What’s Happening? Britain sees economic bottlenecks as a good thing for the Brexit agenda, while there’s no end in sight to the driver shortage.

Boris Johnson’s take on the U.K.’s supply crisis is that it’s helping deliver the economy British voters wanted when they voted to leave the European Union. The U.K. prime minister sees the nation shifting toward higher wages, a more skilled workforce and a more productive economy that doesn’t rely on cheap labor from the EU. While the crisis isn’t unique to Britain, the view of the Johnson’s government is that it marks a turning point to a better future for the U.K.

Data from the present point toward more frictions. Britain remains in the grip of a fuel supply crisis caused by a shortage of truck drivers. And, during his party’s conference earlier this week, the premier said the government had only received 127 visa applications for drivers so far, well short of the 5,000 on offer. The U.K. is facing a shortfall of 100,000 drivers. Johnson brushed aside concerns that 120,000 pigs face being culled due to a lack of slaughterhouse staff — joking about bacon sandwiches instead. His long-winded answers frustrated BBC radio presenter Nick Robinson, who told him: “Prime minister — stop talking.”

Despite the jubilant mood inside the conference, outside, business lobby groups and trade unions warned that wages are barely rising above inflation, while companies face an historic surge in price growth. The Confederation of British Industry is worried about a longer-term disruption, with shortages lasting two years, not just two months. Listen to what they had to say in the new episode of the Stephanomics podcast, which takes a bigger look at why global supply chains have become so snarled.

Adding strain to the British energy grid, France’s European Affairs Minister Clement Beaune threatened to restrict power supplies to the U.K. Britain is a net importer of power, and the move would pressure the government in London to expand access to fishing waters. Cabinet minister and former Brexit negotiator David Frost hit back, saying the U.K. had granted 98% of the requested licenses to EU boats since Brexit. Any retaliation from France would have to be proportionate and agreed by other EU countries, he said.

Rattling his saber in an address to a Tory audience on Monday, Frost said that the U.K. was going to stand up to the EU and suspend parts of the divorce agreement covering trade with Northern Ireland. He also gave a sense of the timeline: Expect an EU response within the next 10 days, then about three weeks of negotiations. At that point, the U.K. would make a call on whether to pull the trigger on Article 16 and unilaterally suspend parts of the Brexit deal relating to the border on the island of Ireland.

Meanwhile, the EU is drafting proposals to address British concerns about trade flows between Northern Ireland and the rest of the U.K. as early as next week. The EU has said that it won’t renegotiate the protocol but is willing to make adjustments to ease bottlenecks.

A star attraction at the conference was Liz Truss, the former trade secretary who is hugely popular among Tory party members. She was recently promoted to be the country’s top diplomat. But it seems Truss can’t keep away from her old patch, describing the job of her successor Anne-Marie Trevelyan as an “addition to the work we do at the Foreign Office.” Still, she ruled out a merger of the two departments. “It is a 24-hours-a-day job,” she said.

Truss never managed to secure the post-Brexit prize of a trade deal with the U.S. It doesn’t look like Trevelyan will any time soon, either. She said she expects an accord by the next election, currently scheduled for 2024. “They’re very focused with dealing on some big domestic issues,” she told Bloomberg T of the U.S. priorities. “That doesn’t stop those conversations carrying on.”

— Lizzy Burden

We aim to keep you up to date on how the U.K. navigates the world after Brexit. Got tips or feedback? Email us at beyondbrexit@bloomberg.ne or  eburden6@bloomberg.net

Chart of the Week

Worst Since 1921

Revisions mean the 2020 slump was no longer the deepest since 1709

Source: Bank of England, Office for National Statistics

The U.K.’s coronavirus recession was no longer the worst in three centuries. Revisions mean that gross domestic product fell by 9.69% in 2020. That makes it the deepest slump since 1921, when the economy shrank 9.71% in the aftermath of World War I. The decline was previously estimated at 9.85%. Until then, the devastation wrought by the pandemic was thought to have exceeded all recessions since 1709, when the Great Frost led to a 13.4% contraction. 

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