Great Britain Withdrawal from EU (Brexit)

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‘We Have Fish, That’s Our Currency’

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Just before midnight, David O’Neill navigated his trawler into the harbor in Union Hall, a small port in southwestern Ireland, the wake from the vessel sending tiny waves slapping against the pier.The crew swiftly unloaded their catch, using a crane to lift ice-packed crates of haddock and hake from the hold of the Aquila under bright spotlights.Less than an hour later, the Aquila would depart for its final trip. Two days later, the crew stripped the vessel’s contents — chains, buoys, ropes, steel cables, and hooks — and ejected them onto the pier, on their way to a shipyard to be scrapped.“This is coming with me,” Mr. O’Neill said as he unscrewed the Aquila’s wooden steering wheel. “It reminds you of all you’ve been through on this boat.”Crew members removing the nets from the Aquila after the ship’s last voyage.“This is coming with me,” said David O’Neill, the skipper of the Aquila, as he unscrewed the vessel’s wooden steering wheel. “It reminds you of all you’ve been through on this boat.”The Aquila is one of dozens of Irish boats being scrapped as part of a voluntary government decommissioning plan introduced after Britain withdrew from the European Union, and transferred 25 percent of Europe’s fishing rights in British waters. That significantly limited Irish vessels in the numbers of fish they are allowed to catch — an anticipated annual loss of 43 million euros ($46 million), making Ireland one of the European nations most affected.Although fishing is a small industry in Ireland, in some coastal communities, it has been the backbone of the economy, even as it has been whittled down over the years. But beyond economics, fishing has been an essential way of life for generations. Locals fear the Brexit quotas and subsequent retiring of boats will be the final death knell. More

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    Brexit Turns 3. Why Is No One Wearing a Party Hat?

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    The divorce between Britain and the European Union has become the dark thread that, to many, explains why Britain is suffering more than its neighbors.LONDON — The third anniversary of Britain’s departure from the European Union passed without fanfare on Tuesday, and why not? Brexit has faded from the political forefront, unmentioned by politicians who don’t want to touch it and overlooked by a public that cares more about the country’s economic crisis.The severity of that crisis was underscored by the International Monetary Fund, which forecast this week that Britain will be the world’s only major economy to contract in 2023, performing even worse than heavily blacklisted Russia.The I.M.F. only indirectly attributed some of Britain’s woes to Brexit, noting that it suffered from a very tight labor market, which had constrained output. Brexit has aggravated those shortages by choking off the pipeline of workers from the European Union — whether waiters in London restaurants or fruit and vegetable pickers in fields.The effects of Brexit run through Britain’s last-in-class economy because they also run through its divided, exhausted politics. In a country grappling with the same energy shocks and inflation pressures that afflict the rest of Europe, Brexit is the dark thread that, to some critics, explains why Britain is suffering more than its neighbors.“One of the reasons for our current economic weakness is Brexit,” said Anand Menon, a professor of West European politics at King’s College London. “It’s not the main reason. But everything has become so politicized that the economic debate is carried out through political shibboleths.”Years of debate over Brexit, he said, had contributed to a kind of policy paralysis. “If you look at it, it is astounding how little actual governing has happened since 2016,” Professor Menon said. “It has been seven years, and virtually nothing has been done on a governmental level to fix the country’s problems.”Inflation, though it has eased slightly, continues to run at a double-digit rate.Neil Hall/EPA, via ShutterstockThose problems continue to proliferate. Inflation, though it has eased slightly, continues to run at a double-digit rate. Britain’s National Health Service is facing the gravest crisis in its history, with overcrowded hospitals and hourslong waits for ambulances. On Wednesday, Britain will face its largest coordinated strikes in a decade, with teachers, railway workers and civil servants walking off the job.Not all these problems are wholly, or even principally, a result of Brexit. But tackling any of them, experts said, will require bolder solutions than the government of Prime Minister Rishi Sunak has yet proposed. Owing largely to Brexit, Mr. Sunak’s Conservative Party remains torn by factions that thwart action on issues from urban planning to a new relationship with the European Union.Part of the problem, experts said, is that the neither the government nor the opposition Labour Party is prepared to acknowledge the negative effects Brexit has had on the economy. The government may not ring the bell of Big Ben to celebrate the anniversary, as it did on Brexit day in 2020. But to the extent that Mr. Sunak refers to Brexit, he still portrays it as an undiluted boon to the country.