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Gas crisis, labor shortages and supply chain chaos: Post-Brexit Britain faces a difficult winter

Gas crisis, labor shortages and supply chain chaos: Post-Brexit Britain faces a difficult winter

Experts have warned that the United Kingdom has risen from the Covid-19 pandemic to face an onslaught of new economic difficulties that have left the country in “a perilous situation.”

A perfect storm of labor shortages, rising natural gas prices, and global supply chain bottlenecks have positioned the country for a challenging winter. Similar challenges have arisen around the world as economies reopen, but analysts suggest that Brexit has worsened these issues in the United Kingdom.

Impact of Labor shortage in the country

A scarcity of workers is wreaking havoc on a variety of industries across the country. A shortfall of 100,000 truck drivers is projected in the United Kingdom, which haulage companies have mostly blamed on a post-Brexit exodus of EU nationals. Due to a shortage of truck drivers, supplies have been hampered, resulting in empty store shelves, port backlogs, and depleted gas stations, which caused a panic buying frenzy in September that lasted weeks.

Other industries have warned of worsening labor shortages, which are expected to wreak havoc on product supply and pricing in the run-up to Christmas.

Risk to the growth in future

Riccardo Crescenzi, an economic geography professor at the London School of Economics, expressed skepticism about the government’s proposed answers.

“Offering three-month [visas] might not work while the rest of the EU is growing due to the resources allowed for its recovery plan,” he told CNBC over the phone. “And there isn’t much of an unemployment crisis in the UK, so I’m not sure where the domestic economy’s drivers would come from.”

With time, Europe is likewise fighting price increases. On Wednesday, the European Commission released a “toolbox” that member states can use to “address the immediate impact of recent [gas] price rises, as well as further build resilience against future shocks.”

According to Crescenzi, the EU can rely on its single market’s strength, “which implies global shocks like the gas price issue can be handled with more effectively with substantially more room for maneuver.”

“Following Brexit, the U.K. may still coordinate its crisis response with its most remarkable trade and investment partner to provide the best possible guard for its citizens and businesses,” he added. “Nonetheless, another concerning thing is that the UK government’s initiatives, let alone a strategy to work with overseas partners, are still not clear.”

Relations between the EU and the United Kingdom have been strained in recent weeks because of disagreements about the Northern Ireland protocol, a special trade agreement established to avoid a hard border between Northern Ireland and the Republic of Ireland. Officials have publicly battled on Twitter about the ideas, which U.K. Brexit Minister David Frost has branded the “greatest cause of mistrust” between the two sides, and met in Brussels on Friday to discuss proposed adjustments.

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