Brexit: lacking the bigger picture

14/03/2021

The ONS data we saw yesterday was available freely to the entire legacy media yet the message delivered by the various organs was very different. The broadly Europhile Financial Times had "UK exports to EU slump as Brexit hits trade", with the sub-heading: "Shipments drop 40% in January while GDP shrinks by biggest margin in 9 months".

We saw a similar line from Guardian which run the headline: "Exports to EU plunge by 40% in first month since Brexit". The Independent contented itself with: "Brexit: UK businesses battle with red tape and higher costs as trade with EU plunges".

City AM led with "Brexit: UK to EU exports collapse by 40 per cent following end of transition period", but that was easily outdone by the archly Europhile European, which had "Exports to EU in January plunged by 41% in Brexit horror story".

By contrast, the only thing we got from the Telegraph was the online report headed: "Post-Brexit plunge in exports caused by 'unique factors' says David Frost", and I'm not sure it made the print version.

Predictably, the Express took a a similar line, running a story headed: "David Frost delivers sharp rebuke over Brexit Britain’s 'unusual' trade figures". Its sub-head declared: "LORD FROST has dismissed claims from Remainers that Brexit has sparked a plunge in exports to the EU".

The nearest thing to headline neutrality we get is The Times "Brexit and the pandemic deliver record hit to trade with the EU". The BBC is not very far from that, and simply reports: "UK exports to European Union drop 40% in January".

The point of all this is quite simple to make, but it still needs making even if it is obvious: news is no longer news – it has become propaganda. As far as the media are concerned, there is no objective truth. Thus, the nature of the message depends entirely on what you read (or watch).

As it stands, we can all agree that trade with the EU is significantly down – both imports and exports. But what none of us can do is accurately – or at all – apportion the impact of the different phenomena recorded: Brexit, Covid and pre-Brexit stockpiling. Clearly, all three have influenced the statistics but it would be foolhardy to be dogmatic on relativity.

Nevertheless, Phillip Inman, writing for the Observer, is not only able to attribute much of the blame to Brexit, it is also asserting that the collapse of trade with the EU will continue into the summer.

Yet, for all its certainly, the evidence the paper has to offer seems remarkably thin, relying largely on the warnings of industry groups who in turn seem to attribute most of our woes to the failure to recruit up to 30,000 customs agents.

In what is then something of a non-sequitur, it asserts that delays and confusion at the UK's ports have resulted in 40 percent of trucks crossing the Channel with empty containers. This, we are told, "threatens to put hundreds of small and medium exporters out of business and cost the government millions of pounds in lost trade tariffs".

All one can take from this rather tedious boilerplate, though, is that Inman, who is the economics editor for the paper, is simply going through the motions. Exports tumbled by almost 41 percent, he tells us, "as thousands of trucks failed to gain entry to the EU, mostly following customs hold-ups due to a lack of compliant paperwork".

The inconsistency here is quite evident even to the casual reader. On the one hand, Inman would have it that "delays and confusion at the UK's ports have resulted in 40 percent of trucks crossing the Channel with empty containers", while, on the other hand, he wants us to accept that the problem was also attributable thousands of trucks failed to gain entry to the EU, "mostly following customs hold-ups due to a lack of compliant paperwork".

What I think we would all like to see, though, is some accurate data on the nature of pinch-points being experienced, and their relative effects.

For instance, I am not sure it has fully sunk in to the media's collective mind that one huge obstacle to exporting to the EU is the procedural change which now requires the active participation of importers resident in EU Member States, in steering products through the entry formalities and then taking legal responsibility for the products once they enter into circulation within the Single Market.

While some of the "paperwork" and "red tape" difficulties may indeed be "teething troubles" – solved by vets acquiring their necessary quotas of coloured crayons, and like measures – it is structural changes such as these which will may have the greater, and most serious longer-term effects.

The need for EU-resident importers has, as some may recall, led to suggestions that UK exporters need to establish their own bases on the soil of EU Member States. Furthermore, it is the cost and complexity of this requirement that "threatens to put hundreds of small and medium exporters out of business" – certainly in the longer term.

One other major issue is the VAT regime and the imposition of handling fees on B2C packages which have come as an unwelcome surprise to EU-resident purchasers, as well as UK buyers. This is intrinsically tied up with the problem of groupage, and the need for multiple customs declarations.

Some of these issues may be sorted, as the system shakes down and gets used to the new regime. But some of the problems may prove intractable. At this point, it hangs in the balance and could go either way.

But what is not going to be resolved easily is the rules of origin problem. UK firms which have built a business on buying in goods from China and other cheap overseas suppliers, which then break bulk and redistribute into the Single Market, will have difficulty overcoming the "insufficient processing" rule. They will either have to restructure or go out of business.

Over and above all that, we expect to see increasing problems attributable to regulatory differences, whether in the food sector, chemicals, medicines or other highly regulated sectors such as aviation. In the latter sector, the Mail on Sunday retails the woes of the charter sector, where UK-based operators are finding it extremely hard going.

Yet, nothing coherent is coming over in the media which would help us understand what the nation is dealing with. We simply get snippets and oddities, and endless "human interest" tales of woe, which fail to convey the bigger picture.

These are bolstered by comfort quotes from the usual suspects, such as Richard Burnett, chief executive of the Road Haulage Association. Such "talking heads" are used to provide colour to articles, their popularity depending on their willingness to provide convenient sound-bites which support the prevailing narratives.

I once thought that journalists spoke to a number of sources and constructed their reports from a synthesis of the information provided, but it is more usually the other way round. They tend to frame their stories first and then skip through their contacts to find sources who will provide the words to fit the piece. Potential sources very quickly learn to deliver what is wanted, if they are to see their names in print.

Despite this, one hopes, the situation will eventually stabilise and become clear enough for even the media to understand what is going on. In the interim, we will have to be content with the propaganda and the diet of trivia.

At least this has the merit of allowing readers to choose their preferred versions of the "facts", without having to trouble themselves with reality. That is far too complicated for most tastes.

Also published on Turbulent Times.