If the supply of TSMC chips is cut off, every corner of British life will immediately feel the shock.

(Reuters)

[Compile Wei Guojin/Taipei Report] Bloomberg reported that the Office of Budget Responsibility (ORB) in 2022 assessed the impact of rising trade barriers that may be triggered by China’s invasion of Taiwan. The results showed that the UK’s debt surged 20 billion pounds (737.7 billion Taiwan dollars) within one year. GDP growth has evaporated by 2% within 4 years, rising to 5.2% of GDP in 10 years, and resulting in a permanent fiscal deficit of 57 billion pounds (2.1 trillion Taiwan dollars), which is equivalent to the size of the defense budget.

According to the report, ORB estimates that if the conflict in the Taiwan Strait is caused by China's military escalation, the UK's defense expenditure may increase from 2% of GDP to 3%, adding another 25 billion pounds (922.1 billion Taiwan dollars) to the fiscal deficit, making the UK's national debt unsustainable trail of.

And this is not the worst scenario, because this is just a "reasonable increase in trade barriers, not a possible global disintegration" shock.

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The report said that in order to prepare for the worst-case scenario, the British government will conduct interdepartmental contingency exercises, assuming that China attacks Taiwan and blocks TSMC's chip production. Wider regional tensions also disrupt the supply of other key manufacturing plants in Japan and South Korea. Triggering a global chip shortage, with more serious economic consequences than the Wuhan pneumonia.

The British government will use the exercise or stress test to seek countermeasures for the chip shortage, and has made the resilience of chip supply the top priority of the "Integrated Review of National Security and International Policy".

Tobias Ellwood, chairman of the House of Commons Defense Committee, said in the review, "We don't have chip supply resilience, we don't have contingency plans, unlike the U.S. building a fab in Arizona. We need a plan B and we need to proceed. Urgent stock check".

According to the report, British officials admitted that they were too slow to understand the dangers in the Taiwan Strait.

Every corner of British life will immediately feel the shock of the TSMC shutdown.

The auto industry will struggle to survive.

TSMC produces 35 percent of the world's automotive microcontrollers, according to U.S. think tank Rhodium Group.

The Rhodium report said that other local industries that rely on Taiwanese chips include "e-commerce, logistics, online car-hailing, and entertainment."

Supplies for medical equipment, such as insulin pumps, could become scarce. "Ultimately, the full social and economic impact of a chip shortage on this scale will be incalculable and potentially catastrophic."

Peter Claydon, president of Picocom, a British start-up that designs chips for new mobile networks and manufactures them in Taiwan, said that if Taiwan were blocked, "we could go out of business very quickly; we don't have much in stock and then we won't be able to any further production."

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