Tories must stop infighting and negotiate best Brexit deal, or step aside for Labour
We are exporting less in goods by value relative to imports than at any time in our history. The UK, the trading nation of yore, is now breaking records for trade of all the wrong reasons, says Shadow Business and International Trade Minister Bill Esterson.
We increasingly hear that a no-deal Brexit means falling off a cliff in March 2019. “No deal” means the sudden need for product certification; import licences; customs checks; lorries queueing for miles at ports; an average EU tariff of 4.8 per cent; increasing costs to UK business by around £4.5bn a year. According to the LSE, “No deal” would mean the instant loss of up to 3.5 per cent of GDP per head.
Sounds like falling off a cliff to me.
But worse than that, investment in British companies has already fallen off a cliff. Office for National Statistics figures for Foreign Direct Investment in UK businesses show a catastrophic fall from a surplus of £120 billion in the first half of 2016 to a deficit, yes a deficit, of £25 billion from January to June 2017. For a country that depends on foreign investment for much of our economic success, this really is falling off a cliff. It means that companies are investing more overseas than we are attracting here, which, given we are supposed to be the number one destination for foreign direct investment, is disastrous for our economy.
At the same time, we have a record deficit in our trade in goods. The worst in our history. We are exporting less in goods by value relative to imports than at any time in our history. The UK, the trading nation of yore, is now breaking records for trade of all the wrong reasons.
That is the real Conservative record after seven years in government.
Meanwhile, Liam Fox, the hardline free trade Secretary of State for International Trade, claims that his department is delivering record numbers of investment projects and lining up a suite of trade deals. So why the gap between the claims of Dr Fox and the figures?
Start with jobs. The Conservatives claim there are record numbers of jobs. Yet figures from Fox’s own department show that there was a nine per cent fall in the number of new jobs created from FDI last year. And the workers at Nestle, BAE Systems and now Vauxhall will tell Dr Fox and his arch Brexiteer chums that their approach to free trade is actually costing them their jobs so far. Fox is prioritising trade deals with the US, India and China above that of our closest and biggest trading partner - Europe. The lack of challenge to Boeing flexing its muscles against Bombardier shows the potential danger of propping up the America First approach of Donald Trump.
The government agreed a backroom deal with Nissan in Sunderland; but now it needs to look after workers at Ellesmere Port. The plant was considering opening a third shift before the referendum. Now it is cutting back to a single shift, with the loss of 400 jobs. The fall in the value of the pound since the referendum means that prices of car components have gone up, making production at the highly efficient and productive Ellesmere Port plant more expensive. The new French owners of Vauxhall, PSA, say that uncertainty over Brexit makes it difficult for them to make investment decisions. And with some in the Tory Cabinet actively flirting with the prospect of a no deal, can you blame PSA?
The Conservatives’ approach to Brexit so far has been to fight each other rather than work out how to negotiate the best deal for the UK. Instead of Ministers bickering between themselves, they must put their energies into negotiating with the EU. They must also give certainty that the government agrees with Labour that we should stay in a customs union with the EU and in the single market during a transition period for as short as possible but as long as is necessary. They should also accept Labour’s approach to negotiate for arrangements after a transition period, which are as close as possible to the existing arrangements. Why? Because this is how to minimise disruption for business and for the economy.
The collapse in FDI, widening of the trade deficit, half a trillion wiped off our international investment position, threatened job losses at Nestle, BAE and now Vauxhall, suggest the Conservatives need to get their act together and quickly. If they can’t, they should step aside and let Labour take over to negotiate Brexit. We will put the economy and people’s livelihoods first.
Bill Esterson is the Labour Member of Parliament for Sefton Central, and is the Shadow Business and International Trade Minister
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