Andalucia Steve

...living the dream

Brexit: What's Next for Britain?

A few thoughts on where things are headed in coming decades.

 

I've been keeping this blog fairly free of politics but this weekend I seem unable to be thinking about anything other than Brexit. In a way, today is the most significant day since the referendum, if, as we are told, it is the last day by which a deal can be made. Though the last day of the withdrawal agreement is the 31st December, the thinking is there wouldn't be enough time to author and ratify an agreement beyond today.
 
So the question that is on my mind is what is next for Brexit. I'm not thinking short term here. Whichever way you slice it, 2021 will start out as a humiliating fiasco. Whether a deal is achieved or not there will still be months of disruption as new ways of doing things are explored and new, unintended consequences of Brexit arise to surprise us. The only question here is how long it will take things to settle down to some sort of normality.
 
No, I'm thinking more of what will happen to Britain in the decades ahead. Geopolitics is a little trickier than it used to be. Immediately following Bretton Woods, the end of WW2 and the exploding of two nuclear weapons in Japan, American might and money was the only game in town. The USSR grew and was, probably for the purposes of political expediency, demonised by America to be a greater threat to its dominance as a world power than it ever really was. Then the USSR fell and for a brief period of time it seemed the world was for the first time truly mono-polar.
 
More recently though the US has become increasingly indebted and less innovative and industrious. Meanwhile the EU has expanded, its currency becoming increasingly important on the world stage, and China has undergone massive economic growth. Despite Trump's efforts to stop China eating America's lunch, she remains a massive industrial power and the growth of her domestic market with a new and enriched middle class means China is here to stay, even with her exports reduced. It is now looking as though the future will consist of a tri-polar world in which the major players will be America, the EU and China, with other BRICS countries emerging and aligning themselves with one of these three main players. I see this as the new world stage into which Britain as an 'Independent Sovereign Nation' has to fit.
 
Old world, old money thinking sees Britain as a nation of traders who straddle the globe buying and selling stuff. We're the nation who started the East India Company after all. The trouble with this 'old skool' thinking is that the world is moving from physical to virtual. If I wanted to order a ton of spice in 1600 when the EIC company was formed, the only way to do it was to travel to India or wherever the spice was grown and to do a face-to-face deal. These days all you need to do is go to alibaba.com and you can find dozens of spice suppliers all competing with each other to deliver to you your ton of spice at the lowest price. By way of experiment I requested quotes for a particular chemical I was thinking of importing into Spain last year, and I was still receiving emails months afterwards from prospective suppliers. Global trade is so fluid these days, the only thing in the way of a deal is the lack of a free-trade agreement, which is why Brexit seems so absolutely nonsensical to me. I was looking into exporting olive oil a few years back and I was struck by how the trade agreements the EU already has with various third-party countries make the process to arrange an export to most parts of the world very simple. The idea that Britain is opting out of these in order to make its own bespoke arrangements seems to me to be a recipe for disaster. The EU has at its disposal an army of around 800 trained and very experienced trade-negotiators who are bashing out new global deals all the time. Britain has Liz Truss! As Britain does not manufacture anything of note, I just don't see a future for Britain as either an exporter or some kind of trading intermediary buying from one country and selling to another, as in an increasingly virtual world there doesn't seem a way to add value. We can add markup but in a world where sales are increasingly made directly, who wants intermediaries taking a slice?
 
Speaking of intermediaries, another area that is about to change dramatically on the world stage is money. China has for several years been developing and trialling the world's first Central Bank backed Digital Currency (CBDC). They are already leading the field and more recently America, Europe and other countries have started researching the idea and publishing policy papers and so forth, making noises that they are about to do the same. The lure of a cashless society is too good for the banking community to pass up and clearly there is a fear that if China's CBDC gets a head start, it could ask its trading partners to use it, suddenly threatening the place of the dollar as the world's leading currency. Obviously this is all very new and it is quite difficult to foresee how things will pan out, but again, the odds are that there will be three main CBDCs, the Digital Yuan, Dollar and Euro. As with crypto-currencies one of the main characteristics of CBDCs will be transparent accountability. It will become much more difficult to launder dirty money through currencies that have an online ledger. Given the chequered history of UK banking institutions and London's existing reputation among anyone from Mexican drug lords to Russian oligarchs as the go-to place to launder money already, my guess is Britain will resist the race towards introducing a CDBC for the Bank of England and instead, the fiat pound will become the central clearing house for the world's black money.
 