“In the three years since leaving the E.U., we’ve made huge strides in harnessing the freedoms unlocked by Brexit,” Mr. Sunak said in a statement marking the anniversary. “Whether leading Europe’s fastest vaccine rollout, striking trade deals with over 70 countries or taking back control of our borders, we’ve forged a path as an independent nation with confidence.”A protest on Monday against a proposed bill to limit strikes outside Downing Street in London.Andy Rain/EPA, via ShutterstockHis predecessor, Boris Johnson, also cited the early authorization and rapid deployment of a coronavirus vaccine as proof of Brexit’s value — never mind that health experts said Britain would have had the authority to approve a vaccine before its neighbors, even if it had been part of the European Union.“Let’s shrug off all this negativity and gloom-mongering that I hear about Brexit,” Mr. Johnson said in a video posted on Twitter on Tuesday afternoon. “Let’s remember the opportunities that lie ahead, and the vaccine rollout proves it.”There is little evidence that Mr. Sunak and Mr. Johnson are convincing many people. Public opinion has turned sharply against Brexit: Fifty-six percent of those surveyed thought leaving the European Union was a mistake, according to a poll in November by the firm YouGov, while only 32 percent thought it was a good idea.And the sense of disillusion is nationwide. In all but three of Britain’s 632 parliamentary constituencies, more people now agree than disagree with the statement, “Britain was wrong to leave the E.U,” according to a poll released Monday by the news website, UnHerd, and the research firm, Focaldata.The three holdouts are agricultural areas around Boston and Skegness on the country’s eastern coastline, where immigration is still a resonant issue. And even in these places, public opinion about Brexit is finely balanced.At the same time, few people express a desire to open a debate over whether to rejoin the European Union. The prospects of doing that on terms that would be remotely acceptable to either side are, for the moment, far-fetched. The Labour leader, Keir Starmer, prefers to frame his party’s message as “Making Brexit Work,” having lost an election to the Tories in 2019, whose slogan was “Get Brexit Done.”The chief executive of the N.H.S., Amanda Pritchard, from left, with Prime Minister Rishi Sunak of Britain. They were visiting the University Hospital of North Tees in Stockton-on-Tees.Pool photo by Phil NobleBritain’s problems are exacerbated by the fact that the one leader who proposed radical remedies, Liz Truss, triggered such a backlash in the financial markets that she was forced out of office in 45 days. To restore the country’s reputation with investors, Mr. Sunak has scrapped her tax cuts and adopted a fiscally austere program of higher taxes and spending cuts that the I.M.F. says will curb growth.“Although we no longer have lunatics running the asylum, we have essentially a lame-duck government that doesn’t have any semblance of a plan to restore economic growth,” said Jonathan Portes, a professor of economics at King’s College London.The trouble is that the bitter squabbling over Brexit has made obvious responses politically perilous for the prime minister. Even the I.M.F.’s projection for Britain’s growth ignited a storm of commentary on social media about whether it would help the cause of “Remainers” or reopen the Brexit debate.The fund’s assessment was not completely gloomy despite its prediction of contraction in 2023. Britain, it estimated, grew faster than Germany or France last year. After inflation cools and the burden of higher taxes eases, it said, Britain should return to modest growth in 2024.Professor Portes said that there were policies Mr. Sunak could pursue, from liberalizing planning laws to overhauling immigration rules to ease the labor shortage, that would stimulate growth. “If you put all those together,” he said, “there is a reasonable, feasible strategy that could make the next 10 years better than the last.”But he added, “Any coherent strategy involves repairing the economic relationship with Europe, and that will depend on the political dynamic.” More

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    Why the British Pound Continues to Sink

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    Britain’s pound coin — rimmed in nickel and brass with an embossed image of Queen Elizabeth II at the center — could always be counted on to be significantly more valuable than the dollar.Such boasting rights effectively came to an end this week when the value of the pound sank to its lowest recorded level: £1 = $1.03 after falling more than 20 percent this year.The nearly one-to-one parity between the currencies sounded the close of a chapter in Britain’s history nearly as much as the metronomic footfalls of the procession that carried the queen’s funeral bier up the pavement to Windsor Castle.