Shewan Haviland, director of the British Chamber of Commerce: “The British no longer believe in the common market”

Shewan Haviland: The country is expected to register a growth rate of 0.3% (Against 1% in the EU Teacher Note) at the end of the year, after two quarters above 0 (0.1% in the fourth quarter of 2022 and 0.1% in the first quarter of 2023, editor’s note). Between 2019 and 2022, UK GDP growth is below the OECD, G7 or European Union (EU) average.

Part of this poor performance, difficult to quantify precisely but significant, can be attributed to the EU-UK Trade and Cooperation Agreement implemented in January 2021. According to our research, the UK exports 22.1% less to its biggest trade, the EU. A partner than before Brexit.

Our 60,000 members, representing 80% of UK SMEs, send us a consistent message: they are discouraged by the red tape required to export their goods to the EU. They are especially struggling to bear the costs of multiplying by 27. This is especially true for the food and beverage industry. As a result, most of the players in this branch stopped selling Christmas baskets last December. Grief 20% of their year-end revenue.

Apart from the aftermath of Brexit, what are the main challenges for the British economy?

Again, among the difficulties we face from the start of 2021, it is difficult to isolate those related to Brexit, the pandemic or geopolitical turmoil, particularly the war in Ukraine. The rise in energy costs fueled by the latter has penalized our companies everywhere else. The country is experiencing the highest inflation in thirty years: 8.7% year-on-year at the end of May. This is why today the central bank raised its rates by 50 basis points to 5%.

In addition to energy bills weighing on our companies’ margins, they face labor shortages that prevent them from honoring their order books and growing. The shortfall is estimated at 1 million workers.

How to explain this labor shortage?

Some of it is damage caused by covid. Some never returned, or only part-time. But most of all, the epidemic retires early (about 250,000). The biggest problem is Brexit-related: the procedures for bringing European workers in are a major obstacle to their free movement between the UK and the EU. In addition, about 330,000, or 1% of the working population, according to our estimates, have left the country for the continent.

Over 80% of UK businesses complain about employment conditions. Government measures—encouraging women’s return to the labor market through childcare subsidies and facilitating measures to “import” foreign workers—were insufficient. Only 13% of companies use the opportunity to obtain a visa through the procedure List of Scarcity Industries.

Net migration stock of approximately 600,000 people in 2022 is insufficient to meet demand.

Brexit has cost the kingdom dearly. Will it backfire?

I don’t think so: the British don’t believe in the common market. Their mentality changed, they realized that there were opportunities outside the continent and they diversified their exports, especially towards America.

What if Labor comes back to power?

Of course if Labor wins next year’s general election it will change the relationship with the EU. A renegotiation of the Trade and Cooperation Agreement will be facilitated in 2025. Brexit is out of the question.