As I see it, that's a Britain Johnson & Co are quite happy about. It seems to me that this government is more mendacious than any other in British history. I sense they have no vision for the British people, nor do they care what happens to them, as long as they keep making money. It's clear they have a desire for small government and I fear without the stabilising hand of the EU, centuries of hard-won social and employment protections are about to be thrown out of the window. The welfare state and the NHS will be gone, quite soon I should imagine. Health & Safety and pesky employment regulations will be thrown on the bonfire. I should imagine Scotland will fight for and probably win independence. As the realisation of what is being done to Britain starts to sink in, the will in Scotland to escape the Tories and rejoin Europe will become compelling. The situation with Ireland may take longer to fester but the north of Ireland will become a gateway for smugglers to bring contraband into Europe and measures introduced to counter this will increase tensions and will bring pressure on Britain from the EU and America to reunite Ireland. Again, though publicly affronted, the Tories will be privately delighted to lose Scotland and Northern Ireland, as in their view there will be less money going out and more for them to secure fortress London, which will, as the decades roll by, start to resemble some 18th century Bahamian island beloved by buccaneers and cut-throats.
 
I don't think it is accidental that many of the current crop of Tory nationalists did their degrees in history or classics. It came as no surprise to me yesterday to see Johnson's government boasting it will have gunboats ready to defend British fish. Their thinking is aligned with the glory days of Agincourt and Waterloo. They think in terms of Empires and battles, a mindset that is out of step with the modern world. The days of the opium wars and gunboat diplomacy are long gone. France is a nuclear power (the only one in the EU post Brexit) and China, Russia and America dwarf Britain in military might. I can't help thinking that if the British government continues on it's current selfish, belligerent path, there will come a time, given the way the world is shaping up, that it will end up being put in its place by being on the receiving end of a bloody good kicking!
 
 

Making money in Spain

The hardest thing about moving here is the income problem.
 

I wanna job in Spain and basically need to know if there is work out there for me, I’d do anything I just wanna move for the sun.  Please help!!

 
The above quote was a genuine question asked a few weeks ago on an online forum for 'expats' in Spain. I kid you not that I see these sort of requests all the time. 
 
Sifting through the three hundred or so replies reveals an interesting snapshot of people's experiences of having moved here in search of work.
 
"Most men get off the plane and become builders, while women become cleaners and dog sitters" says one.
 
"Learn Spanish". says another, "you'll improve your chances of finding a job no end".
 
There was quite a long thread about teaching English in which one camp said it was dead easy to get a TEFL certificate (Teach English as a Foreign Language) in order to get a job teaching the queens, where as another camp were saying the language schools were in decline and rejecting applicants with the cheaper certificates earned on line, preferring instead the residentially earned certificates of schools perceived to be of higher value.
 
Curiously nobody mentioned becoming an estate agent, which many do. This can be a ludicrously easy way to make money in a bull market, but as I found during the last recession it's not much fun when you go over a year without selling anything. 
 
Generally most commenters agreed that it is hard to find work in Spain. As one chap said, "it helps if you have a lot of money to support yourself while you're looking for work as it can take some time".
 
In my humble experience, I've found the the main problems are the language barrier, the extremely high unemployment rate of the country as a whole and the fiscal system here which seems deliberately to act against people starting up their own businesses.
 
Not speaking Spanish, or speaking it very badly as I do, severely limits one's ability to find a job with a Spanish company. That means people coming from the UK will struggle to find employment in inland areas where English is not so widely spoken. This less of a problem on the Costa Blanca or Costa del Sol where English is more common. A nephew of mine worked as a waiter in Fuengirola for six months without speaking a word of Spanish.
 
I knew a young Spanish girl years ago who confided in me the dark secret of her employment status as an office worker. I think her hours were nine until two then five until eight. She had a contract with her employer who officially declared that he was paying her 800 euros per month, and so he paid her employer's contribution towards the equivalent of her tax and national insurance contribution based on the sum. In reality he only paid her 400 per month in cash though. I was astonished she worked all those hours for so little take home pay, but she explained to me it was hard enough to get a job at all. Getting one that paid her stamp and had her plugged into the system was a big plus compared with many folk here who work cash in hand and cannot afford to go self employed.
 
