Britain has officially left the EU. It opens a potentially more volatile chapter in this drawn-out saga, as negotiators try to reach a trade deal.
As a man who makes whisky for a living, Antony McCallum knows how to wait patiently for the years to pass. He buys spirits from across Scotland, entrusts the liquid to wooden barrels stashed in dark warehouses, and then allows time to perform its alchemy.
But McCallum has wearied of one sort of waiting: He is exhausted by the myriad unknowns threatening his business as Scotland and the rest of the United Kingdom look for resolution to the seemingly eternal matter of Brexit.
The biggest question has now been answered: Yes, some kind of Brexit is going to happen. That much became certain in recent days, as lawmakers in London and Brussels officially blessed Prime Minister Boris Johnson's plan to take Britain out of the European Union at the end of this week.
But that milestone does not end the story. It merely begins a potentially more volatile chapter in this tumultuous divorce, in which political and business interests jockey over how Brexit will play out. Britain must negotiate a trade deal governing future commercial relations with Europe by the end of the year — a perhaps impossible deadline — or risk expensive disruption with its largest trading partner.
In Scotland, the risks of economic damage are especially galling given that the electorate adamantly opposed leaving Europe in the first place. The unknowns are multiplied by revived talk of another Scottish independence vote, a prospect fueled in part by anger over Brexit. Independence has gained appeal as a means of resisting the politicians in London while remaining within the European bloc.
The countless possibilities for Scotland's commercial and legal future are making life difficult for business owners. McCallum is putting off hiring full-time staff, and slow-rolling a planned expansion that would send his scotch to the United States.
"It's been very hectic," he said. "We don't know what rules will apply. There is no clarity. I'm going to wait for more certainty, until I know I can trade freely within Europe."
He may be waiting for some time.
Although Britain will officially break ranks from the European Union on January 31, nothing will change in reality during a transition period running through the end of the year. In the interim, negotiators are supposed to strike a deal governing future trade across the English Channel.
Europe's recent trade deals with Canada and Japan took seven years. Still, Johnson has repeatedly ruled out extending the transition date. The prime minister has often demonstrated willingness to confront the British political class and European leaders with supposedly unbreachable lines only to find flexibility. Perhaps, as the year progresses and the stakes get real, he may accept some sort of politically palatable euphemism for an extension, allowing trade to continue unhindered while talks go on.
But if Johnson holds firm, that raises two potential outcomes, neither conducive to expanding fortunes. Either Britain and Europe strike a narrow trade deal that governs some manufactured goods, while leaving out services — the bulk of the British economy — or Britain crashes out of the European bloc with no deal at all.
Even the threat of a no-deal exit would entail costly mayhem, as companies on both sides of the English Channel stockpile goods in anticipation of customs snafus and choked ports. That is what unfolded for much of last year as the British political system lurched toward a Brexit deadline without an agreed-upon plan, bringing a no-deal scenario into stark relief.
Adding to the risks, Johnson's administration has declared intentions to break from European rules governing labor, the environment and product safety. European authorities have warned that the more Britain deviates from European standards, the more they will restrict access to the Continent's enormous marketplace. Given that Europe is the customer for nearly half of Britain's exports, any impediment would threaten jobs.
For Scotland, the unknowns are amplified by the revival of independence aspirations. The ruling Scottish National Party rose to power in 2011 with independence at the center of its agenda. But in a referendum held in 2014, Scottish voters decisively rejected leaving the United Kingdom, in large part because of warnings that such a step would entail grave economic costs.
The leader of the Scottish National Party, Nicola Sturgeon, has taken Brexit as impetus for another referendum, asserting that leaving Europe — whatever the final details — will cost jobs and livelihoods. She has argued that Brexit presents a dramatic change to Scottish life and therefore justifies a second independence vote. Johnson recently denied her request for a new referendum, but public pressures appear to be building.
Economic and political uncertainty have gripped Scotland for years, said Graeme Roy, who heads the economics department at the University of Strathclyde in Glasgow. "This is now the new normal."
A sustained independence conversation could be disruptive, given that Scotland sells more than three times as many goods to the rest of Britain as it does to the European Union.
The pitfalls of Brexit will especially be felt in industries that are intertwined with the global supply chain.
Britain's divergence from European product safety standards could prompt global automakers to further diminish investments at factories in neighboring England, jeopardising sales for Scottish auto parts makers. Factories that make components for the aerospace industry and chemicals for pharmaceuticals could face reluctance from European customers to extend new orders.
