Theresa May officially triggered the Article 50 on March 29, 2017 and now UK will have two-year time limit set for all the negotiations to take place and decide all the details on the exiting issues.
What is the potential impact of Britain leaving the European Union (EU)?
Brexit basically means Britain exiting or leaving European union and its members. The referendum- a vote which took place on Thursday June 23rd, 2016 and almost everyone of voting age voted, would decide if Britain should stay or leave European union. The results were leave 51.9% and stay 48.1% and the total turnout was 71.8% and almost 30 million people voted all over UK. England voted 53.4% for leave and 46.6% for stay, states like wales also followed England and voted in favour for leaving European union, 52.5% for leave and 47.5% remain whereas Scotland voted for staying 62% and leaving 38% and Northern Ireland also voted for remaining in European Union 55.8% and leaving 44.2%. Moreover, there was a major impact of Brexit on Britain’s political environment as the Prime Minister David Cameron had to resign because of the failure of his campaign for staying in the European Union and the results of the referendum stated otherwise. The former home secretary – Theresa May took over David Cameron and became PM without facing any kind of conservative leadership contest as her key rivals backed off from the elections. Nevertheless, the final result had been declared and the UK voted for leaving European Union and this process will be finalized on Friday 29, 2019 at 11pm UK time.
The EU and UK have both agreed and decided on three divorces or major issues which are as follow: how much money does the UK need to pay to EU, what will happen to the Northern Ireland Border and also what happens to both UK and EU citizens living elsewhere in UK or EU.
Amid all the issues, there will be negotiations on future relations and a plan would be made for the two-year transition period to deal with the post-Brexit relations. Both UK and EU are happy about the idea of getting additional time after 29 March 2019 which would allow them both to get their affairs and everything in order and would also allow some time for businesses and everyone else to prepare for the time when new post-Brexit rules between United Kingdom and European Union apply.
Theresa May officially triggered the Article 50 on March 29, 2017 and now UK will have two-year time limit set for all the negotiations to take place and decide all the details on the exiting issues. These negotiations regarding post-Brexit laws successfully began on June 19, 2017 with the two chief negotiators, Michael Barnier representing European Union and David Davis Brexit Secretary representing United Kingdom, took off immediately in search of common ground. The impact of Brexit on businesses would be both negative and positive but all the industrialists, economist and business leaders are most worried about the new tariffs that would be imposed and restrictions on the movement of people across EU and UK.
The toll of Brexit can surely be seen on banking and economy of Britain as in November 2017, the Bank of England for the first time in a decade has increased the interest rates and the Bank’s Governor Mark Carney also stated that the Britain’s economy is going towards a few rough years and the next interest rates raises would likely happen before 2020. Mr. Carney also said that the economy of UK has been already affected dramatically by Brexit, which obviously impacted the country’s performance and now Britain is among the worst performing countries in G7 whereas it was among the best performing countries before the referendum vote took place. In the Autumn Budget, Chancellor Phillip Hammond announced to add 25 billion pounds in the extra spending to support the ailing economy, the data from the budget also showed that the families are experiencing the biggest financial crush since the 1950s. The economy growth projections released by The Office for Budget Responsibility are now just 1.5 percent in 2017 and 1.4 percent in the upcoming year which were previously estimated to be 2 percent and 1.6 percent respectively.
Moreover, the business investment was also not very good in 2017 and the Bank of England predicts that the level of the business investment would go down around 25 percent by 2019 which is same as the pre-referendum projections which would likely damage the future productivity and growth of Britain, the economy of UK only expanded 0.4 percent in the third quarter of 2017. The jobs in Britain are also affected by the Brexit as the UK is expected to lose around 10500 jobs in the financial sector alone by day one of Brexit and almost one third of the city companies have already confirmed that they will be moving away from the UK. Major companies such as Citigroup, Morgan Stanley, Daiwa, Sumitomo, Nomura, etc. have also confirmed that they are going to move to some part of their processes and staff from Britain to European Union because of Brexit.
The price of pound also fell drastically last year after the referendum vote took place following trading at 15% lower in comparison to dollar and 12% less than the Euro, than it was post-Brexit while this decrease in pound benefitted exporters, on the other hand it unsettled the British tourists as they would have to pay more for their foreign holidays. The fall in price has also increased the importing costs for manufacturers of car industry as import is the major factor in cars as vehicles which are assembled in United Kingdom often require imported components and parts whereas the lowest of all time interest rates have also added to make the pound weaker.
The currency experts have suggested that the pound is most likely to remain unstable in the upcoming months until there is more information available on the Brexit deal. Housing markets in UK are keeping up for the time as the prices of houses have increased in February by 4.5% according to Nationwide, the employment in housing sector is experiencing growth and is being supported by good housing demand and the average performing economy, the expected rise in UK house prices was around 2% in the previous year.
Businesses would have to come up with new strategies to overcome problems such as weak currency prices, restrictions on movement, new rules and laws, loss of current markets, etc. to maintain competitive edge against other firms while trying to be profitable and efficient. Immigration would also decrease as one of the reasons for UK to leave EU was the high number of refuges and migrants coming from depressed countries which according to UK are a threat to security of the country and the new immigration laws could seriously affect the productivity, creativity and innovation of UK, 323,000 people have been confirmed that have left the Britain since the referendum vote happened and this number is up by 26000 people in previous year.
The final condition of the United Kingdom outside EU can be accurately predicted after the Brexit negotiation deal is done, which would likely decide how would Britain perform and hold up without the support of European Union.
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