Even more firms will move jobs out of Britain

JOE GILL: Even more firms will move jobs out of Britain

Amid the febrile atmosphere that is enveloping all those associated with Brexit one question sticks in my mind.

What are the goods and services that Brexiteers believe will lead Britain to an export-led unbridled period of prosperity once they leave the EU?

There was a time when Britain was a global centre for a multitude of high quality manufactured products . The best cars, ships and aircraft were invented, engineered and manufactured in the UK for sale not just at home but across the world.

It was also the source of high quality linen, crockery and industrial products that arose during an era when the UK was a leader in industrialisation.

All of that was swept away over decades as the world economy evolved. As nations that were once deemed primitive and ignorant educated themselves profound changes occurred in trade.

Globalisation, comparative advantage and competition created a new world economy. Instead of ships being manufactured in Belfast and Scotland they are produced in Korea and Russia.

The centre of gravity in the car industry revolves around Asia, Germany and the US. Clothes and crockery are now probably produced in India or China.

There may be some notion in the eye of a Breixteer that the food industry could deliver export-led success. However, Britain has not been self sufficient in food for many decades. It imports over 30% of its requirements as other countries are more efficient at delivering its food requirements.

Anyone with the notion this could change after Brexit are naive in the extreme. A planned low tariff future will actually exacerbate the pressure on UK farmers by facilitating cheap imports from countries such as Brazil.

It is hard to pick out a sector that could flourish with exports after Brexit. Scotch whisky is a standout British brand with a global audience. Yet, its Scottish stakeholders are vehemently opposed to the Brexit strategy.

The sector that is of equal - if not greater - importance in this debate is services. The world economy has changed dramatically in the past century as manufactured goods have been augmented by a surge in services.

Indeed, services have eclipsed manufacturing in many economies, especially older ones like those in North America and Europe.

That, too, has occurred in the UK where financial services in particular have been core to driving forward the overall economy but especially the London market.

Even more firms will move jobs out of Britain

Services, like finance and software, are critically dependent on international trade agreements to facilitate access to a broad range of markets. These agreements are complex and involve a multitude of service-enabling systems related to data and law.

It takes many years to forge seamless agreements that allow the free flow of services that underpin the success and job creation that has been achieved in this area. London built a world class financial services industry by having such agreements embedded in the world’s richest economy – Europe.

All of that is now in peril.

A no-deal Brexit will guillotine the flow of financial services between Britain and the rest of Europe. It will become almost impossible for UK-based service companies to exercise the fluidity in customer engagement that currently prevails.

Unlike the harrowing visual images that accompany a steel or car plant closing, the implosion of a services sector is a relatively invisible catastrophe.

Many of these companies have already quietly moved thousands of jobs outside the UK without too many headlines. Tens of thousands will follow.

As the noise levels in the Brexit debate are amped up this week it will be a challenge to secure rational debate about hard facts in the UK economy.

The hard fact is that Britain needs goods and services that can thrive after Brexit.

No-deal is the worst path to take in that context.

Joe Gill is director of origination and corporate broking with Goodbody Stockbrokers.

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