Brexit choices exacerbate fuel and food shortages in Britain

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Specifically, the form of Brexit pursued by the UK government – which introduced strict immigration policies and pulled Britain out of the EU goods and energy market, making it much more difficult for UK businesses to hire European workers and much more expensive for them to do business with. the country’s largest trading partner.

The UK government’s post-Brexit immigration system, meanwhile, was designed to reduce the number of unskilled workers coming to Britain and end what the government has described as the country’s’ dependence on a cheap and low-skilled labor ”, despite a national unemployment rate in the region of only 5%.

“In the end, the government made the political decision to make low-skilled immigration more difficult,” said Joe Marshall, senior researcher at the Institute for Government, an independent think tank. “Labor shortages might have been less severe if the UK had retained the free movement of people after Brexit,” he added.

Britain recorded one million job vacancies between June and August, according to the Office for National Statistics. Restaurants, pubs and supermarkets, including Nando’s, had to temporarily close some locations last month due to staff shortages or because some ingredients were not delivered due to declining truck drivers .

The adult welfare sector is also facing a “workforce crisis” and will need to recruit workers from overseas to fill tens of thousands of vacancies, according to Care England, which represents the workers. independent providers.

Supply chain constraints exacerbated by Brexit mean UK consumers face rising food and energy bills as pandemic support measures are lifted, including government support for wages and a weekly increase of £ 20 ($ 27) in social security payments.

Chronic labor shortages

This week, the UK government was forced to partially reverse its strict post-Brexit immigration policy after thousands of gas stations dried up over the weekend and grocery retailers warned the country did not ‘had only 10 days to “save Christmas”.

In an interview with broadcasters on Tuesday, Transport Secretary Grant Shapps acknowledged that Brexit “will undoubtedly have been a factor” contributing to the fuel supply crisis.

To alleviate the pressure, the government will issue temporary visas to 10,500 foreign truck drivers and workers in the poultry industry. But industry groups say the measure won’t make much of a difference, in part because it’s unclear whether EU workers want to return to a country that has become more hostile to their presence.

British Chambers of Commerce President Ruby McGregor-Smith said that while short-term visas attract the maximum number allowed, “it will not be enough to solve the scale of the problem that has now developed in our chains. supply “. She likened it to “throwing a dice of water on a bonfire.”

The British military is now on standby for fuel deliveries amid warnings from the British Medical Association that healthcare workers, including ambulance drivers, will not be able to do their jobs as pumps run dry, although the Petrol Retailers Association said on Tuesday that there were “early signs that the crisis at the pumps is ending”.

Vehicles are seen outside a gas station in London on September 27.

The driver shortage has been exacerbated by Brexit, which has prompted tens of thousands of EU nationals to quit truck driver jobs and other professions in the UK. Johnson’s decision to end the free movement of workers following Brexit also made it more difficult for Europeans who returned home during the pandemic to return.

While many have the right to stay in Great Britain, they felt “rather unwelcome” because of Brexit, said L. Alan Winters, founding director of the UK Trade Policy Observatory at the University of Sussex.

“Covid was just the straw that broke the camel’s back, in the sense that things just got less pleasant here [for EU workers],” he added.

The exodus of workers is a major problem for many sectors which, during four decades of EU membership, had come to depend on a constant influx of labor.

“The EU’s labor supply has been cut without a clear roadmap of how this transition would be managed without disrupting services and supply chains,” McGregor-Smith said. “A managed transition, with a plan agreed upon between government and business, should have been in place from the start. “

A recent report by Grant Thornton commissioned by the food and beverage industry estimated that there were more than 500,000 vacancies in the industry.

Farms and food processors have been forced to cut back on production or simply let crops go to waste because they don’t have enough workers. This leads to a reduction in product lines in supermarkets and, in some cases, empty shelves.

Empty shelves are seen at a supermarket in Manchester, Britain on September 22.

“The jobs crisis is a Brexit-related issue, which has been widely reported in the food and drink industry,” Richard Griffiths, chief executive of the British Poultry Council, said in a statement last month.

According to Nick Allen, CEO of the British Meat Processors Association (BMPA), many farmers simply did not raise turkeys before Christmas because the supply of labor was so uncertain.

“There will be a shortage [of turkeys]Allen told CNN Business, adding that other Christmas favorites such as gammon and cover pigs (sausages wrapped in bacon) will likely be in short supply as well.

UK to bail out US company to avert food supply crisis

Data from Adimo, a shopping technology platform that tracks consumer interest in 300 brands, shows the percentage of out-of-stock products in UK supermarkets reaching levels recorded in March 2020, when shoppers were buying in panic as coronavirus cases soared.

The company predicts that in early December, UK shoppers will experience worse grocery shortages than at the height of the pandemic last year.

Alcohol, dairy, meats and frozen foods will be the most affected, according to Adimo CEO Richard Kelly. “The lack of choice and increasing supply chain costs will all affect the price customers will pay for their weekly or Christmas store,” Kelly added.

Raising wages on farms and in food processing factories to attract more British workers will also eventually lead to higher prices, Allen said. “We all want a high wage economy… but someone has to pay for it.”

Energy crisis

The rise in food prices comes as Britain grapples with soaring natural gas and electricity costs, due in part to the cool spring temperatures earlier this year, to growing demand from the China and declining supplies from Russia.

Soaring energy prices are also a problem in Europe. But the situation is particularly acute in the UK, as the tight supply has been exacerbated by the lack of large natural gas storage facilities, delayed maintenance work and a fire that cut an electric cable from France.

Earlier this month, soaring gas prices prompted a major US fertilizer maker to halt production in Britain, cutting off most of the country’s supply of carbon dioxide to the industry. agrifood. The gas is used to stun animals for slaughter, as well as in packaging to extend the shelf life of fresh, chilled and baked products, and in the production of carbonated drinks.

Europe is paying record prices for energy.  A winter crisis is looming

None of these problems can be blamed on Brexit, but the minimalist trade deal with the EU signed by Johnson last December left the UK to fend for itself in the current crisis as it did not include any energy deal. . This meant Britain had left the EU’s internal energy market on December 31, 2020.

“There is no such closeness of cooperation [between the United Kingdom and European Union] on the safety of [energy] procurement, ”said Lilah Howson-Smith, senior partner at Global Counsel, a policy consultancy. This has left the UK government with fewer levers to deal with the current challenges, she added.

These include access to storage facilities and solidarity between EU member states, which contributes to security of supply, according to a 2016 report commissioned by National Grid, a utility company, which found that leaving the internal energy market could push up UK energy bills by up to £ 500million ($ 677.8million) per year.

“Although uncertain, the impact of Brexit on the UK energy system will most likely be negative,” the report said.

Economists are already warning that continued upward pressure on prices from labor shortages, booming supply chains and rising energy costs will weigh on UK growth and increase the economy. inflation, which is already at its highest level for more than two decades.

The UK economy remains 2.1% smaller than before the pandemic and economists in Berenberg recently pushed back their forecast of a full recovery to the second quarter of 2022.

By comparison, S&P Global Ratings expects Europe to return to its pre-crisis GDP level before the end of this year, a quarter earlier than expected, suggesting that the divergent fortunes of the UK and European economies , already apparent in terms of growth and investment since the Brexit referendum in 2016, is expected to continue.

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