Since the start of December, 19 companies have announced major job cuts or decisions to relocate businesses elsewhere in the EU and beyond. That’s 19 major announcements in less than eight weeks accounting for over 17000 jobs losses. It is time we brought the decision to leave the EU back to the electorate with a Peoples Vote to avoid this death by a thousand cuts.
What worries me is that, of those 19 companies that announced their closures, re-location or deferred investments, 9 were in the manufacturing sector. Now manufacturing is an important and healthy sector in the UK according to a recent report in ‘The Manufacturer’ (https://www.themanufacturer.com/uk-manufacturing-statistics/). It accounts for 44% of exports and 11% of Gross Value Added. And has seen a real renaissance in the last two decades as we have become established as a place to do business. So, 50% of closures are in manufacturing which itself accounts for 11% of GDP. At this rate, we will see the sector return to the decline it faced n the 1970s. Remember that?
The casualties have not just been the high profile likes of Ford, Jaguar Land Rover and DHL. Companies such as Rotherham based Central Wire Industries have shelved a £1.5mn expansion that would have created 15 local jobs. They have been hit by rising costs due to the pound’s devaluation and concerns over trade barriers with the EU where they export most of the products. Phillips Avent, the Suffolk based maker of the bottles many of us have used to feed our children have announced a relocation of their plant to the Netherlands with a loss of 500 jobs.
The list goes on and I haven’t included this week’s announcements by Dyson and Sony to relocate their HQs to Singapore for Dyson and Amsterdam for Sony’s European HQ.
Now what does this show us? Well, it shows that:
- businesses are deciding that Mrs May’s aim of getting ‘as frictionless trade as possible’ with the EU actually not very frictionless at all. Even with a free trade deal, let alone a no deal exit, businesses are deciding to avoid the consequences of leaving and simply re-locate their activities elsewhere.
- We will start to lose tax revenues and the ability to fund our public services. If companies such as Dyson and Sony are headquartered outside the UK, you can be sure that taxes will be minimized and revenues declared in low tax regimes such as …….. Singapore.
- the forecasts of ‘Economists for Brexit’ were correct in saying that the UK’s manufacturing industry would die after Brexit. You read that right. That forecast came from the architects of Brexit such as Professor Patrick Minford. If you do not believe me, look here:
It is time that the Government treated us as adults. If they cannot agree a plan with Parliament, they need to let go of the decision-making and hand it back to us. We need a Peoples Vote now we know the details of what Brexit will mean.
Dr Domonic Swords
Dominic is a Professor in Business Economics and has over 25 years of international experience working with blue-chip companies around the globe. Dominic is a regular contributor to the Hope For Europe blog so watch this space.