Trade wonk
Dmitry Grozoubinski@DmitryOpines
A lot of the mixed messages around No-Deal preparation stems from the complexity of what a "No-Deal impact" actually is,
and what preparation can look like.
2/ I mentally catalog No-Deal impacts into two groups:
(a) "Broken as Intended" and
(b) "Oh Shi..."
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"Broken as Intended" refers to the big, long-term impacts of leaving the SM/CU and the EU.
This includes things like UK farmers facing EU tariffs
and UK hairdressers no longer being able to just take up a job in Berlin.
-
"Oh Shi..." covers short term disruptions which arise from the abruptness and complexity of the transition.
It includes any disruption that occurs during the first few months of No-Deal, as processes previously reliant on the EU have to be reconfigured.
- The "Broken as Intended" vs "Oh Shi..." distinction is important for evaluating preparations and responses.
The former requires long term solutions and a vision for the future,
whereas the latter needs rapid, ideally pre-emptive intervention.
- Many No-Deal challenges might be a mix of both.
For example, lamb farmers face a "Broken as Intended" problem in the shape of lost access to their largest market,
but they also face an "Oh Shi..." problem in the form of thousands of sheep more than they can profitably sell.
- Responses, by contrast, fall into three mutually dependent categories:
- UK Government
- Private Sector
- Foreign Governments
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Much of No-Deal preparation is in the hands of the UK Government.
This includes amending legislation, expanding customs posts, and hiring more customs officials.
It can also encourage and inform the private sectors preparations, and lobby foreign governments.
- In the short term, probably the biggest "Oh Shi..." risks come from lack of private sector capacity and preparedness.
If 5,000 trucks with the wrong paperwork show up at Dover in early November, there are going to be problems.
10/ Problems may also arise if elements of the private sector haven't adequately thought through their supply chains dependence on friction-less trade.
The government can help and encourage,
but it can't do the supply chain integrity work of a hundred thousand businesses.
11/ There are also challenges which only the timely action (and largess) of other governments can address.
If Spain decides not to honor UK drivers licenses immediately after Brexit,
then that's disruptive but out of the UK's hands.
12/ In light of the above, it's worth keeping some questions in mind when evaluating government statements regarding No-Deal preparation.
(a) To what extent is the impact you're trying to mitigate a short term one born of disruption,
and to what extent is it a new normal?
(b) To what extent is your proposed measure reliant on private sector action,
and what do we know about the state of their preparedness around this?
(c) To what extent is your proposed measure reliant on other governments taking action,
have they formally indicated they'll do so, and how long will it take?
15/ The Government is working hard,
but when they say "we are fully prepared for No-Deal Brexit"
it's worth asking "what part of it, exactly?"
and also, "who is we?"