Absolutely. And our devalued currency and trade barriers make it much worse for us, and both of those are a direct result of Brexit.
I agree the headline is over the top. But Brexit has made the drug shortage worse for the UK. That is an absolute fact.
Thank you for you response.
I am not claiming Brexit doesn't hamper goods supplied from the EU. My main beef is there are a host of reasons for drugs shortages but it is Brexit that gets the headline unjustly inferring it is the prime reason.
You, like myself, are deeply concerned about the unfairness in our society and the lack of fairness in incomes, pay for the low paid, provision of health and social services, and care for older adults. The solution lies in getting the UK back to paying its way. The Labour government of the 2000s was able to spend more on health because it inherited a healthy economic situation. Regrettably the balance of payments situation deteriorated rapidly. Investment went abroad to China and the EU where labour, energy, taxes, etc. cost less. I know from personal dealings with business consultants to the then Labour cabinet that the future of industry and commerce was furthest from their minds. The attitude of the Blair and Brown governments was big business can fend for itself, their concern was society. Industry left the country, bankers filled their pockets on toxic debt, and the balance of payments plummeted.
www.ons.gov.uk/economy/nationalaccounts/balanceofpayments/timeseries/hbop/pnbpThe situation displayed in the above link is unsustainable and leads to all the ills the UK suffers.
Rather than cut and paste a host of reasons, I'll accede to CBUFAWKIPWH 's request and refer you to this link:
www.economicshelp.org/macroeconomics/bop/probs-balance-payments-deficit/I'm sure the problems of current account deficit identified in that link are recognised in foreign ownership of UK businesses, historic high government borrowing, lack of long term investment, steady devaluation of the £, and low government spending.
Drugs shortages has triggered this theme of the thread, but it is food that is of greatest concern. The UK has slipped into a position of high dependence on the EU, but in the future the EU will not be able to supply the UK with food due to drought, weather extremes, demand for sustainability such as organic farming, increased EU population from immigration (>5 million in 2022), less use of fertilizers and pesticides, etc.
The UK needs to return the balance of trade to equilibrium. That will only happen by substantially increasing exports to the rest of the world to pay for imports.
UK GNI increased by 5% to £2.65 billion in 2023 from £2.52 billion in 2022. That proudly places the UK 6th highest:
www.macrotrends.net/global-metrics/countries/ranking/gni-gross-national-incomeBut, as has been pointed out, that does not give a complete picture. In terms of GNI per capita the UK has been slipping down the table.
data.oecd.org/natincome/gross-national-income.htmThe formation of the EU in the 1990s led to capital leaving the UK to where it gave a better return, resulting in business closures and redundancies, and cheap labour pouring into the UK resulting in lack of investment in productivity, lower wages, and higher unemployment.
The UK continued to slip down the "wealth league" in terms of GNI/capita slipping from circa 8th highest when the EU formed in 1993 to 14th highest when we left in 2020. Inequality has increased and real wage increases declined from the levels that used to be experienced prior to joining the EEC, as demonstrated in this old Guardian article:
www.theguardian.com/business/2014/jan/31/real-wages-falling-longest-period-ons-recordNow we have left the EU, we are already seeing a sea change.
The first change was a sharp reduction in the number of EU citizens migrating to the UK after the referendum. This resulted in unemployment dropping further to levels not seen since the UK joined the EEC in the 1970s (apart from during the pandemic):
www.statista.com/statistics/279898/unemployment-rate-in-the-united-kingdom-uk/Secondly, the downward trend in average growth of earnings has been reversed since the 2016 referendum:
www.statista.com/statistics/1272447/uk-wage-growth-vs-inflation/UK workers have been getting higher average wage increases than most of the rest of the G7. Of course this does not apply to everyone. Government finances have been under strain since the 2008 financial crisis and broken with the pandemic, so if you are paid directly or indirectly by government, life is a lot tougher. Nevertheless most workers are benefiting from the UK leaving the EU.
Thirdly, redundancies have been lower since the referendum and at c. 4%, lower than all the years of EU membership:
www.ons.gov.uk/employmentandlabourmarket/peoplenotinwork/redundancies/timeseries/beir/lmsFourthly, job vacancies have been higher since the pandemic; the highest since records began. There are a number of factors causing this, namely over 50s retiring early, high sickness levels, more young people staying on in further education as well as controlling legal immigration to take UK jobs. In fact, employers are having to recruit more from abroad to fill jobs, not least the government for the NHS.
www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/timeseries/jp9z/unemOther issues are taking longer to resolve. Furthermore they are proving more difficult to address due to a whole host of factors including the pandemic, post pandemic shortages, reduced workforce, war in Ukraine and middle east, terrorist action, and industrial action by some worker frustration at reduced real earnings, and high interest rates and levels of taxation. These are not all UK issues, most are common around the world. The UK has its own special problem: our politicians. I could go on at length as usual, but keep my comments down to two issues, namely investment and trade. These are the most import for an economically successful future.
Investment.
Prior to joining the EEC investment increased as a percentage of GDP. Apart from a short period during Thatcher's administration, UK investment has declined during EEC/EU membership.
See Figure 1:
www.economicsobservatory.com/boosting-productivity-why-doesnt-the-uk-invest-enough#:~:text=Figure%201%3A%20Investment%20as%20a%20share%20of%20GDP&text=This%20fell%20from%20around%208,to%209%25%20in%20three%20decades
During the last decade, after a sharp fall in investment due to the 2008 financial crisis, investment increased till 2016 and then levelled off:
www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/businessinvestment/octobertodecember2023revisedresultsThose that oppose Brexit blame the result of the referendum for the halt in the increase in investment, but this is only partially true. There are other reasons why investment did not continue to increase.
