Anyone who knows anything about business knows that it is cash flow crises that kill businesses. It’s not, in my opinion, tariffs, changed regulation, the Irish border, disinvestment or anything else that will deliver mayhem in the UK next year. It’s something much more prosaic that will do that. It will be giant traffic jams at ports that will impose lasting damage on the UK. So many businesses will suffer crippling cash flow problems the impact could be massive, and cumulative of course.
Mark Carney has said he may need to reduce interest rates to compensate for Brexit. He’s not got much scope to do so. And the cost of money will not be the issue next year. It will be its absence that will matter as debts do not get paid. This is the coming crisis of Brexit. And it is beyond Mark Carney’s reach to address it.
The government could though. It will be the only creditor able to waive what is owing next year and survive the experience. PAYE, VAT and other sums owing may have to be put on hold if business is to survive Brexit, in my opinion.
That is, don’t collect taxes owed during the chaos.
The government has now suggested how it will respond to the suggestion that Dover will cease to function in the case of a No Deal Brexit. According to the FT:
The UK government will instruct officials to relax efforts to collect border taxes if Britain leaves the EU without a withdrawal deal, a junior minister told peers on Thursday.
Speaking to a House of Lords subcommittee, Mel Stride, financial secretary to the Treasury, said the government knew it would have to balance security concerns, revenue expectations and the pressure to keep goods flowing across borders.
“We will not compromise on security,” Mr Stride said. “But there will, perhaps particularly in the case of a place like Dover, where you have to keep flow moving very quickly or you have all sorts of problems, there will be a trade off between keeping the flow going and revenue protection.”
He added: “The priority will be to keep flow moving”.
This is is a quite extraordinary statement. First, it acknowledges that there will be a break down in law and order.
Second, it acknowledges that the resultin criminality will be permitted.
Third, it admits that an unfair playing field, biased against honest domestic businesses, will be created as importers not paying VAT will be able to undermine them.
How outrageous that the government intends to do what I said government should do, don’t collect taxes during the chaos.
D’ye think he’s even noted the reversal?