For too long, the UK market has been an easy touch for foreign, and particularly European, producers, helping to generate one of the largest trade deficits in goods of any advanced economy in the world. Put simply, we buy a lot more produce from them than they do from us.

Ever since the turn of the century, however, it’s just got bigger and bigger. Fortunately, this widening gap in goods has been partially offset by a growing surplus in services, particularly high value business and financial services.

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Even so, the UK economy manages to generate a consistently large current account deficit, making it highly dependent on inflows of foreign capital to prevent things tipping over into a fully blown balance of payments crisis of the sort that used to plague the nation in the Sixties and Seventies.

For a multitude of reasons, it would therefore be nice if we made more stuff. With its levelling up agenda, and its determination to make the economy more self-reliant and resilient, the Government thinks so too. Might Brexit provide such an opportunity? UK/EU third country import tariffs for selected products

Source: The Online Trade Tariff/ Access2Markets

Some background. It’s hard to put an exact date on when the UK lost the plot as a manufacturing nation, but roughly speaking it coincided with Britain’s accession to Europe’s common market.

That’s not to attribute cause as such to membership of the EU. Grown fat and lazy on once captive imperial markets, large parts of Britain’s manufacturing base had long since become internationally uncompetitive.

But those markets were increasingly shutting us out in their own drives for self-sufficiency. That’s why the UK joined the supposed alternative of the European Economic Community; sadly, many British firms found the adjustment to this more demanding, competitive landscape difficult, or even impossible.

The harsh medicine of the early Thatcher years sealed their fate.

But let’s not exaggerate here. In point of fact, Britain produces more manufactured goods in absolute terms today than ever. It’s just that service sectors have grown by far more.

Relative to GDP, manufacturing output has been falling for 50 years or more, and is today just a third of its previous level. In itself, this is no bad thing. Thanks to globalisation and technological advances, manufactured goods prices have been falling rapidly relative to others.

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Post-Brexit border controls have created delays at ports

Britain’s comparative advantage in services, where prices have been racing ahead relative to goods, has therefore stood the nation in good stead, enabling citizens to buy cheaply from abroad what they no longer produce at home.

Yet the transition has also been a socially destructive one. Once proud manufacturing regions have been rendered all but obsolete. We have, in a sense, traded our dignity for cheap foreign pap and a life of perpetual service. In some respects, we’ve only ourselves to blame.

Britain’s markets are more open to foreign invasion than almost any other country on the planet. UK consumers are also seemingly far less loyal to national brands than their European peers. “Buy British”, and “I’m backing Britain” campaigns have fallen on deaf ears. We like the choice and price of what our relatively unprotected borders give us.

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This morning’s update from the Office for National Statistics has boosted optimism about the UK’s economic recovery. GDP fell 2.6 per cent in November, reversing the trend of six consecutive months of increases since April’s significant contraction. This takes GDP back down 8.5 per cent below February’s levels – wiping out the recovery gains made between roughly the end of July and November.

Not, on the surface, good news. But the case for optimism comes alongside the context of what was happening in November: England’s second lockdown and a host of fire-breaks and circuit-breaks throughout the UK. November’s significantly smaller contraction compared with the March shutdown has forecasters thinking that the economy may have become more resilient to lockdowns.

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Keeping your business open

With the exception of some non-essential shops and public venues, we are not asking any other businesses to close – indeed it is important for business to carry on.

However, you should encourage your employees to work from home unless it is impossible for them to do so.

Sometimes this will not be possible, as not everyone can work from home. Certain jobs require people to travel to their place of work – for instance if they operate machinery, work in construction or manufacturing, or are delivering front line services.

See the full guidance on work.

Many UK SME businesses are misunderstanding what the government instruction is… relating to COVID 19

All companies can carry on working, and the direction is that people should not breach social distancing. So Retailers, Pubs, Restaurants and Businesses that necessitate people to meet, Theatres, Clubs etcetera, should not open.

Remember that deliving your food or product to the customer is not only OK, in many ways for businesses it’s A unique opertunity. First you learn who and where your customers reside and secondly the delivery person, drives afficency as the customer will be available to receive the order.

newspaper journal shopping

You can, however, trade if you can protect the public, your customers and perhaps most importantly, your employees.

Consider social distancing, don’t have teams travelling in the same vehicle. If you can work from home, do so, so clerical duties can continue. (more…)

On Thursday the Federation of Small Businesses (FSB) complained of a “nightmarish” experience for business owners that have already tried to seek help from lenders.

The finance ministry said it will ban lenders from requesting personal guarantees for loans under 250,000 pounds — one of the FSB’s demands — and will make operational changes to accelerate approvals.

Banks have now been banned from requesting personal guarantees – which allow them to take a director’s property if they cannot pay funds back – on loans under £250,000. Most high street lenders have already promised to do this following a backlash but the government will now force all of them to act.

The government has also removed a requirement for businesses to demonstrate that they have no other means of accessing funding in an attempt to widen the scheme.

There have now been more than 130,000 enquiries from companies for the loans, according to new data from UK Finance.

But only 983 businesses have had their finance approved, with around £90 million of loans.

Companies trying to apply for the loans said banks had been demanding the guarantees and charging double-digit interest rates after the first interest-free 12 months.

The Treasury said all viable small businesses affected by coronavirus will now be eligible for the scheme and they will not have to offer any proof they have looked elsewhere first.

Mr Sunak also offered a lifeline for mid-cap businesses.

About 5,000 companies had been previously been too big for the loan scheme – which is capped at firms with turnover of £45m – and too small for Covid Corporate Financing Facility, which helps multinational companies.

A new Coronavirus Large Business Interruption Loan Scheme which will provide a government guarantee of 80pc for loans of up to £25m to firms with an annual turnover of between £45m and £500m.

More here