Stronger recovery behind the transport crisis in the UK: that’s why Brexit has nothing to do with it
Julian Jessop is an economist, fellow of the Institute of Economic Affairs with over thirty years of experience in the public and private sector, an expert in British and global economics, fiscal and monetary policy and the labor market. We interviewed him about the recent transport crisis in the UK.
ARIANNA CAPUANI: How would you explain the freight transport crisis? Is it Brexit's fault or is it a global crisis?
JULIAN JESSOP: You are right to say that it is a global crisis. Different countries have been affected in different ways, albeit all in all similar, in Europe and beyond. At the moment, the National Guard drives school buses in the United States, because there are no more drivers. As for Britain, it is tackling some problems better than others, and other problems worse. The areas where it performs best is food and gasoline price inflation. Inflation, in particular, is at lower levels than in the rest of Europe or even in the United States, and one of the reasons is the strong pound already in early 2021. It follows that the cost of imported food and gasoline are less than expected.
In other respects, such as delays in manufacturing supply chains, the problems are broadly similar to the rest of Europe. The shortage of truckers is one of the areas where Britain is suffering the most. But even in this sector, the differences with the rest of Europe are not so pronounced. There are some specific details that have nothing to do with Brexit . It is also due to an economic recovery that is stronger than elsewhere that there is a shortage of labor before others. Brexit played its part, but it played a minor role compared to other factors. The government issued more visas for tanker drivers, but only 127 responded, which shows that there is a shortage of drivers across Europe. Obviously, the fuel crisis is largely caused by alarmism, rather than a real shortage of petrol. People in panic caused excess demand. Now the problem seems to have largely settled, albeit with some pockets in London and south-east England still suffering from fuel shortages at fire engines.
One of the problems to mention is undoubtedly the high average age of truck drivers. It is also difficult for young people to want to take up this profession, let alone women, and this not only because of not very favorable working conditions, but also because of night shifts and other long-standing problems related to remuneration. One of the potential effects of Brexit would be to induce employers to invest more in their employees. A lot of truckers 'time is wasted in queues and waiting for shifts to unload goods, but the problem could be solved with the use of technology, even if so far it has not been a priority, because truckers' time is worth little. If they start to cost more, then more could be invested in technology to be able to use them more efficiently. With increased productivity, one becomes able to justify even an increase in wages. It is to be hoped that Brexit will be able to facilitate these changes, even if the costs of the transition are high at the moment, probably even more than they should have been, and this is because the government and public administration did not take preventive measures in time. It seems that there has been no emergency plan to allow freight traffic to flow, but despite the lack of government intervention, the situation could be able to restructure the sector.
AC: And the role of the government in all of this?
JJ: The government's response to the crisis has been divided into various phases. He was initially slow to recognize the problem, and then seems to have left everything to the market. The third phase saw an oscillation between "we will extend visas" and "no, we will not". In short, I believe that the government has acted late, reacting rather than preventing with a specific plan. I believe the issue will be resolved and the truck drivers will be paid more, but the transition is more chaotic than it should be.
AC: Do you think extending visas for five months will be a sufficient measure?
JJ: Five months is certainly better than three as it was originally thought, and I also hope it is enough time to train new truck drivers in Great Britain, since one of the problems was the inability to train and get a driver's license. during the pandemic. If 10, 20,000 indigenous drivers were trained it would be better than about 200 imported from the rest of Europe.
If we consider the lockdowns in the United Kingdom, they have had progressively less and less impact than the previous ones, and this is because 'the different production sectors have adapted, either by enhancing online services or with work from home. I think the pandemic has shown that the private sector is very flexible, and perhaps that was precisely the shock that many industrial sectors needed. We have already talked about truck drivers, but another sector is agriculture, which has evidently become dependent on European seasonal workers. I believe that this influx must continue, as these are not very coveted jobs among British workers, but most desirable for Ukrainian workers, for example. These are solvable problems. It might mean paying them more, but if demand exists, you can help producers meet it.
The Australian "points" immigration system is certainly the model we are looking at, but we have found some obstacles. The first is due to the fact that perhaps for ideological reasons, the government did not want to grant too many visas, because admitting that freedom of movement was of some advantage would have been seen as a sign of defeat. Also, I believe they have chosen the wrong setting. In fact, highly skilled workers are being favored – where “highly skilled” only means “well paid” and not necessarily anything else. On the other hand, it could be said that it is not very specialized jobs that we need, since these foreign workers offer to carry out jobs that our fellow citizens do not want to do. I appreciate the idea that these jobs can go to European immigrants who would get a better salary than at home. I much less appreciate that the Whitehall bureaucrats have to decide who can or cannot enter, without letting the market lead.
AC: Changing the subject, as you comment on the increase in GDP, is it a simple post-pandemic recovery, or rather a sign of something that is going in the right direction?
JJ: It looks like we're heading towards 7 percent growth this year, which would bring economic activity levels back to the pre- Covid situation, rather than 2022 or 2023 as some feared. This is because Brexit was not the negative factor that some thought. It has obviously been a nuisance for some sectors, but all in all, eliminating uncertainties by bringing Brexit to an end has made things easier.
The determining factor, however, was the recovery from Covid – largely due, in my opinion, to an earlier and more successful vaccination campaign than in other countries. The same is true of the United States, which has seen a relatively strong economic recovery. There is also more: it was feared that Covid would cause long-term economic damage, for example higher levels of unemployment, but it doesn't seem like a real risk now, thanks to the layoffs. Unemployment remained at very low levels, and new job creation remained at good levels. Covid has managed to shake the economy in a positive way, in some ways. Many have had to rethink their way of working, to adapt to a more flexible market, and this could produce positive effects even in the long term, including perhaps eliminating a series of low-skilled and low-productivity jobs.
In short, the labor market is strong, and therefore the shortage of manpower is a positive sign. I believe that we are going through a difficult period of adjustment, probably more difficult than necessary due to the lack of organization by the government and the productive sectors, although I believe that in a few months the situation will have improved. I really believe that we will be able to save Christmas, thanks to the speed with which the markets manage to adapt.
AC: Does the cost of energy worry you?
JJ: The increase in energy prices is a global problem, even if hopefully temporary. At the moment, consumers are protected by the cap on bills, although low-income households and industries that use large amounts of energy are likely to need additional aid.
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This is a machine translation from Italian language of a post published on Atlantico Quotidiano at the URL http://www.atlanticoquotidiano.it/quotidiano/ripresa-piu-forte-dietro-la-crisi-dei-trasporti-in-uk-ecco-perche-brexit-non-centra/ on Mon, 18 Oct 2021 03:49:00 +0000.