Trade our way into Europe

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Read this months blog from Downtown London in Business Chairman, Simon Danczuk discussing the impacts of Brexit on the UK, plus the recent JD sports and European trade story.

Words: Simon Danczuk

The sun is beating down, it’s another hot day of my 2016 Spanish summer holiday and my mobile phone rings. It’s Peter Cowgill, the Executive Chairman of JD Sports.

At the time, I’m the Member of Parliament for Rochdale and JD Sports have a large new distribution centre in my constituency. It provides hundreds of jobs.

The place might never have been built if the former director of Rochdale Development Agency had got his way. Planning Kingsway Business Park, he had insisted on it being for highly skilled occupations related to technology, pharmaceuticals, and the like. A couple of councillors and I had to impress upon him that the result would be lots of people driving into Rochdale for their employment, then driving out again, and that semi-skilled jobs were as, if not more, important to our local economy. We won the day.

Peter’s phone call was about the EU referendum result – which had been on June 23rd – and the Government’s plans for continental trade. He was making it clear that if they got it wrong JD Sports would have no choice but to locate more of its distribution activities in mainland Europe.

I made strong representations to the relevant Trade Minister, whose response was woefully inadequate, simply referring the matter to some taskforce that had been established to deal with such enquiries. It highlighted how some politicians, who achieve high office, are not cut out to serve our country’s interests. Here was a major employer in the UK and the Minister could not be bothered to engage.

Fast forward to this Tuesday and Peter Cowgill is on BBC Radio 4 stating that Brexit is worse than feared, red tape and delays in shipping goods to mainland Europe meant “double-digit millions” in extra costs.

He said: “I actually think it was not properly thought out. All the spin that was put on it about being free trade and free movement has not been the reality. The new system and red tape just slows down efficiency. The freedom of movement and obstacles are quite difficult at the moment. I don’t see that regulatory paperwork easing much in the short term.”

Opening a big distribution centre in mainland Europe “would make a lot of economic sense,” he said. He estimated such a facility would employ about 1,000 people. While JD Sports’ existing warehouse in Rochdale would not close, “it would mean the transfer of a number of jobs into Europe,” he told the programme.

In the days that follow, we learn that AEV Group, a north west manufacturer with a plant in Hungary will now reduce its UK operations and invest in EU facilities after what it described as a “lack of clarity and preparedness” following Brexit. A survey by the Chambers of Commerce found that nearly half of all exporters now had difficulty moving or trading goods.

The Financial Times breaks the story that ‘Amsterdam ousts London as Europe’s top share trading hub – UK’s departure from the EU prompts shift in dealing of stocks and derivatives.’

It was right that after the referendum, we came out of Europe, but let’s not kid ourselves that jobs will not be lost. How many now depends upon the performance of our Government and its Ministers, early indications are not positive.

Whilst this year’s Spanish summer holiday, if we are allowed one, will be inconvenienced by a little Brexit bureaucracy, it will be as nothing compared to those losing their jobs because of Government failure to act on continental trade.

 

Words by Simon Danczuk

Simon Danczuk is Chairman of Downtown in Business London, a business consultant, and former MP for Rochdale 

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