Britain’s Been Hammered by Brexit, but It Got the Vaccine Right
The positive contrast with the European Union’s COVID-19 vaccine debacle has masked a rocky exit from Europe.
Post-Brexit Britain has had a rough start to life after Europe, with British businesses struggling with mountains of bureaucracy, fish rotting away for lack of export markets, and billions of pounds fleeing the City of London’s financial sector. But thanks to the European Union’s ham-fisted handling of vaccine distribution, Brexit Britain, in one way at least, has come off looking like the better-governed outfit.
The EU’s vaccination program has gone off the rails, with a shortage of vaccines standing in stark contrast to Britain’s stockpile and quick rollout. When the EU attempted last week to redress its shortage by attempting to block exports of the AstraZeneca vaccine made in Belgium—but ordered and paid for by the British government—even pro-EU Britons were outraged. Brussels then compounded the damage, with European Commission President Ursula von der Leyen briefly invoking Brexit’s most controversial clause to prevent deliveries from Northern Ireland to mainland Britain, sparking fury among both Irish and British lawmakers.
“Under any other circumstances, we would be battling a tide of bad Brexit news,” said a senior official at No. 10 Downing St. “As it is, this vaccine story makes the EU look incompetent, selfish and evil … while showing up one properly brilliant thing we have done, which is vaccinate far, far more people than anyone else in Europe.”
Scientists at Oxford University developed the AstraZeneca vaccine, and the British government ordered over 100 million doses in May 2020. The EU, by contrast, insisted that all 27 members purchase the doses collectively—but only started signing up for the vaccines last August. AstraZeneca, an Anglo-Swedish drugmaker, said that it will serve customers on a first-come, first-served basis—and that the EU will have to wait until the British order is fulfilled. As a result, the U.K. has vaccinated more than 11 percent of its population, compared with around 2 percent in Germany and less than that in France.
Even the usually fiercely pro-EU Observer newspaper argued that “the vaccine crisis has shown the EU at its worst. By contrast, it has shown Britain at its best.”
The EU “basically could not have behaved more obnoxiously,” said the British government official, who spoke to Foreign Policy on condition of anonymity. “It’s helped us to convince a lot of people, even many who thought Brexit was a bad idea, that [Britain] is much better out of this awful organization.”
And they’ll need some convincing. The EU’s vaccine debacle has so far distracted attention from a steady drumbeat of bad news on the economic fallout from U.K. Prime Minister Boris Johnson’s insistence that Britain leave Europe’s single market—a decision whose impacts on British importers and exporters is only likely to grow more acute in the months to come.
The upshot is that U.K. businesses wishing to do business in Europe will now have to fill out some 215 million import and export forms every year, costing an estimated 7.5 billion pounds (over $10 million), according to the British tax collection agency. Barriers to trade have also been thrown up not just between the United Kingdom and the EU but between the mainland and Northern Ireland.
Those frictions are showing up in British ports, which previously served as a gateway to the huge European market. The leaders of Britain’s five largest business groups warned the government last week that firms across all sectors face “substantial difficulties” at U.K. ports since Brexit, with the prospect of a “significant loss of business” if the situation is allowed to continue. Cabinet Office Minister Michael Gove—who had previously dismissed border problems as “teething troubles”—now acknowledges that exporters face, as the business groups described it, “sizable obstacles.” He pledged 23 million pounds in compensation to firms that had lost money as a result of bureaucratic delays.
“That sum doesn’t stack up at all to the projected losses [from Brexit],” said Anand Menon, the director of the U.K. in a Changing Europe think tank. “There are estimates of a 7 percent loss to [U.K.] GDP, which is vast … the scale of the losses is so great that there’s no way any potential economic benefits can compensate.”
Unsurprisingly, Irish exporters to the EU have chosen to avoid transit through the U.K. entirely. Shipping giant Stena Line announced in early January that its biggest new ferry would be sailing from Rosslare, in the Republic of Ireland, direct to Cherbourg, France, rather to Holyhead in Wales. Thanks to Brexit, in early January Rosslare Port reported truck traffic up by 500 percent over last year.
