EU so net our businesses benefit as people switch to domestic businesses.

Don't get me wrong, I would rather these non tariff barriers were not there (my preferred Brexit was to join EFTA but not EEA). However we are where we are and if the EU decide to "work to rule" then the EU are cutting off their nose to spite their own face.

 

[JamesT]

Surely it would be better for the economy for the government to be taking actions that increase tax revenues by encouraging business growth, rather than increasing tax on their inputs (and so suppressing growth)?

Edit: As an aside, it's interesting to see a Brexit supporter who isn't right-wing. Who would have thought someone would support both Brexit and increased taxation to provide public services, rather than being pro-free market, small government.

See the Labour Party in the 1970s. Then there was a leader of the Labour Party whose views hadn't changed much from that time...

 

[21C101]

Oh, come on. My last purchases from the EU have been a second hand cd that I should have purchased when it first came out (only available in the UK as an import at a massively inflated price) and a couple of puzzle books to wile away the Covid hours - published in the UK about 10 years ago, similar ones last seen in The Works about 5 years ago being sold cheap. Total cost, don't know but certainly less than £25. I don't suppose I am unique in this type of purchase.

If its worth less than £135 then its exempt from customs anyway.

I regularly order similarly priced items on Amazon that are shipped direct from China, Korea, Japan, US etc all the time and it just turns up at the alloted time with a completed customs declaration statement. No surcharge or undue delay. So this is just the EU being awkward.

And their reward will be that people increasingly buy such goods domestically or from places such as US and China instead of EU suppliers.

And as we currently buy £70 billion more goods a year from the EU than we sell to them, they have a lot more to lose than us.

I think you will find lots of “red wall” constituencies voted Brexit under the vision that British heavy industry would miraculously come back into being. Lots felt left behind from the southern end of the country. Brexit was seen as a protest vote. There were interviews done with many who had aspirations of old industries coming back. Absolutely nothing to do with sticking two fingers up at Brussels or about calling the nasty EU a “dictatorship” blah blah blah. Most didn’t understand the consequences of Brexit because they were constantly being told about £350m a week to the NHS etc. I wonder now how many would still vote Brexit now they know what Brexit really means when they might not be entitled to rest breaks or overtime payments or holiday pay. You make out like Britain is fighting a Cold War against an evil dictator.

I’m still really waiting to hear the benefits of Brexit rather than just someone trying to push an opinion that the EU is a ruthless dictator that the UK has escaped.

And you appear to make out like red wall voters are thick, gullible and unable to understand complex political issues.

 

[SHD]

The tax on that rent going to the UK government? No. The income tax on the wages of the warehouse staff going to HM Treasury? No.

These warehouses could be located in Northern Ireland though, as NI is bound to remain a member of the Single Market, however it would not be very practical if the goal is to forward goods towards the continental EU.

 

[Dave1987]

Our domestic businesses will benefit disproportionately compared with the EU's as the UK has a £70 billion trade deficit with the EU so net our businesses benefit as people switch to domestic businesses.

Don't get me wrong, I would rather these non tariff barriers were not there (my preferred Brexit was to join EFTA but not EEA). However we are where we are and if the EU decide to "work to rule" then the EU are cutting off their nose to spite their own face.

Except that the EU have just signed a FTA with China and already have one with Canada both of which are trade agreements that the BoJo Govt want. Don’t make out the UK to be the all mighty nation that holds the whip hand.

 

[21C101]

These warehouses could be located in Northern Ireland though, as NI is bound to remain a member of the Single Market, however it would not be very practical if the goal is to forward goods towards the continental EU.

This has not gone entirely unnoticed in NI where it is dawning on them that they are being in a pretty good place being in both the single Market and the UK Customs area (and trade deal area).

Yes there are some logistics issues to think through but nothing beyond the wit of man (especially for goods that can be air freighted).

Except that the EU have just signed a FTA with China and already have one with Canada both of which are trade agreements that the BoJo Govt want. Don’t make out the UK to be the all mighty nation that holds the whip hand.

And?

This discussion is about non tariff barriers. We already have a FTA with the EU.

