The UK left the European Union (EU) at the end of last year and so far it’s been a mixed blessing.
From 1 January, the UK dropped the so-called ‘Tampon tax’, a VAT levy of 5% that the EU attaches to sanitary products. And Britain has avoided EU wrangles over approving Covid-19 vaccines and securing supplies; the UK has so far administered around 7 million doses, far more than any EU member state. The British government has hardly been able to contain its glee at romping ahead.
But although the UK supposedly left the EU having secured a tariff-free trade deal it’s turning out to be less simple than that sounds. There is plenty of anecdotal evidence suggesting that the cost of doing business is going up thanks to unanticipated ‘red tape’. The ‘free’ trade agreement, on which basis the UK left the EU, will require an estimated 215 million additional customs declarations every year. That extra paperwork will translate into extra costs somewhere along the line.
Debit and credit card companies are now freed from an EU regulation (introduced in 2015) that capped the fees which could be levied on online transaction values. Merchants will no doubt pass on to customers any rise in fees.
Consumers are also finding themselves lumbered with unexpected charges for goods delivered from the EU, while exporters to the EU report heavy costs from the required extra paperwork – such as up to £95 ($130, €107) for an export health certificate for every consignment of langoustines and crabs sent to the EU from the UK. And entirely separate from the EU muddles, living on credit has just become more expensive for Barclaycard’s 10 million users; their minimum repayments have been raised. Not great timing perhaps, coming just after the heavy Christmas bills.
Maybe some of this will all sort itself out in time. Let’s hope so. But the bottom line is that unscrupulous businesses may use the additional complexities as a cover to jack up prices.
It’s less than a month since the UK left the EU. It never was, and still is not in the interest of businesses either side of the English Channel to put any grit in the bilateral trading relationship, it’s clear that both sides of the Channel could do without putting up prices; Covid-19 has devastated many lives, both physically and economically.
In the UK the number of people claiming unemployment-related benefits is now 2.6 million, an increase of 113.2% since last March. Many UK citizens now rely on food banks; the charity, Trussell Trust runs a food bank network and the use of that has increased by 74% in the past five years.
It’s no different among the poor of the EU. Eurostat said in 2019 that more than 20% of EU citizens were at risk of poverty or social exclusion. The European Food Banks Federation (FEBA) has reported a food demand increase of around 30% across their European network of 430 food banks in comparison to pre-Covid times.
Glint is not a charity, we don’t provide food parcels. However, we do feel for all those who are now struggling, and our product does offer some protection against inflation and the debasement in the purchasing power of whatever money you own, no matter how little or how much. We strongly believe that gold, with Glint, is the fairest and most reliable currency on the planet, but we obviously need to point out that it isn’t 100% risk-free. Whilst we have seen a steady increase over time, the value of gold can fall, which means the purchasing power of the customer can also fall. But, when you consider the options – QE, low-interest rates or the seemingly random volatility of Bitcoin, for example, gold has proven its position as a safe haven for savings over time.
In Britain, inflation has averaged 5.2% a year since 1950. Such is the corrosive power of that inflation that today you would need around £35 to buy what your £1 could in 1950. In the US, the picture is similar – with an average inflation rate of 3.41% between 1950 and 2020 you would need today almost $11 to buy what $1 bought in 1950.
If prices are indeed being pushed up – for whatever reason – then you need to protect yourself if possible. Gold with Glint is arguably a great anti-inflation asset – and can help steady the rocky EU trading ride. After all – gold is security and Glint is its key to liquidity.
Until next week.
Sign up to get the latest Glint news
Receive the GLINT newsletter with the most popular content, platform updates and software guides.