Brexit: Trade Pt.2

In the first part, we discussed what problems Brexit could cause for trade – now, we’ll shine a light on a possible advantage to the situation, and what it means for the UK.

Another positive outcome is that the UK can forge better alliances with other countries through the new trade links formed. By strengthening its ties with the world’s nations, the United Kingdom can expand its sphere of influence across the globe. It will allow the government to connect with world superpowers like China and strengthen existing bonds such as with the United States of America and also India, a rapidly rising economy in the global market. This can help the UK as it advances to maintain a vast and diverse source of imports, which allows them to ensure the supply of necessary goods in case any natural disasters, conflicts and severe changes, in general, occur that could affect their current supplier. A prominent example would be the currently ongoing[1] shortage of energy for homes, with prices costing at the very least five times more expensive than they were less than a year ago. The reasons for this crisis are varied[2]: among them are earthquakes in the Netherlands, which is one of the UK’s and continental Europe’s leading suppliers. It contains Europe’s largest gas field, Groningen, and it was designed to be a swing supplier with production boosted or suppressed to control prices by balancing supply and demand. This allows other gas fields to produce freely all year round and prevent the uncontrollable surges in costs that we are currently seeing.

However, Groningen has become a liability for the Dutch government. As its vast supplies slowly depleted, small earthquakes were triggered in the surrounding area as they drilled further into the ground. This resulted in damage to homes and businesses, and it will eventually reach the point where it costs more to continue operating than would be gained by maintaining its production. Therefore, as political pressure mounted, the Dutch government decided to start closing it down, with the field now making 75% less than in 2018. A sudden change like this could and is causing massive fluctuations in supply and prices and result in homeowners and consumers having to pay absurd and unaffordable amounts for necessities like energy, as we are currently seeing in the UK. To avoid this, the UK needs to be able to diversify its portfolio (in a sense) to ensure that if one supplier fails, there are no shortages and that the United Kingdom will be able to rely on another country to supply its resources.

[1] At the time of writing, 12/10/2021

[2] Information for reasons for shortages obtained from Financial Times – ‘Gas shortages: what is driving Europe’s energy crisis?’ by David Sheppard, written 11/10/2021


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