Three years ago the UK decided to leave the EU. In the last three years, the UK saw three Prime Ministers at Downing Street. It now appears that No. 10 is potentially ready to see another leader considering Prime Minister Boris Johnson's government lost working majority in the House of Commons after Philip Lee defected to pro-EU Liberal Democrats. Even with the support of the Democratic Unionist Party from the Northern Ireland, the Prime Minister is now essentially running a minority administration. Johnson later lost his first vote in the House of Commons by a majority of 27 votes (328-301) and would table the motion for an early general election.
Johnson appears determined to leave the EU with or without a deal on 31st October. But over the last three years economists, parliamentarians and financial institutions have echoed concerns around the consequences of a crashing out of the EU without a deal.
When David Cameron had held the Brexit referendum, he had been expecting for the people to vote 'Remain'. However, majority voters believed propagandist claims made by Nigel Farrage and other such politicians driving the “leave” sentiment in the UK. Thus, Theresa May stepped in David Cameron's shoes at a time when there was no working formula around Brexit. The former Prime Minister had done everything in her negotiations with the EU to avoid a no-deal Brexit and in her attempts had even announced a general election in 2017 where Tories lost their majority in Parliament.
After Government lost the vote on Tuesday by 27 votes, Boris Johnson said, “Parliament is on the brink of wrecking any deal we might reach with Brussels. I don't want an election but then the public has to choose who goes to Brussels on 17th October. But if MPs vote tomorrow to stop the negotiation then I will table the motion for general elections and campaign for leaving the EU on 31st October.”
On Wedneday, Opposition MPs and rebel Conservative lawmakers will try to pass a bill that would prevent the Prime Minister from taking the UK out of the EU on October 31 without a deal.
Britain's opposition Labour Party wants an election as soon as possible but the "sequencing" has to be right to ensure a no-deal Brexit was blocked first, the party's top legal policy chief Baroness Shami Chakrabarti said on Tuesday. On the other hand she alongside Scottish Lord Advocate James Wolffe QC, who is Scotland’s senior law officer, and the Welsh Government have also been given permission to join Gina Miller's (who has Indian roots) legal action over the decision to suspend Parliament. The High Court, which will hear Ms Miller’s judicial review on Thursday, has granted permission to Sir John Major to intervene in the case in writing.
At a time when country seems to have a leadership crises, factions within the Tory party are struggling to keep the party intact.
Internal fights: Javid's media advisor sacked
Tory Government's internal fights are brought to spotlight with the recent sacking of Sonia Khan. A Treasury media adviser of Sajid Javid, she was escorted by armed police from Downing Street after a confrontation with Johnson's chief strategist Dominic Cummings. Khan was accused of lying about her conversations with chancellor Philip Hammond’s former staff member Poppy Trowbridge. Cummings is understood to have found evidence which suggest that they had been in touch on her personal mobile phone.
Khan was the second adviser working for Javid to be sacked by No 10, leading to suggestions that Javid is becoming increasingly isolated from the core of the Johnson regime.
Manufacturing index at the lowest in seven years
In the meantime, political uncertainties have stumped growth. The country's manufacturing output has hit a seven-year low, and service sector has recorded the worst performances in the past decade. All the above is indicated by IHS Markit/CIPS Purchasing Managers Index (PMI). IHS Markit, which compiles the monthly survey, said production had been stifled by “political uncertainty” and “global trade tensions”. Another extension can result in the country potentially departing from EU in January 2020. A group of the world’s leading business organisations, including from the US, Japan and Australia, have warned the UK that a no-deal Brexit would damage its reputation with some of its biggest trading partners.
In an open letter signed by some of the biggest lobby groups in the western world, representing more than 4m companies from eight countries, the organisations said they had “grave concerns” about the rising chance of a no-deal departure on 31 October.
Amidst such chaos, businesses have echoed concerns around being jammed in administration and documentation procedures. Most firms that export only to the EU do not have the paperwork they need to carry on their business after a no-deal Brexit, government figures have suggested in the recent past.
Exports and European headquarters
T-sticks is an award-winning FMCG start-up introducing an innovative tea-drinking concept that removes the needs for strainers, tea-bags and spoons. Speaking about the challenges that Brexit has posed to his business, Ricky Kothari, owner and founder of T-Sticks says,
“Over the last three years, our biggest challenge has been working with our distributors and partners in Europe and getting them to commit to our orders. It is difficult to assure them that business will continue without disruptions.
“In the last two years, we have set up more of a presence in Europe to ensure products are delivered on time at competitive rates and have opened up a Euro account. I have established a warehouse in Europe as well which means that the products do not have to come to the UK and can be shipped directly from our headquarters in Europe.”
T-sticks prides itself in being a British brand and regardless of the circumstances will continue to base its headquarters in London. However, terms and conditions around Brexit may favour for the development of their branch office in Europe. This will enable them to efficiently liase with their European clients as well as retain their employees from European countries. Currently, there is no clarity around the Government's proposed white paper and the freedom of movement of European citizens once Brexit happens, another concern among leading businesses. T-Sticks estimates its trade with EU clients comprises approximately 45% of its wholesale and distribution business.
According to IHS Markit reports the amount of export trade fell at the fastest rate for seven years, with some firms reporting that EU-based clients were “routeing supply chains away from the UK” due to Brexit. New orders from the US and Asia have also fallen. On 3rd September as we went to press, Sterling hit a three-year low against the dollar falling below $1.20 to its lowest level since October 2016. A slump in the Sterling, has favoured T-sticks to record a steady growth of business in light of their UK-EU exports.
“Currently, I have a shipment coming in from Europe to the UK. Owing to the Government's requirement for additional documentation, the shipment is delayed in its release from the customs department,” he says.
EORI registration number and license
After the UK leaves the EU, firms that trade with their EU counterparts will need an Economic Operator Registration and Identification (EORI) number to comply with customs rules. Firms that export and import beyond the EU already have an EORI number, but registration has become a pressing issue for the 245,000 companies who trade internationally only within the EU. A no-deal Brexit would be particularly difficult for them because, instead of having current rules apply during a transition, they could find their trading opportunities shut down after 31 October without an EORI number.
In the meantime the UK has launched a £16-million fund to train thousands of customs experts and support businesses for trading after Brexit