Firstly, there was a sharp reduction in investment in North Sea exploitation that started before the referendum.
www.statista.com/statistics/830000/ukcs-capital-expenditure-united-kingdom-uk/As well as reduced investment the North Sea, industry started to contract during Tory austerity measures. The Rough gas storage facility was closed in 2017, when Centrica decided it did not make financial sense to pay for costly repairs and (as with the Teesside steelworks closure in 2015), the government refused to step in to help. This proved to be a monumental error during the energy crisis.
Secondly, by 2015 investment had returned to circa 18% GDP which was the same level as it had been for over a decade prior to the 2008 financial crisis. There is no reason to suppose that had the referendum result been a "remain" victory (or no referendum) that UK investment would have continued to increase beyond the level it had been since the 1990s. In fact I believe if the UK had chosen to remain in the EU, more businesses would have moved out of the UK or closed.
data.worldbank.org/indicator/NE.GDI.FTOT.ZS?locations=GBToday, despite the high interest rates, UK quarterly investment, as a % of GDP, is around the same 18% level that it was prior to the 2008 financial crisis. Therefore Brexit has had minimal impact on investment in the long run. Other events such as the pandemic and the impacts of the war in Ukraine on inflation and high interest rates have been far more damaging to investment.
This month, the World Bank reported "
Gross fixed capital formation (% of GDP) in United Kingdom was reported at 18.33 % in 2022", which was the highest annual figure since 1996.
tradingeconomics.com/united-kingdom/gross-fixed-capital-formation-percent-of-gdp-wb-data.htmlIf Brexit did damage investment it was short lived while the May government procrastinated over Article 50 and we had two general elections. Since then investment returned to normal levels.
Trade Balance
Trade was at record levels in 2023 as reported in my annual review above, where I have posted about UK trade performance at length. But figures can be distorted by inflation, currency values, and exceptional items such as in 2023 the large drop in energy prices and trade figures have been highly volatile since 2019 due to world events. It is better to consider annual figures and another comparator is trade relative to GDP.
According to the World Bank, UK trade expressed as a percentage of GDP was at its highest ever level in 2022:
data.worldbank.org/indicator/NE.TRD.GNFS.ZS?locations=GBIn 2022 exports exceeded $1 trillion for the first time in history, representing 32.72% of GDP, the highest level ever.
A few days ago, on April 19th the Department for Business & Trade reported that in 2022 the UK ranked 4th highest in the world for exports, up from 7th in 2021 by overtaking Japan, France and the Netherlands . The UK position for imports was also 4th highest in the world in 2022, up from 6th in 2021. The UK's global ranking for inward FDI stock rose from 4th in 2021 to 3rd in 2022.
Don't believe anyone who tells you the UK world position on trade has been damaged by Brexit.
Critics of Brexit highlight the lack of growth of goods exports, but goods exporting has been flatlining since long before the referendum. The UK is reaping the harvest from decades of low manufacturing investment during EU membership. According to the ONS analysis published on 22nd April, since 2010 goods exports increasing by just 7% in real terms to 2023, compared with services exports growing by 63% over the same period. EEC/EU membership saw the closures of a host of UK manufacturing and millions of redundancies. There has also been a major decline in the North Sea oil and gas industries.
Anti-Brexit media quote the lack of growth of goods exports to the EU since Brexit, but the performance is the same for goods exports to the rest of the world as it is to the EU; Brexit has made little difference. Most major exporters managed the changes leaving the EU, although it is true small businesses have struggled due to the EU's red tape. The UK has become primarily a service economy and services exports have outperformed the rest of the G7. (See review of 2023.)
Despite all these facts, anti-Brexit commentators continue to fabricate convoluted counterfactuals and doppelgangers and misleading graphs to deceive the public.
The real evidence of how the UK economy is performing is patently obvious: motorways are as busy as ever, the UK enjoys "full employment", low redundancies, higher average wages, high job vacancies, high imports, record bookings for holidays, higher inflation than our peers, record corporate profits, record immigration, etc. These are not the symptoms of a country suffering from leaving the EU, but they are also not sustainable if the UK does not pay its way, and we can expect higher government borrowing, continued devaluation of the £, low government spending, and more inequality, if we don't pay our way.
Getting trade balance back into equilibrium is going to be a long process. The UK has consistently reported a trade deficit overall with EU countries and trade surpluses with non-EU countries. With the development of east European countries economies and potential new EU members, there is no prospect of the UK ever getting back to equilibrium in trade with the EU. Conversely the prospects of increasing trade with the rest of the world are boundless, particularly if the UK removes barriers and establishes new trade agreements.
Not only has EU membership led to a huge dependence on the EU for food and drugs, but many UK products depend on supply chains within the EU. It will clearly take years to firstly agree better trading terms with non-EU countries and then for commerce to take advantage of those improved conditions. The anti-Brexit forecasts that leaving the EU would lead to recession, high unemployment, collapse in house prices, etc. have proved false. Regrettably the UK could not have left the EU at a more difficult time. On the back of years of austerity, in 2020 we entered a world recession due to the pandemic, followed by post pandemic shortages/inflation, high sickness levels, war, terrorism, high interest rates to tackle severe inflation due to an energy crisis, and in the UK's case Liz Truss. Nevertheless the UK has ridden the storms and performed economically just as well as many countries and better than some. See 2023 review above. Time will tell how future UK governments take advantage of restored sovereignty.