“The queen’s death for many people brought to an end a long era of which the soft power in the United Kingdom” was paramount, said Ian Goldin, professor of globalization and development at the University of Oxford. “The pound’s demise to its lowest level is sort of indicative of this broader decline in multiple dimensions.”The immediate cause of the pound’s alarming fall on Monday was the announcement of a spending and tax plan by Britain’s new Conservative government, which promised steep tax cuts that primarily benefited the wealthiest individuals along with expensive measures to help blunt the painful rise in energy prices on consumers and businesses.The sense of crisis ramped up Wednesday when the Bank of England intervened, in a rare move, and warned of “material risk to U.K. financial stability” from the government’s plan. The central bank said it would start buying British government bonds “on whatever scale is necessary” to stem a sell-off in British debt.The Bank of England’s emergency action seemed at odds with its efforts that began months ago to try to slow the nearly 10 percent annual inflation rate, which has lifted the price of essentials like petrol and food to painful levels.Rising Inflation in BritainInflation Slows Slightly: Consumer prices are still rising at about the fastest pace in 40 years, despite a small drop to 9.9 percent in August.Interest Rates: On Sept. 22, the Bank of England raised its key rate by another half a percentage point, to 2.25 percent, as it tries to keep high inflation from becoming embedded in the nation’s economy.Energy Bills to Soar: Gas and electric charges for most British households are set to rise 80 percent this fall, further squeezing consumers and stoking inflation.Investor Worries: The financial markets have been grumbling with unease about Britain’s economic outlook. The government plan to freeze energy bills and cut taxes is not easing concerns.The swooning pound this week has carried an unmistakable political message, amounting to a no-confidence vote by the world’s financial community in the economic strategy proposed by Prime Minister Liz Truss and her chancellor of the Exchequer, Kwasi Kwarteng.To Mr. Goldin, the pound’s journey indicates a decline in economic and political influence that accelerated when Britain voted to leave the European Union in 2016. In many respects, Britain already has the worst performing economy, aside from Russia, of the 38-member Organization for Economic Cooperation and Development.“It’s just a question of time before it falls out of the top 10 economies in the world,” Mr. Goldin said. Britain ranks sixth, having been surpassed by India.Eswar Prasad, an economist at Cornell University, said this latest plunge had delivered a bracing blow to Britain’s standing. A series of “self-inflicted wounds,” including Brexit and the government’s latest spending plan, have accelerated the pound’s slide and further endangered London’s status as a global financial center.Dozens of currencies, including the euro, the Japanese yen and the Chinese renminbi, have slumped in recent weeks. Rising interest rates and a relatively bright economic outlook in the United States combined with turmoil in the global economy have made investments in dollars particularly appealing.But the revival by the Truss government of an extreme version of Thatcher and Reagan-era “trickle-down” economic policies elicited a brutal response.“The problem isn’t that the U.K. budget was inflationary,” wrote Dario Perkins, a managing director at TS Lombard, a research firm, on Twitter. “It’s that it was moronic.”To some, the pound’s journey indicates a decline in Britain’s economic and political influence.Suzie Howell for The New York TimesDuring the more than 1,000 years in which the pound sterling has reigned as Britain’s national currency, it has suffered its share of ups and downs. Its value in the modern era could never match the value of an actual pound of silver, which in the 10th century could buy 15 cows.Over the centuries, British leaders have often gone to extraordinary lengths to protect the pound’s value, viewing its strength as a sign of the country’s economic power and influence. King Henry I issued a decree in 1125 ordering that those who produced substandard currency “lose their right hand and be castrated.”In the 1960s, the Labour government under Harold Wilson so resisted devaluing the pound — then set at a fixed rate of $2.80, high enough to be holding back the British economy — that he ordered cabinet papers discussing the idea to be burned. In 1967, the government finally cut its value by 14 percent to $2.40.Other economic crises thrashed the pound. In the 1970s, when oil prices skyrocketed and Britain’s inflation rate topped 25 percent, the government was compelled to ask the International Monetary Fund for a $3.9 billion loan. In the mid-1980s, when high U.S. interest rates and a Reagan administration spending spree jacked up the dollar’s value, the pound fell to a then record low.The pound’s dominance has been waning since the end of World War II. Today, the global economy is experiencing a particularly tumultuous time as it recovers from the aftermath of the coronavirus pandemic, supply chain breakdowns, Russia’s invasion of Ukraine, an energy shortage and soaring inflation.As Richard Portes, an economics professor at London Business School, said, currency exchanges have enormous swings over time. The euro was worth 82 cents in its early days, he recalled, and people referred to it as a “toilet paper” currency. But by 2008, its value had doubled to $1.60.What might cause the pound to revive is not clear.The Truss government’s economic program has forcefully accelerated the pound’s slide — the latest in a series of what many economists consider egregious economic missteps that peaked with Brexit.Much depends on the Truss government.