We can hardly believe it has been over five years since the British public voted to leave the European Union. Below we will look at two main questions: Firstly, are the voters still content with their decision; secondly, how well voters think Brexit has been executed. After this, we will look at the real-life impacts; the good, the bad and the ugly. (okay..its really just the bad and the ugly!)
What we found to be quite surprising is that the UK is still evenly split as to whether we should rejoin or stay out of the UK. Back in 2016, 48% voted remain, 52% voted to stay. In the NatCen Panel surveys conducted throughout the last five years, it examines first whether individual voters have changed their minds about Brexit and whether collectively there has continued to be majority support for leaving the EU. The conclusion after analysis was that 48% would vote to rejoin the EU, and 52% would vote to stay out. It seemed to us, at least, that the consensus was that the public had started to think we had made a mistake – however this does not appear to be the case.
However, overall, voters feel quite strongly that we obtained a bad Brexit deal, with only 21% coming out in support of it. When we look at the real impacts of Brexit for the UK, it may explain why those that voted to leave have stuck with their decision. The larger more negative consequences have not filtered down through to the average voter yet: In fact, 6 out of ten people in the UK revealed that Brexit has not impacted their daily lives. But anyone who listens to the news will have heard about how underwhelming the deal that we received really was.
Brexit’s biggest disadvantage is its damage to the U.K.’s economic growth. Most of this has been due to the uncertainty surrounding the final outcome.
Uncertainty over Brexit slowed the U.K.’s growth from 2.4% in 2015 to 1.0% in 2019. The U.K. government estimated that Brexit would lower the U.K.’s growth by up to 6.7% over 15 years. It assumed the current terms of free trade but restricted immigration.
The British pound fell from $1.48 on the day of the referendum to $1.36 the next day. That helps exports but increases the prices of imports. It has not regained its pre-Brexit high. (Figure source)
Brexit hurts Britain’s younger workers. Germany is projected to have a labor shortage of 3 million skilled workers by 2030. Those jobs won’t be as readily available to the U.K.’s workers after Brexit.
Employers are having a harder time finding applicants. One reason is that EU-born workers left the U.K., their numbers falling by 95% in 2017. This has hit the low-skilled and medium-skilled occupations the most.
The U.K. must negotiate new trade agreements with countries outside of the EU, which had more than 40 trade agreements with 70 countries already in place
BREXIT IN IRELAND
Northern Ireland remains with the U.K. The Republic of Ireland, with which it shares a border, stays a part of the EU. The agreement avoids a customs border between the two Irish countries.
A customs border could have reignited The Troubles, which was a 30-year conflict in Northern Ireland between mainly Catholic Irish nationalists and pro-British Protestants. In 1998, it ended with the promise of no border between Northern Ireland and Ireland. A customs border would have forced about 9,300 commuters to go through customs on their way to and from work and school.
BREXIT IN LONDON
Brexit has already depressed growth in the U.K.’s financial center of London, which saw only 1.4% in 2018 and was close to zero in 2019. It also diminished business investment by 11% between 2016 and 2019.
International companies are less likely to use London as an English-speaking entry into the EU economy. Barclay’s moved 5,000 clients to its Irish subsidiary, while Goldman Sachs, JP Morgan, and Morgan Stanley switched 10% of their clients. Bank of America has also transferred 100 bankers to its Dublin office and 400 to a broker dealer unit in Paris.32
BREXIT IN SCOTLAND
Scotland voted against Brexit. The Scottish government believed that staying in the EU was the best for Scotland and the U.K. It had been pushing the U.K. government to allow for a second referendum.
To leave the U.K., Scotland would have to call a referendum on independence. It could then apply for EU membership on its own.
What has Brexit meant for us…?
We have tried to make the transitional period of Brexit as easy as possible for our customers but there have been some changes in the way we have to operate to the EU. Everyone shipping to the EU from the UK now needs to have their IORI numbers to ship which wasn’t a requirement before. More information on this can be found in our Q1 Newsletter, if you have any more questions about shipments, just give us a call.