Why North East business needs the Single Market

Darren Gibson is the Owner of Fountain Safety Solutions, based in Newcastle, and is a business champion of Open Britain.

The Government’s choice to pull Britain out of the Single Market after Brexit will hit small businesses like mine hardest of all. As the technical director of a small business specialising in machinery safety – we check the equipment of companies small and large across the North East of England to ensure it is safe and in good working order. Although we don’t sell our products abroad, leaving the Single Market would be a real blow for my business. I want to set the record straight, and show how the Single Market is not to blame for red tape that burdens business, but is in fact a vital part of Britain’s economic success. 

Many small businesspeople I have met who voted to leave in the referendum have shown regret about their decision, now that the Government has made a political choice to pull us out of the Single Market. From United Airlines abandoning their flights from Newcastle to the USA, to suppliers in the water industry locally shutting down because of price increases caused by the fall in the value of the pound, to entrepreneurs talking about relocating to Ireland, it’s clear the Brexit decision and the choice to leave the Single Market has had a real, negative impact on businesses in the North East. I cannot imagine the situation is different in any other part of Britain. 

So why would leaving the Single Market be such bad news for British business? There are a variety of reasons, such as trade barriers being put up between the UK and Europe, the collapse in the value of the pound, and the real difficulties in signing new trade deals with countries like America.

Leaving the Single Market will make trading with the existing Member States of the European Union more difficult.  At present, Single Market regulations have removed technical barriers to trade, however if the UK is not going to be within the jurisdiction of the European Court of Justice, who is going to be accountable for the conformity of UK goods that are exported to Europe? EU law requires a representative of the manufacturer to be established in the Single Market to provide evidence of compliance with EU safety directives should there be an accident or incident. If there is no such representation, customs officers could refuse entry to products that have been manufactured in the UK. This is just one example of the bureaucratic minefield that awaits us if we leave the Single Market, and shows that the real threat of red tape to business comes from leaving, not staying.

The Brexit vote has caused the pound to fall to its lowest value against the dollar for thirty years. This is causing real problems for businesses. For example, if a British company manufactures a machine, many of the electrical components in it will have come from companies such as Siemens and Schneider which are headquartered in mainland Europe. A weaker pound makes importing these components more expensive, resulting in increased costs and lower competitiveness for British manufacturers.

Many people who were in favour of leaving the EU say that more difficult trade with Europe is a small price to pay, as we will be able to sign new trade deals with other countries, and in particular the United States. Regarding a trade deal with the USA, I would expect this to be biased in favour of the Americans.  I go there on business typically once a year and US Border Control already ask questions such as "Why are you here and why can't an American engineer do that job?"  I have an American client who has a manufacturing site in Yorkshire and when their engineers are visiting the head office, they are not allowed to walk around the American plant unaccompanied; apparently it is a directive from the US Department of Commerce to stop foreign nationals from copying manufacturing processes. Protectionism will only get worse under Trump. We do not want to put ourselves at his mercy when we could stay in the Single Market – our single largest customer, to which we sell three times more goods and services than we sell to the US. 

Making a voluntary choice to wrench Britain out of the Single Market, with so many issues to deal with, and with no serious analysis about the economic consequences having been done, would be a terrible mistake. The Government needs to come clean about how this is going to work, and how they are going to keep the promises made by Vote Leave campaigners during the referendum. They should make clear how they intend to spend the much-promised £350 million a week we will apparently get back from the EU; how much negotiating the deal will cost, through hiring new lawyers, civil servants and trade experts; and how the Government expects our country to ‘break even’ after Brexit when we are going to be hit with a £50 billion exit bill to pay for our prior commitments to the EU.

I sincerely hope that Britain can remain, as Nick Clegg put it, “an open economy and a tolerant, outward-looking nation” with young people having something to aspire to. From my perspective as a businessman, there is no doubt that bright future for our country will be put at risk if we choose to leave the Single Market.