“The plunge in the pound is the result of policy choices, not some historical inevitability” said Ian Shepherdson, chief U.S. economist at Pantheon Macroeconomics. “Whether this is a new, grim era or just an unfortunate interlude depends on whether they reverse course or are kicked out at the next election.”As it happens, the Bank of England is preparing to issue new pound bank notes and coins featuring King Charles III, at the very moment that the pound has dropped to record lows.“The death of the queen and the fall of the pound do seem jointly to signify decisively the end of an era,” Mr. Prasad of Cornell said. “These two events could be considered markers in a long historical procession in the British economy and the pound sterling becoming far less important than they once were.” More

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    U.K. Braces for a Difficult Holiday Season Due to Shortages

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    Military personnel are driving transport trucks. Pig farmers may start culling their stock. Even the government says shortages will affect Christmas, as Britons brace for a challenging winter.BUNGAY, England — To understand the deep sense of anxiety Britons feel about the supply shortages currently afflicting the nation — and threatening disruptions to the Christmas dinner table — one need only travel to Simon Watchorn’s pig farm, about two hours northeast of London.In 2014, Mr. Watchorn was England’s pig farmer of the year, with a thriving business. But this year, he said, the outlook for the fall is bleak.Slaughterhouses are understaffed and are processing a smaller-than-usual number of pigs. There is a shortage of drivers to move pork to grocery stores and butcher shops. And there are fewer butchers to prepare the meat for consumers.If the problems persist, Mr. Watchorn may have to start culling some of his 7,500 pigs by the end of next month. Pigs grow about 15 pounds each week, and after a certain point, they are too big for slaughterhouses to process.Mr. Watchorn said the last time he can remember things being this bad was during an outbreak of mad cow disease in the late 1990s. “It’s a muddle,” he said. “It’s worse than a muddle, it’s a disaster, and I don’t know when it’s going to finish.”Mr. Watchorn, 66, is one of many producers of food and other goods warning of a daunting winter ahead for Britons. Shortages continued to bedevil the British economy on Monday as gas stations in London and in southeastern England reported trouble getting fuel, and the government began deploying military personnel to help ease the lack of drivers. Supermarket consortiums say pressures from rising transport costs, labor shortages and commodity costs are already pushing prices higher and will likely continue to do so.The chancellor of the Exchequer, Rishi Sunak, acknowledged on BBC Radio on Monday that there will shortages at Christmastime. He said the government was doing “everything we can” to mitigate the supply chain issues but admitted there was no “magic wand.”Mr. Watchorn, whose farm is near the town of Bungay, England, northeast of London, is convinced that Brexit is responsible for the current distress.Andrew Testa for The New York TimesMr. Watchorn, who prides himself on running a farm where all adult stock live outside, is convinced that Brexit is responsible for the current distress, saying the exodus of European workers from Britain had led to damaging labor shortages. The British people voted to break with the European Union to reduce immigration, he believes, without realizing how damaging a cliff-edge exit from the bloc would be for businesses.“They didn’t vote for supermarket shortages,” he said on Sunday as dozens of pigs gathered around him to be fed. “They didn’t understand that was going to be a probable, likely outcome.”Mr. Sunak and other Conservative leaders say supply problems are a global issue largely attributable to the pandemic and not limited to Britain. Indeed, businesses around the world are facing rising energy prices, product shortages and labor shortages.But the challenges in Britain are acute, with many industries facing a shortage of workers — in part because of the pandemic, but also, many business owners say, because of stricter immigration laws that came into effect after Britain’s exit from the European Union on Jan. 1.