It was indeed Brexit that killed British Steel. But not the fact of it, rather, the way that it hasn’t happened yet. A useful reminder that the thing which kills economies is uncertainty. Often enough it’s better to do something, near anything, that to keep us all in suspense about what might happen. So it is with Brexit.
This is actually what British Steel’s collapse is being blamed upon too. Not so much that Brexit would have caused this or that to happen. The net effect would almost certainly have been positive in fact. Rather, that the not knowing meant that no one did anything. Anything important, like ordering steel that is:[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]British Steel was reportedly seeking a government loan of £75 million ($95 million) to cover losses it said it suffered because European orders had evaporated due to the uncertainty surrounding Brexit.
“Unable to decipher the trading relationship the UK will have with its biggest market in just five months’ time, planning and decision making has become nightmarish in its complexity,” UK Steel, the industry’s trade association, said in a statement.[/perfectpullquote]
Uncertainty kills:[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]Greybull Capital, which specializes in trying to turn around distressed businesses, said it had tried to keep British Steel alive but the challenges of Britain’s looming exit from the European Union proved insurmountable.[/perfectpullquote]
If we left the EU and exports faced tariffs that would coincide with the pound falling because British exports would face tariffs. So, British Steel would be OK. If we stayed in then trading conditions and terms of trade would be as they were before, no problem. It’s the uncertainty. What will be the arrangements? As we don’t know sterling hasn’t fallen to where tariffs aren’t a problem. Yet tariffs might still be imposed. Uncertainty….
The truth is that British Steel died because we didn’t leave the EU on March 29th. Well done to all those who insisted we should not do what we said we would do – leave when we said we would.