From what I've seen, one has to be rich in the first place to go self employed in Spain. If you want to set up the equivalent of a limited company you need to prove you have 5000 euros in the bank. The contribution to the health and welfare system here known as 'autonomo' is a big chunk. It was a shade under 300 euros per month last time I looked, though there is a scheme now to pay much less in the first year of trading. VAT starts from the first euro earned if your business is dealing in rateable goods or services. Income tax is even more full of pitfalls for the unwary. One chap I know told me his accountant advised him to use a system where he paid a quarterly sum on his predicted earnings. Half way through the year he lost his contract and still had to make the two remaining tax payments for the remaining quarters.
 
Worse still, the tax office or 'hacienda' is so grossly avaricious. It has the power to monitor your bank account and grab money out of it as it sees fit. One chap I knew stopped trading but didn't inform the hacienda. Some years later he found they had taken 6000 euros from his account for unpaid taxes. It took a devil of a job to get it back. The hacienda clearly has an army of spies. For an interesting insight into how they operate, read the recent article in El Pais (In English) called How the Spanish Tax Agency followed the trail of Shakira. They left no stone unturned, even to the fine detail of  tracking down details of her hair-dresser and Zumba teacher!
 
Elsewhere the hacienda has its beady eye on your private sales. If you flog stuff on websites like Ebay, Etsy, Facebook Market place etc, they want a chunk of your profit. How this works exactly varies from region to region but typically in Madrid, sales of over 500 euros are subject to a 4% IPT (transaction tax). I've read where they have had tax officers trawling through listings trying to identify sellers. More recently talks have been taking place to make the websites to supply transaction details to the hacienda digitally. Being a cynic, I suspect when they do, the minimum sales on which these taxes apply will be decreased!
 
Perhaps the most successful group of people I've come across in Spain are the ones whose work is not, i.e. people who work remotely. If you have the right skill-set and the right contacts it is possible to have the best of both worlds, e.g. an American sized pay packet with a Spanish style cost of living. Finding such work is not without its problems as there is a very broad base of people in all corners of the world competing for remote jobs. Websites such as Freelancer and Fiver allow one to pursue work in a wide range of countries but the downside is there is a mountain of competition from all over the world, so bidding for work is more often than not a race to the bottom. It is almost always preferable to seek work by personal contact, word of mouth, networking etc. 
 
Disclaimer. I'm not an expert on Tax or Employment law or any of the topics mentioned in this blog post. These are just the rantings of someone who has lived here for fifteen years and seen the work situation up close and personal!  Nor am I selling anything so I have no skin in the game (which is probably why my postings are a little less 'ra ra' than you might read elsewhere!!)
 
 
 
 
 
 
 
 
 

Fruit picking, a personal perspective.

Thoughts on fruit picking of an ex-pat whose ancestors were agricultural labourers for three centuries.
Fruit picking, a personal perspective.

One of the consequences of Brexit often visited by the media is the future of fruit and vegetable harvesting. The reporting comes in two stripes. The anti-Brexit media report the downsides of course. In a nutshell the 'hostile environment' created by the Tories towards foreigners and Brexit uncertainty has deterred immigrants from EU countries filling the seasonal vacancies in the industry. There are many reports of fruit rotting on the ground and farmers fearing they will be driven out of business completely or forced to relocate abroad. Then there is the Brexit positive media who claim this is all scaremongering. They report on the job opportunities for picking fruit in Britain soaring e.g. "£700 per week job boom" says 'The Sun'. Another common theme in the pro-Brexit media are reports about the development of fruit and veg picking robots, so clearly there is a fall-back in case Britain's youth don't care to relocate to a field in East Anglia to pick strawberries in July.

I've never picked fruit commercially myself. Well I owned a small-holding in Spain for a couple of years but apart from trading several tree-loads of olives to the local co-operative in exchange for virgin oil, I never sold anything, nor was I paid.
 
However that wasn't the norm for my ancestors. A friend of mine who is a whiz at these things came to stay for a few weeks and her parting gift was a family tree going back to 1740. For generation after generation my forebears were agricultural labourers.
 
I knew my grandfather was a farm labourer but not that the entire stock of my family were so as well, male and female. All lived and worked in the same village, Froxfield Hants for centuries. Grandfather Alfred though was a little different. He moved where the work was, over some considerable distance.
 