 

[edwin_m]

All this talk of tax take ignores the elephant in the room, that Brexit is forecast to hit the economy as a whole so will reduce the tax take from all sources. A bit of extra duty coming in to the government won't offset that - there will have to be more tax, more borrowing and/or more austerity.

Yes, this 'sovereignty' is a strange thing.

The closest I would liken the situation is leaving a long term partner, not for any particular reason, just a feeling that you are fed up with them. Maybe years of dancing to their tune, being coerced into doing things that you didn't really want to do. None of them individually onerous. In exchange you got a particular lifestyle, some of which you will lose forever on departure.
On leaving you know that you are going to be immediately worse off, but you know you'll cope, and who knows, finances might get as good as before, or even surpassed. But life is not all about finance.

Of course some people would stay together for financial reasons, and just paper over the underlying unhappiness. others would suppress their character and do as their partner bid or try to change their partner's behaviour. Many will have friends who will not understand what the problem is.

Never an easy decision, as we all well know.

And what about the children from such a relationship, who are going to be badly affected but haven't had a chance to influence the decision or even to choose which partner to stay with?

 

[najaB]

If its worth less than £135 then its exempt from customs anyway.

Not from VAT though.

 

[nlogax]

Not from VAT though.

Worth clarifying I think.

HMRC Notice 143

2.3 Limits for Customs Duty and Import VAT​

The limits for Customs Duty and Import VAT are:

• commercial consignments (goods you’ve purchased) of £135 or less are free from Customs Duty and not subject to Import VAT - this does not include alcohol, tobacco products, perfume or toilet waters as these items are excluded from the relief of Customs Duty and VAT at import is payable
• commercial consignments sent to the UK from the Channel Islands do not benefit from any relief of Import VAT
• if you’re sent a gift with a value of £39 or less, which complies with the rules shown in section 2.4, it will be free from Customs Duty and Import VAT (gifts of alcohol and tobacco are subject to the limits shown in section 2.5 and gifts of perfumes and toilet waters are subject to the limits in section 2.6)
• Customs Duty becomes payable if the value of the goods is over £135

In summary:

Goods value	Customs charges applicable
£0.01 to £135	No Customs Duty No Import VAT
£135.01 and greater	Customs Duty due, Import VAT due

 

[Domh245]

Our domestic businesses will benefit disproportionately compared with the EU's as the UK has a £70 billion trade deficit with the EU so net our businesses benefit as people switch to domestic businesses.

I'd love to see some justification behind this, because I'm not convinced that it is the case. Our largest import is motor vehicles (£48.5b in 2019) and I really don't see that going domestically (much as I wish it might!) - our next largest goods import sectors are medicine & pharmacy (£17.7b), Electrical machinery & appliances (£11.4b), Misc manufactured articles (£10.5b) and General industrial machinery & equipment (£10.1). I don't see how we are supposed to wean ourselves off of European supply and set up equivalent domestic versions of these industries, given their generally specialist nature.

 

[nlogax]

I don't see how we are supposed to wean ourselves off of European supply and set up equivalent domestic versions of these industries, given their generally specialist nature.

The UK lost many of those industry-specific skills long ago when it began to morph into a service economy and our education system is ill-prepared to equip the next generation with what they need to fill that post-Brexit gap. Considering nearly half of our trade with EU partners is - or was - services, it's even harder to understand why we chose to take this stupid, stupid decision.

 

[SHD]

I'd love to see some justification behind this, because I'm not convinced that it is the case. Our largest import is motor vehicles (£48.5b in 2019) and I really don't see that going domestically (much as I wish it might!) - our next largest goods import sectors are medicine & pharmacy (£17.7b), Electrical machinery & appliances (£11.4b), Misc manufactured articles (£10.5b) and General industrial machinery & equipment (£10.1). I don't see how we are supposed to wean ourselves off of European supply and set up equivalent domestic versions of these industries, given their generally specialist nature.

It is important to note that food imports are not included in this figure. UK food imports from the EU totalled ~£36bn in 2019.

