How a Brexit transition end and covid19 compound

Talking to a friend today he pointed out how the pandemic, and a potential disorderly Brexit, compound each other.

The way for consumers and firms to get through a threatened interregnum in essential supplies, to ensure continuity of services and, in the case of the consumer, of life itself! is to stockpile. An unusually large surplus of spare parts, inputs, or just food, can tide you over in case the sudden imposition of trade frictions, or panic about them, causes supplies to dry up.

However, stockpiling costs money. The opportunity cost is the cost of finance. Although risk free rates are low, the rates already stretched people and firms might cofront are very high, if marginal finance was available at all.

So covid19 will make it much harder for them to insure themselves against a no deal end of transition.

The government could address this, at least for firms, by offering new subsidized loans tailored for purpose. I doubt they will, because that would amount to admitting that they were creating a problem that needed to be insured against.

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1 Response to How a Brexit transition end and covid19 compound

  1. Dipper says:

    The thing about Brexit and the EU is that there are some problems that can be fixed, and some problems that cannot be fixed. Pointing out to me that leaving the EU will create some problems, but ones that can be fixed with some effort, isn’t going to make me change my mind.

    Voting to remain in the EU is that it would have left us with problems that cannot be fixed. Take Greece; it cannot fix its problems whilst it is in the EU. Take UK population growth and mass immigration; when your population has gone from 63 million to 75-80 million in a generation (EU numbers) you cannot undo that. The cities and infrastructure you have to build cannot be unbuilt.

    So, interesting, but not a game changer.

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