Britain’s supply chains in Brexit’s brave new world
Six months and counting since the U.K. took its leave from its largest trading partner, the EU, and timely to ask - how is its economy performing?
Bear in mind the PM’s declaration on December 24 that the new EU-UK Trade and Cooperation Agreement, which he had just signed, is “a good deal for the whole of Europe.”
In recent weeks examples have been cropping up to indicate problems of empty shelves, issues of driver shortages raised by hauliers and by retailers, culminating in delays in the provision of products to meet consumer demand.
When Great Britain departed from the EU single market and took back control on 1 January, its agreed deal included special provision for Northern Ireland. It remains inside the EU market for goods.
With minimal delay Brexit’s impacts on supplies of certain classes of goods into Northern Ireland began to emerge. The ugly sceptre of violence returned to some streets in Belfast as loyalists protested about customs checks arising from the new arrangements for transporting goods within the U.K. from GB to NI.
And yet, statistics just published reveal that trade between the Republic and Northern Ireland since the U.K’s exit has grown spectacularly in the six months spanning January to June 2021 - €800 million in round figures.
Data published by the Central Statistics Office in Dublin (1) show that imports from Northern Ireland to the Republic have risen by 77% since the U.K’s departure from the EU.
At the same time, the value of the Republic’s exports to Northern Ireland has risen by 43%.
These are big numbers. The figures that underlie the percentages are significant. For example, the value of the Northern imports into the Republic rose from just under €1 billion for the same period last year to €1.77 billion in the first six months of 2021. And exports from the Republic to Northern Ireland rose to €1.57 billion, up from €1.1 billion last year.
Some British-based businesses are reported to have established bases in Northern Ireland to facilitate (some might say exploit) opportunities to trade with the Republic; and some companies in the Republic are reported to have replaced imports from GB with imports from NI.
 |
Irish Times 21 August 2021 Value of cross-border trade June 2020- June 2021 |
The chief executive of Manufacturing NI has expressed surprise at the scale of trade and described the opportunity presented for Northern producers.
He noted that nearly €800 million of additional sales into the Republic had been achieved in the first six months of 2021 “which,” in his words, “is enormous.”
He added that whereas the figures prove that market access is critical for trade, the amount of disruption on GB/NI trade won’t be known, in his opinion, for at least another year.
More recently, supply-side hurdles indicate that Northern Ireland is not alone in witnessing problems in catering for demand. Similar issues have begun to occur in supply chains within Great Britain itself. One restaurant chain (Nandos) was forced to close 50 outlets in GB.
Significantly, that same chain was not experiencing supply issues in its Irish outlets - neither in the Republic nor north of the border; and a week later, another similar chain (McDonalds) reported supply chain problems at 1250 of its outlets in England, Scotland and Wales (but not in Northern Ireland).
Brexit and its effect on the availability of drivers is being cited as an important constituent cause of the disruption (2).
For example, analysis of the Office of National Statistics’s Labour Force Survey suggests that 14,000 EU lorry drivers left UK jobs last year with only 600 returning by July this year.
The same BBC report refers to the impacts of supply chain bottlenecks on other large businesses including the supermarket giant Tesco.
 | |
Empty shelves in an Essex Tesco (taken 25 August 2021) |
A subsequent BBC report quotes the supermarket Iceland as saying that the supply chain chaos is worsening as retailers start Christmas planning (3). Its company boss is quoted as estimating the national shortage of lorry drivers as about 100,000.
Don’t even mention panic buying.
Whereas the trading data support a prima facie case for Northern Ireland coping with Brexit (which it rejected democratically) better than some would have predicted, availing of access to EU markets and, arguably, thriving (at least economically) as a result
©Michael McSorley 2021
Postscript:-
This series consists of the following 15 articles to date
Brexit 25 July 2016
Global Populism 27 Feb 2017
Brexit 14 Months On 30 August 2017
Our Precious Union 29 August 2018
Arguments for/against Brexit as Parliament debates UK/EU Deal 7 December 2018
Brexit Briefings to DUP MP Jan/Feb 2019 5 March 2019
Brexit lampooned 27 April 2019
How can the UK’s new PM resolve the Brexit conundrum? 23 July 2019
Omnes ad Unum Conservatives and DUP 24 September 2019
Election Communication 8 December 2019
Leaving Britain Undone 31 January 2020
Brexit Trade Deal: What Price Sovereignty? 30 December 2020
Just how good is the UK’s trade deal with the EU? 22 January 2021
Politics failing the people 28 April 2021
Britain’s supply chains in Brexit's brave new world 27 August 2021
References
1. Irish Times 16 & 17 August 2021 “Brexit fuels major pick-up in North-South trade” https://www.irishtimes.com/business/economy/imports-from-ni-to-republic-up-77-since-uk-s-eu-exit-1.4648699
2. BBC News 24 August 2021 “McDonalds runs out of milkshakes in England Scotland and Wales” https://www.bbc.co.uk/news/business-58315152
3. BBC News 25 August 2021 “Tesco and Iceland bosses warn over Christmas supplies”