 

[jon0844]

I think you will find lots of “red wall” constituencies voted Brexit under the vision that British heavy industry would miraculously come back into being. Lots felt left behind from the southern end of the country. Brexit was seen as a protest vote. There were interviews done with many who had aspirations of old industries coming back. Absolutely nothing to do with sticking two fingers up at Brussels or about calling the nasty EU a “dictatorship” blah blah blah. Most didn’t understand the consequences of Brexit because they were constantly being told about £350m a week to the NHS etc. I wonder now how many would still vote Brexit now they know what Brexit really means when they might not be entitled to rest breaks or overtime payments or holiday pay. You make out like Britain is fighting a Cold War against an evil dictator.

I’m still really waiting to hear the benefits of Brexit rather than just someone trying to push an opinion that the EU is a ruthless dictator that the UK has escaped.

The UK built up a strong economy where we excelled in services and finance, not manufacturing. We were able to enjoy good salaries and companies could take advantage of cheaper foreign labour to do the jobs we didn't want to do (and I'd argue still don't). The EU allowed us to get the products we needed without barriers, and for them to use our services and expertise in return.

Are we seriously thinking that in a few years we'll be building our own cars and machinery here? And that those farm picking jobs will have queues of British people lining up? Of course not; we're going to issue visas to import labour for that.

We buy more than we sell, including components and equipment for the 'factories' that assemble things here, but we want to delay the movement. Yet we aren't in a position to ever be self sufficient. And Europe? Well, they're no longer needing our services and the big players in finance have already moved. Heck, if you're suitably qualified and able and willing to learn other languages, why wouldn't you move to where your future is brighter?

We're almost certainly going to see a brain drain.

The changes we've made (which isn't just about Brexit) makes it equally hard for many US sellers to send us things (another clip), and I am sure orders from China (via the likes of AliExpress) will be hit too - as many ship in bulk to places like the Netherlands for onward delivery. Rest assured, like the person in my YouTube video, many people aren't going to register with the UK for VAT - they'll just remove us from the list of places they deliver to.

All I can see even now on Twitter are people repeating the same thing; 'We won. Deal with it.'. Is that all they ever wanted? Was that all this was ever for? As time went on and the easiest deal in history nearly ended with no deal, and eventually a pathetic deal that's a total mess and still subject to change, they just couldn't admit they'd been played and have doubled down instead.

 

[Domh245]

It is important to note that food imports are not included in this figure. UK food imports from the EU totalled ~£36bn in 2019.

Interesting that it wasn't included on the briefing paper I was using then! I would again though query how much of that 36bn will move back to the UK - I doubt we will see European wines & cheeses (for example) replaced by British produced ones. Similarly you'd have difficulty growing Oranges in the UK's climate

 

[nlogax]

Similarly you'd have difficulty growing Oranges in the UK's climate

Give it twenty years.

 

[najaB]

Similarly you'd have difficulty growing Oranges in the UK's climate

We'll just use apples instead. There's no difference, surely?

 

[SHD]

Interesting that it wasn't included on the briefing paper I was using then! I would again though query how much of that 36bn will move back to the UK - I doubt we will see European wines & cheeses (for example) replaced by British produced ones. Similarly you'd have difficulty growing Oranges in the UK's climate

My mistake, sorry, they are included in the overall figure (£542bn imports) but they are broken down by food category (e.g. "vegetable and fruit", "meat and meat preparation", etc.) rather than lumped together. As such, food is not visible in the top 10 categories



From https://assets.publishing.service.g..._data/file/865366/OTS_2019_Annual_Summary.pdf



From https://www.uktradeinfo.com/media/1imlstzs/t30q320.xlsx

But that is the figure for all countries the UK imports from, not only EU countries.

My source for the £36bn is the following: https://ec.europa.eu/info/food-farm...xt=In 2019, the value of,UK agri-food imports).

 

[Domh245]

Ah, the list I was using didn't have "commodities" - only goods & services. It's odd that the numbers in your source don't match the ones in mine (although it still doesn't really change the point of how or if that 70bn trade deficit will be replaced by domestic industries!)

 

[21C101]

The UK built up a strong economy where we excelled in services and finance, not manufacturing. We were able to enjoy good salaries and companies could take advantage of cheaper foreign labour to do the jobs we didn't want to do

*some* of us enjoyed good salaries.

