Britain’s vote to exit the European Union in 2016, divided the country and put a strain on the England, Wales, Scotland and Northern Ireland. Majority of England Wales chose to exit the EU whereas Scotland and Northern Ireland voted to remain in the referendum.
This further lead Scotland’s Nationalist government to demand independence arguing that they cannot be forced to leave the EU. The political turmoil has seen a change of three Prime ministers in Britain in the last three years.
United Kingdom’s recent prime minister Boris Johnson has been mocked in the parliament by Scottish National party lawmaker Ian Blackford as “the last prime minister of United Kingdom.”
Amidst all the criticism Boris Johnson has started touring Wales and has Northern Ireland as a part of a national tour intended to reassure Britons that the hard-hit and controversial Brexit won’t hurt the economy and rip the UK apart.
However, Pound’s slump to a new 28 month low is not helping to reassure the markets. Boris received a Luke warm response from the Welsh farmers who are quintessential to the Welsh economy. Welsh farmers are worried that the no-deal Brexit will adversely affect its sheep production.
Minette Batters president of National Farmers Union said “Wales is the second-largest producer of sheep meat. They export 40% of the sheep meat produced and due to Brexit if they are tariffed out of EU’s market, their economy will be impacted severely.”
The government argues that a plethora of new policy opportunities and new markets will open up leaving the 28 nation bloc and a common agricultural policy, with 90% of global growth opportunities will come from outside the EU.
“However trade with EU accounts for over half of British exports and any new trade deals will not be immediate.”, says Alun Cairns, the government’s Wales secretary.
Northern Ireland is the only part of the United Kingdom sharing borders with the European Union. The current invisible border with the Republic of Ireland has been one of the major stumbling blocks to the Brexit deal. Boris Johnson has to face double difficult in Northern Ireland as he has to not only did the Irish border but also restoring the collapsed Belfast government.
Northern Ireland’s 1.8 million people have been functioning without a government for over two and a half years. Mary Lou McDonald, leader of Irish National Party said, “ He (Boris Johnson) tells us that he will act with absolute impartiality to help establish the administration. We have told him nobody believes that.”
Financial analysts suggest the recent sharp fall in Pound warns that no amount of preparation can avert the economic damage if Britain exits the EU without agreeing on the terms. City Index’s Fiona said, “ Sterling has lost its value by 4.3% since July 2019.” She further adds on, “This along with a no-deal Brexit seems to be investors main concern as it can further push the economy into a chaotic state.
Boris Johnson became the Prime Minister by winning the pro-Brexit conservative party’s leadership. He has ascertained that the UK will exit EU as scheduled on October 31st, 2019 irrespective of a Brexit deal or not.
EU struck the exit deal with his predecessor Theresa May only to be rejected thrice by the British Parliament. EU has decided not to reopen the 585-page withdrawal agreement it has drafted in the last two years with May. Boris Johnson’s government has been accused of not giving a clear picture about Brexit and the deal.
The new Brexit’s delivery committee, Michael Gove said: “ The government is operating keeping in mind that an exit deal is not very likely, However Johnson is certain that a new deal will emerge.”
Boris Johnson addressing a meet in Manchester last week said, “Brexit opens up massive economic opportunities for the UK.” He has promised to step up negotiations in the post-Brexit Trade deals and set up free ports in order to boost Britain’s economy.
He promised to decentralise the helm of affairs from London and localise business. “Taking back control doesn’t just apply to Westminister regaining sovereignty from the EU, but also our cities, countries, and towns becoming self-governing.”
He ascertained that leaving the EU will open a door of economic opportunities to the UK which was not possible for over a decade. He said “ The vision is set out to regain vision in order to rebalance power, growth and productivity across UK.
The British government has set aside more than 2 billion Pounds to prepare leaving the European Union. The Treasury Sajid Javid said that additional funds will be kept aside to employ over 500 officials, stockpiling medicines and other absolute necessities.
Johnson has refused any further talks with the European Union unless they agree to remove the backstop. Europe advisor David Frost has been tackling and communicating this at Brussels.