My father Edmund was born in Tolworth, Surrey in 1908. He told me he didn't see his father very often when growing up. Alfred did seasonal work which meant he was away for much of the year. One month he would be hop-picking in Kent, another harvesting turnips in Suffolk and so forth. Money was good when Alfred came back and my father and his seven brothers and sisters ate well. However one year, Alfred did not return. This was before the welfare state remember, there were no benefits to take care of single mothers with eight children, so the siblings who could work did, while my father and his younger brother George were found a place in Bizley Farm School, a charitable institution for borders, where the children would tend crops, manufacture wickerwork baskets, produce honey, cheese and so forth all of which was sold to pay for their farm education. 
 
Dad also picked fruit but he did so to survive. In good old Dickensian manner, the children at the school were largely fed on bowls of gruel, apart from Easter when they were treated to a boiled egg. My father and his friends therefore foraged in the countryside scrumping whatever fruit and veg they could find. They would trap birds, game, pigeons etc. A particular favourite was a hedgehog rolled in mud and cooked on a bonfire. It is a sobering thought that this is not a fairy tale from long ago - this is the real story of my father and these events took place less than a century ago.
 
Anyway, I didn't think too much about picking fruit again until in 2003 when my wife and I moved to Spain. We bought a country house in a small inland village in the north west of Murcia which is very much an agricultural economy. We became friendly with many of the local farmers and after a time, a picture of the black economy emerged. Fruit picking is obviously an activity where time is of the essence. As a crop is about to ripen, people have to be there in numbers not required throughout the rest of the year. In a somewhat 'backward' area of Spain at this time (by which I mean few people had email), there was an unspoken seasonal tradition. Come say, June, the apricots would ripen. A convoy of battered cars would arrive full of itinerant fruit pickers as if out of nowhere. At six in the morning the 'workforce' would gather at a point on the edge of town, and farmers would haggle to get the amount of workers they need at the lowest price. These people were working in black money so they would invariably earn below minimum wage, perhaps two to three euros per hour. After a twelve hour day in the blazing sun the workers would return to their cars, which were normally parked near the river where they could bathe and wash their clothes. This is tough work too. An Ecuadorian woman of my acquaintance appeared one day with her hand in a sling. When I enquired she said she had slipped from a tree and sliced off her little finger. She shrugged and said live goes on, explaining she needed return to work quickly to continue sending money back to her family.
 
As far as I could gather, the itinerant labourers in Spain have a similar lot to my grandfather. They move about, not just in Spain but in other EU countries, providing work where it is needed, often (mostly as far as I could see) in black money. There seemed to be a mix of Moroccans, Bulgarians and South Americans, all of whom had the common thread of being so far down the food chain they never get out of the black money trap.
 
However I have since seen another class of migrant workers in Spain with much better terms and conditions. Indigenous Spanish who are already in the system get much better 'gigs'. I knew a builder, a very industrious chap called 'ni' (short for Antonio) who would go to Switzerland each summer picking grapes, for which he got good money, stamp paid for etc. I understand that the building trade is quiet in Spain during the summer months so this is a popular way for workers who would otherwise be picking up unemployment to get some good money in. Now the Spanish unemployment money is not bad anyway so for this to be the case I reckon the Swiss money must be pretty good. I've heard of similar schemes where town halls in Spain organize groups of people to go fruit picking in France and Italy, again on legal money that is high enough to make it worthwhile. One woman told me she will be doing three months at 3000 euros per month and she will be taking most of that home. 
 
What these subjective, personal and somewhat random observations suggest to me is the future of the farming of fruit and vegetables in Britain is this. With Britain leaving the EU I see it as unlikely that the lot of fruit-pickers in Britain will get any better. On the 19 December 2019 the Johnson government published a revised version of the EU withdrawal agreement which no longer contains clauses on the protection of EU-derived workers’ rights. Robots aside (fruit picking robots are a long way from being viable), a demand for fruit pickers (which has apparently gone from four fruit pickers to each job to four jobs for each fruit-picker) will inevitably drive up wages, so I doubt the British supermarkets will accept the corresponding increase in the price of produce required by farmers for their operations to remain profitable. There are therefore two ways this could go. Either the government will takes steps to make the environment for the unemployed so unpleasant that they will be induced to chase low paid agricultural work to avoid starvation as my ancestors did, or alternative suppliers to British farms will fill the void on the supermarket shelves. The countries that may gain the most out of the latter are non-EU countries with low labour costs that are not the other side of the world and have climates that suit agricultural production. The British government has already had preliminary talks with several North African countries such as Morocco, Algeria and Tunisia and these may well be smart places for investment in a post-Brexit economy.