Among the hardest-hit businesses are those that once campaigned enthusiastically for Brexit.
British fishers, part of an industry that accounts for less than 0.1 percent of the U.K. economy but whose demands to break free of European fisheries management played an outsized role in Brexit, are now coming to grips with the true implications of their departure. The majority of the fish caught by British fishers are exported, mostly to the European market; most of the fish Britons eat is imported. But those decades-old fisheries arrangements are now in disarray.
In late January, fishers drove fish-filled trucks to Downing Street to protest costly and time-consuming customs delays that have made the export of fresh seafood to Europe uneconomic. The trucks, emblazoned with slogans such as “Brexit carnage,” stopped short of carrying out their threat to dump tons of wasted fish on Johnson’s doorstep. But as Gary Hodgson, a director of crab and lobster exporter Venture Seafoods, told Reuters, “we strongly feel the system could potentially collapse.” Scottish trawlers have begun landing their catches in Denmark rather than face the hassle of exporting them through British ports.
British farmers, too, were a vocal pro-Brexit group because of restrictive EU quotas and subsidies—until the reality of trying to export their goods to the EU dawned. The British Meat Processors Association reported in late January that over 120 trucks carrying British meat were stuck in at Rotterdam in the Netherlands—one for more than three weeks—while the food rotted inside.
The customs squeeze has already put a serious dent in cross-border traffic. Data from the Préfecture des Hauts-de-France et du Nord, the local French authority that controls the main cross-channel ports and the Channel Tunnel, shows heavy goods vehicle traffic in both directions down 30 percent since new regulations kicked in on Jan. 1. The difficulty of reentering Europe with trade goods has dampened the enthusiasm of European truckers: About two-thirds of the 3,400 trucks crossing from France to the U.K. came back empty.
And that situation is set to get even worse at the end of this month, when a grace period during which French officials have been instructed to be lenient on incorrect paperwork lapses. So far, French customs found that only 1 in 10 of British trucks’ export health certificates—required for consignments of all food—were correctly completed.
Things could be even worse for service industries, which make up some 80 percent of the U.K. economy but were left out of last year’s trade deal. Cboe Europe, one of London’s biggest exchanges specializing in euro-denominated financial trades, has lost some 6 billion euros (more than $7 billion) in business to markets like Paris and Frankfurt, according to the Financial Times. And the carnage could continue: New regulations on “passporting” rights that allow non-EU financial institutions to trade inside Europe have yet to be clarified. Obstacles to free financial trading could cost the city billions more in fleeing capital, as well as disappearing jobs and tax revenue.
U.K. government officials have tried to offer help. Advisors employed by the British government’s Department for International Trade have been telling small U.K. businesses that the best way to get around the regulatory nightmare of customs checks and accounting for value-added taxes is to register subsidiaries within the EU single market—an odd way to regain British sovereignty.
But those customs difficulties underscore that the new trade environment is not “teething troubles” but a structural change. “The cost of trading with the EU will increase. It’s a fixed cost that won’t disappear over time,” said Oscar Guinea, a former civil servant who is now senior economist at the European Centre for International Political Economy. “U.K. exporters may get better at doing paperwork—but their costs will always be higher than if they were inside the EU.”
At the same time, many of the benefits of Brexit promised by Johnson—including light-touch regulation and freedom to export outside the EU—remain intangible. Before, the U.K. had—via its membership in the EU—preferential trading arrangements with some 70 other countries; now, it is having to renegotiate those one by one.
One possible benefit of Britain’s newfound political freedom could be a “new politics” in the U.K., Menon said, rebalancing government spending to reflect the problems of the have-nots who were Brexit’s strongest supporters. “The economy will be smaller, but it could be more equal.”
As for short-term achievements to crow about, even the prime minister’s office is having a hard time finding any. “To tell the truth it’s been quite tricky finding concrete things to point to” as an immediate benefit of Brexit, the senior government official said. “So thank God for the vaccine thing.”