“We are desperately trying to find workers,” said Jon Hare, a spokesman for the British Meat Processors Association, which estimates that Britain is short of about 25,000 butchers and processing plant workers.He called on the government to issue more short-term visas to foreign workers to help the industry with the transition outside of the European Union. “There are only so many people you can take out of the production system before the system starts breaking down,” he said.A shopper confronted sparse food shelves in a Co-op supermarket in Harpenden, England, in September.Peter Cziborra/ReutersThe specter of disruptions to the holiday season is particularly resonant in Britain, where Christmas isn’t Christmas without traditional foods. And yet British meat producers say the dinner table could be lacking some of the seasonal specialties that people count on every December. That includes pigs in a blanket (bacon-wrapped sausages that are different from the American version), glazed ham and Yorkshire pudding, which require additional labor to prepare, Mr. Hare said.The National Pig Association has warned that about 120,000 pigs are backed up on farms because of a lack of slaughterhouse workers, and the British Poultry Council said it expected to cut Christmas turkey production by 20 percent. On Monday, protesters gathered outside of the Conservative Party conference in Manchester with signs that said “All we want for Christmas is our pigs in a blanket” and “#saveourbacon.”Consumers are already anticipating shortages. One farmer in Leeds said that by last month, customers had already ordered all 3,500 turkeys she was raising for Christmas — a first.A lack of truck drivers has also caused sporadic shortages for staples including eggs, milk and baked goods. One in six people in Britain said that in recent weeks they had not been able to buy certain essential food items because they were unavailable, according to a report by the Office for National Statistics, which surveyed about 3,500 households.Some consumers interviewed in recent days said they had not had any trouble finding what they wanted at grocery stores. But Meriem Mahdhi, 22, who moved from Italy to Colchester in southeast England last month to attend college, said she had struggled to find essential items at her local grocery store, Tesco, Britain’s largest supermarket chain.“All the dried foods like pasta, canned fruit, it’s all gone, every day,” she said. Tesco did not respond to a request for comment.Seeking a quick fix, 200 military personnel in fatigues on Monday arrived at refineries to help deliver fuel to gas stations. About half of them drove civilian vehicles and the others provided logistical support. “As an extra precaution we have put the extra drivers on,” Mr. Sunak said.Over the weekend, the government said it had extended thousands of temporary visas for foreign workers to work in Britain until the first few months of next year. But economists said the temporary visas were unlikely to be enough to make much of a difference, since there are shortages at every link in the supply chain.“There is a lack of workers coming in, and British people are not willing to do the job,” said Robert Elliott, a professor at the University of Birmingham. He said it was difficult to say how much of the supply-chain issues were a result of Brexit versus the pandemic, but regardless, the government has chosen policies that have not made the situation better.The government has underinvested in training workers to drive trucks, he said, and too few young people are pursuing the profession to replace ones who have retired.Even before Brexit, the meat industry had difficulties attracting workers because of the hard work, low pay and remote locations of processing plants. Producers have raised wages for butchers by an average of 10 percent this year, the British Meat Processors Association said, but shortages are still so severe that members of the British Poultry Council reported they had cut weekly chicken production by five to 10 percent.Mr. Watchorn said the situation was “a disaster, and I don’t know when it’s going to finish.”Andrew Testa for The New York TimesJames MacGregor, the general manager at Riverford, an organic food company based in Devon, England, said he was short of about 40 workers, or about 16 percent of the company. Butchers have been particularly hard to find, he said. To cope with the shortages, Riverford will likely offer fewer products for sale around Christmas.“It feels like we’re staring down the barrel of a gun a little bit at the moment,” Mr. MacGregor said. “It’s highly likely if we don’t see movement in terms of fuel and labor, we will ultimately end up passing some of this cost on to the consumer.”Kathy Martyn, the owner of Oakfield Farm in East Sussex, which has about 100 pigs, said she was relieved to find fuel on Friday, just in time to make it to a catering job for a wedding over the weekend. She said that fuel shortages have made planning difficult, and that she may have to cull about 20 of her pigs this year.“We’ll just roll up our sleeves and take a deep breath,” Ms. Martyn said.Mr. Watchorn, the pig farmer, said his farm will be losing money this year. Even culling pigs is costly. If it comes to that, he would have to find someone to slaughter the animals and then take them away. Financial help from the government to do that would help, but he said he was not counting on it. “When pigs fly,” he quipped.Mr. Watchorn said the last time he can remember things being this bad was during an outbreak of mad cow disease in the 1990s.Andrew Testa for The New York TimesAina J. Khan More