"The general perception is that you've got the election done, Brexit's sorted, let's all move on," said Keith Anderson, chief executive of ScottishPower, a major provider of electricity across Britain. "But as anybody who knows anything about it knows, all the complicated stuff is about to start."
ScottishPower, which is owned by a Spanish energy conglomerate, the Iberdrola Group, is relatively less vulnerable. It generates and sells power across Britain. It does not export. If a limited trade deal results in tariffs on the wind turbines and utility poles the company brings in from Europe, it can pass the costs on to customers.
Still, Anderson frets that the fractious political process has delayed a transformation underway in his industry to attack climate change.
He gestures toward the window of a 12th-story conference room, looking south across the River Clyde. There, on the exceedingly rare day that Glasgow is not smothered in gray clouds, one can glimpse the Whitelee Windfarm, a sprawl of turbines big enough to power nearly 300,000 homes. The company has plans to add a battery complex there. It is developing two new wind farms. These three projects alone will cost some 200 million pounds (about $400 million).
Anderson presents these numbers as a historic opportunity, a chance to at once curb emissions and put local people to work on infrastructure projects required to meet national targets: Britain has pledged to become carbon-neutral by 2050. All new cars sold in the country are supposed to be electric by 2040.
Anderson is impatient for the government to do its part — to settle on a regulatory model that will govern new production facilities, enabling ScottishPower to marshal investment and start hiring.
"You tell the investors, 'Here's the model,' and we'll just get the hell on with it," he said, adding that clear rules should be enough to allow his company to proceed. "If they want to spend, God forbid, the next two or three years arguing about trade deals, carry on and do that. You've now handed that to us, and we'll go and deliver it."
Among those in the whisky business, the fear is that Brexit will impede their ability to deliver the goods.
Whisky is Scotland's largest export, accounting for 4.8 billion pounds ($9.5 billion) worth of international sales in 2017. Within the industry, worries are focused on chaos at the ports if Britain fails to strike a trade deal with Europe.
Producers also fret about special protections for Scotch whisky enshrined in European law. It must now be bottled in Scotland to be labelled as such, but a rushed trade deal might eviscerate that protection, McCallum said. After Brexit, a French producer could potentially import casks of spirits from Scotland, bottle it in France and call it single-malt scotch.
A boutique producer, McCallum, 52, is a master blender who distinguishes his whisky with custom packaging that features Scottish artists on the label. He does not eat garlic and generally avoids herbs to protect his palate from interference. On a recent afternoon, he donned a green plaid kilt and knee socks in advance of a promotional dinner.
He spoke calmly, his words measured, but his knitted brow betrayed agitation. The ambiguity over future rules has cost him sales, he said. A customer in Austria just placed an order that was one-tenth the size of the previous year. The numbers were set to come down somewhat. Amid fears of an unruly Brexit in 2019, wholesalers in Europe stockpiled whisky. Now they have more than they need, prompting them to buy hardly anything, while undermining their willingness to try something new.
"They are not going to invest in developing the sales of your brand if they think in the future there may be issues of supply," McCallum said.
He had planned to hire a full-time marketing person to handle his European business, and then another to oversee an American expansion. Both are in limbo.
He drove to a neighboring town, Paisley, to visit one of his bottling plants, Craigton Packaging, where giant oak barrels lie on their sides on shelves arrayed across a concrete floor.
The owner, Kevan Jones, is an enthusiastic proponent of Brexit. "We like our ability to make our own decisions," he said.
But one of those decisions is restricting immigration. Six of Jones' 18 employees are from Poland, their immigration status unknown to him. Jones shrugs off questions about labor shortages, but he is about to put 200,000 pounds into a new automated line.
McCallum drives back to Glasgow to visit his technology consultant, now developing a database to replace the spreadsheets he has been using to track inventory. Even this process is tangled up in Brexit.
The company, TrigPoint Blue, stores customer data on servers in Germany. With Brexit seemingly certain, this is a problem. European regulations restrict data traveling over borders. So TrigPoint Blue is shifting to another web-hosting company in Britain. It needs to send someone to Germany to ensure that all its old data is deleted there.
"Companies are not moving forward with investments or expansion," said the company's managing director, Donald McIvor. "Because of the uncertainty over what the landscape is going to be."
Written by: Peter S. Goodman
Photographs by: Gregor Schmatz
© 2020 THE NEW YORK TIMES
