There's a lot being made on Twitter about this letter from Lord Bamford. He is of course entitled to his view, and indeed his views on the impact of Brexit on his company (and his sector more broadly) should be respected... But... 1/
...it would be completely wrong to extend his past experience to the impact across the economy/society as a whole if we crash out without a deal in March. Here’s at least three reasons why: 2/
Firstly, JCB has of course been operating within the EU in its dealings with firms in non-EU countries. Given the many preferential deals the EU has, it’s unlikely he has experienced only the sort of WTO baseline trading that would become reality in a no-deal scenario. 3/
Secondly, tariffs vary widely between sectors. They are generally highest on agricultural products (in many cases very high, e.g. c. 67% on beef). I do not know what sort of tariffs JCB’s business faces, but their experience is not necessarily typical of the entire economy. 4/
Thirdly, much of the risk of no-deal goes beyond tariffs, and concerns other frictions such as border and other checks. Again these are most stringent on food products (e.g. veterinary, plant health, food safety), which are often perishable and so cannot absorb long delays. 5/
So the experience of a firm currently trading in machinery parts and finished products all over the world will differ markedly from firms trading in perishable products with their nearest neighbours in the EU. 6/
The bottom line is, a no-deal Brexit would mean an immediate and seismic change in trading terms with our largest trading partner overnight. For the many firms who trade with the EU this isn't a marginal issue. In agri-food products in particular, the impact will be enormous. 7/7
