Comparing The Impacts on The UK Economy With Those of Other Similar EU Economies
On 23rd June 2016, the United Kingdom held a Brexit referendum on its membership in the European Union. The referendum resulted in 52% of the votes cast being in favour of the United Kingdom leaving the European Union making the UK the first country to do so and setting the stage for the Brexit process.
Brexit which is an abbreviation for “British exit” refers to the withdrawal process of the United Kingdom from the European Union. Due to Brexit, EU laws and the Court of Justice of the European Union no longer have supremacy over British laws, except in selected areas of Northern Ireland.
Brexit has significantly impacted the UK economy with significant trade, investment, and employment changes. Before Brexit, the UK had access to the EU’s single market, allowing for the free movement of goods, services, capital, and people.
However, following Brexit, the UK lost access to this market and as a result of this, many businesses have relocated from the UK to EU countries to maintain access to the single market.
Brexit has led to changes in trade agreements between the UK and other countries. For example, the UK has had to renegotiate trade agreements with countries that were previously associated with the EU, such as Canada and Japan.
This has resulted in significant uncertainties for UK businesses, who are still anticipating the future of their trade relationships.
Brexit has also impacted the UK’s investments. Sir Richard Branson and the pro-Brexit group Briefings for Business suggest that the cost of Brexit red tape would deter business investment in the UK. Moreover, a study by the Centre for European Reform and the UK in a Changing Europe found that Brexit resulted in 330,000 fewer workers in the UK, which could represent 1% of the total workforce but could still significantly impact the economy.
The uncertainties caused by Brexit have made it difficult for businesses to plan their investments, as they are still awaiting future trade agreements and regulations. This uncertainty has been compounded by other significant changes impacting the UK economy post-Brexit which include COVID-19 and the economic impacts of the war in Ukraine, which has led to substantial inflation.
Following the Brexit vote, the value of the pound sterling fell significantly, which has made foreign investments in the UK more expensive and this has led to a decline in foreign investment in the UK. The Brexit vote has also impacted the UK’s employment rates, as many businesses have chosen to relocate to EU countries, resulting in job losses in the UK.
Brexit has also had a significant impact on UK society. One of the most notable impacts has been on immigration.
Prior to Brexit, citizens of EU countries had the right to live and work in the UK and vice versa. However, these rights have been restricted following Brexit, and there are new rules for EU citizens who wish to live and work in the UK. This has led to a decline in the UK’s number of EU citizens living and working, impacting industries such as healthcare and agriculture, where many EU citizens were employed.
Brexit has also led to increased nationalism and xenophobia in the UK. The Brexit campaign was partly fueled by anti-immigrant sentiment, and since the vote, there has been a rise in hate crimes against ethnic minorities and foreigners which has impaired the UK society and has led to increased divisions and tensions.
The long-term impacts of Brexit on the UK are yet to be fully understood, but it is clear that Brexit has had significant and far-reaching consequences for the country.
The UK is in a transition period that began on 31 January 2020 and is set to end on 31 December 2023. During this time, the UK and the EU are working to negotiate a new relationship, including a free trade agreement, that will come into effect once the transition period ends. Many anticipate and hope that this new relationship will provide a solid foundation for future cooperation and collaboration between the UK and the EU.
Overall, the way forward from Brexit will require continued cooperation and collaboration between the UK and the EU and a commitment to addressing the various challenges due to Brexit.
Sources
- “Brexit supporters celebrated in London’s Parliament Square, while Prime Minister Boris Johnson vowed to bring the country together and “take us forward”. But the UK did not immediately cut all…” URL: https://www.bbc.com/news/explainers-5445526
- “The only way back is an application to rejoin. But many people may not notice the difference, as the UK enters an 11-month transition period to allow time to negotiate a new relationship. That…” URL: https://www.theguardian.com/news/2020/jan/27/brexit-explained-how-it-happened-and-what-comes-next
- “What is clear is that, initially at least, Brexit is making us poorer. It has contributed to labour shortages in many business sectors as EU workers have returned home. There are grievances…” URL: https://www.theguardian.com/politics/2021/dec/25/brexit-one-year-on-so-hows-it-going
- “A study by the think tanks Centre for European Reform and the UK in a Changing Europe suggests that there are 330,000 fewer workers in the UK due to Brexit. That may only be 1% of the…” URL: https://www.bbc.com/news/business-64450882
- “They compare the UK as it is with a doppelgänger UK, following the attributes of EU economies that were most similar before Brexit and before Covid. Isolating the Brexit effect suggests a…” URL: https://www.bbc.com/news/uk-scotland-scotland-business-59741804
- “This uncertainty has been compounded by two further significant changes that are impacting the UK economy post-Brexit: the impact of COVID-19 both in terms of initial lockdowns and its longer-term effects in terms of decreased labour market participation; and the economic impacts of the war in Ukraine, which has led to significant inflation …” URL: https://www.openaccessgovernment.org/article/impact-brexit-uk-economy-covid-19-ukraine-war/154378/