He will deliver the message that the backstop must be scrapped and that UK is willing to work on a robust Brexit deal. The bloc however is equally adamant that they will not reopen the Brexit talks and the backstop will stay.
Amidst all the political chaos and economic slide, business confidence has been battered. Britain’s auto trade industry said that the investment in the auto industry has effectively stopped in the first half of the year due to fear of no deal parting.
The Society of Motor Manufacturers and Traders said that they have only had an investment of 90 million pounds so far this year as opposed to an annual total of 2.7 billion Pounds. Car production has dropped by a worrying 20% in the first half of 2019.
However time and time again over the last three years, inspite of many forecasts and forewarnings the economy has proved the pessimists wrong. Even the Treasury has been left embarrassed by their sure forecast.
As things have turned out, UK’s economy is being accelerated and a million jobs went on being created. They, therefore, have taken even the slightest sign as the current pound’s fall as the proof of vindication.
Pro Brexiters are arguing that now is the most favourable and apt time to leave the European Union as there is no favourable economic report in the whole of Europe.
Car manufacturers across the continent are feeling the pressure as an internal combustion engine is on the way out. Germany’s economic growth has downgraded several times this year indicating that the country might go under recession.
Similarly, France’s growth has slumped down to 0.2 percent, lower than what was forecasted. Italy slid into recession in the end of last year. Therefore Britain’s contraction in manufacturing in recent months is not just to do with Brexit but the general non conducive economic climate throughout Europe.
Any negative trends in UK like closure of car manufacturing plans, steelwork etc is immediately seen through the prism of Brexit rather than the slow business in the entire eurozone.
Britain’s unemployment is the lowest in 45 years. Therefore the falling Pound should not be seen as trouble for Britain’s economy rather should be seen as growth-enhancing flexibility. However, there are negatives attached to it too. Falling Pound lifts inflation and imported goods set to become expensive.
In less than three months Britain is heading towards Brexit. A no deal Brexit will be indeed damaging and disruptive in many ways and if Britain ends up with one, it is very early to assume that Britain would come off worse.
Besides having the ability to adjust the value of the economy to a level considered appropriate, Britain will be free to forge new trade relations which will be unencumbered by the European Union’s traditional protectiveness. Britain will be free to deregulate and lower taxes unlike the Res of the European Union countries. This will provide the economy with a bonus stimulus to kick start.
For the past three years, UK’s economy has outshone and done better than most of the European countries. This may be the trend with or without the Brexit deal. However the UK parliament is divided over this with one fraternity thinking that by the Prime minister not even open to talks with EU is putting an enormous strain on the relationship and EU unity.
The Prime Minister is certain that people should not be left in a doubt that his no-deal threats are real. France’s Europe minister, Amelie de Montchalin has ruled out any new deals. German foreign minister, Heiko Maas has conveyed that the backstop is necessary despite British Prime Minister insisting it is scraped. The rest of EU so far have been unified on their opinion on Brexit.
According to the Bertelsmann Stiftung Think Tank, a no agreement Brexit will affect rest of Europe, particularly its western nations. Ireland, France and even Slovenia will be hit economically over a billion of dollars as an asymmetric impact of no deal Brexit.
So far EU has stuck its guns to its position of 39 billion pounds divorce payment from the UK, Peace in Ireland and EU citizen’s rights in Britain. It is very likely for Britain to use its age old divide and conquer tactics to establish trade side deals with the other EU countries who are hit by the asymmetric impact of Brexit.
A no deal Brexit only would cause chaos with ports being closed and airlines grounded. Therefore the British government is preparing for the worst case scenario in order to ensure the transition takes place in a
smooth manner.
The uncertainty over Brexit means there is one is three chances of the United Kingdom slipping into recession. Bank of England governed, Mark Carney said, “ The country has to be prepared for contingency in case of no deal Brexit and the financial sectors are gearing up for it.” In three months UK will be subject to whole lot of changes in economic and political policies, but at what cost is to be watched for.