Those further down the food chain saw salaries stagnate and working conditions degenerate into insecure zero hours contracts as "companies could take advantage of cheaper foreign labour to do the jobs" we did want to do, for far less than we did them for.

Many organisations such as food retailers opened nice new distribution centres staffed mainly with eastern europeans on minimum wage, then shortly afterwards shut down perfectly good existing distribution centres staffed by mainly british people on nearer £15-£20 an hour and made them all redundant.

Similarly, many construction workers earn little more if any than they did 20 years ago, and in some cases less, as the pay cap is the amount a chap from Romania is willing to do the work for.

Hence the referendum result.

I expect one unspoken effect of Brexit to be inflation driven by wage inflation, coupled with asset deflation, accompanied by howls of outrage from those who benefitted from the status quo up to now. We will return to the historic situation up to the 90s where we generally have higher inflation than Europe.

 

[RichT54]

How quickly brexit comes back to xenophobia and racism

 

[21C101]

How quickly brexit comes back to xenophobia and racism

Corporations exploiting eastern Europeans as a source of cheap labour to drive down everybodys wages is a particularly unpleasant form of racism.

Similarly you'd have difficulty growing Oranges in the UK's climate

No we just revert to importing better quality Oranges from South Africa, at a much better price, now that we are no longer obliged by the EU to charge a 16% import tariff on them.

 

[Domh245]

No we just revert to importing better quality Oranges from South Africa, at a much better price, now that we are no longer obliged by the EU to charge a 16% import tariff on them.

So the plan is to spread the £70bn trade deficit we currently have with the EU out across more countries? I still don't see how this benefits domestic businesses?

(ps, surely Spanish oranges are still preferable to South African ones because of the reduced distance & hence carbon emissions needed to import them?)

 

[SHD]

Those further down the food chain saw salaries stagnate and working conditions degenerate into insecure zero hours contracts as "companies could take advantage of cheaper foreign labour to do the jobs" we did want to do, for far less than we did them for.
[...]
Similarly, many construction workers earn little more if any than they did 20 years ago, and in some cases less, as the pay cap is the amount a chap from Romania is willing to do the work for.
Hence the referendum result.

Oh. I thought from your posts that the referendum result stemmed from a mighty resurgence of English Renaissance wrath against foreign princes, from a fierce anti-Papist proclamation of liberty and sovereignty!

 

[21C101]

So the plan is to spread the £70bn trade deficit we currently have with the EU out across more countries? I still don't see how this benefits domestic businesses?

(ps, surely Spanish oranges are still preferable to South African ones because of the reduced distance & hence carbon emissions needed to import them?)

I would expect it to be a mixture of switching to domestic, buying from non EU countries and residual buying from EU.

As to the proportions, the more awkward the EU make it, the better the business case for switching to the other two.

As to carbon emissions, I would expect that to be fairly minor. Indeed if they come by ship to Tilbury they will probably have a lower footprint than oranges that are trucked on diesel lorries from Spain.

 

[SHD]

(ps, surely Spanish oranges are still preferable to South African ones because of the reduced distance & hence carbon emissions needed to import them?)

The devil might be in the details here - maritime transport is hugely efficient in fuel consumption per unit of load shipped.

I would expect it to be a mixture of switching to domestic, buying from non EU countries and residual buying from EU.

Who would expect it to be any other mixture? The sum total of your three parts is literally the whole word!

 

[21C101]

Oh. I thought from your posts that the referendum result stemmed from a mighty resurgence of English Renaissance wrath against foreign princes, from a fierce anti-Papist proclamation of liberty and sovereignty!

As ever it was a coalition of reasons. I'm not much exercised by the immigration issue, it was the sovereignty for me (and by the way I am a practicing Papist as is Mr Rees Mogg)

For those now in insecure, low paid work, due to corporations exploiting eastern Europeans to drive down wages and impose zero hours etc. I suspect that is more of a factor. However that dosen't mean they have ill will to the eastern Europeans who many will regard as equally exploited to the, but they will be glad to see the corporations unable to continue to exploit an unlimited supply of cheap low paid labour to everyones detriment.