Tripod Consequences Of Brexit

Tripod Consequences Of Brexit

A hard Brexit without a trade agreement would eliminate Britain's tariff-free trade status with the other EU members. Tariffs would raise the cost of exports .That would hurt exporters as their goods became higher-priced in Europe. Even with a trade agreement, a hard  Brexit could be disastrous  for The City, the U.K.'s financial center. Companies would no longer use it as an English-speaking entry into the EU economy. The City of London  reported that 5,000 jobs could be lost. That could lead to a real estate collapse. There are many new office buildings under construction that would sit empty. Housing prices have already started to fall.

The United Kingdom would lose the advantages of EU's state-of-the-art technologies. The EU grants these to its members in environmental protection, research and development, and energy. 

Also, U.K. companies could lose the ability to bid on public contracts in any EU country. These are open to bidders from any member country. The most significant loss to London is in services, especially banking. Practitioners would lose the ability to operate in all member countries. A hard Brexit could raise the cost of airfares, the internet, and even phone services.

A hard Brexit would hurt Britain's younger workers. Germany  is projected to have a labor shortage of 2 million workers by 2030. Those jobs will no longer be as readily available to the U.K.'s workers after Brexit. London is already losing many nurses and other health care professionals. In the year following the referendum, almost 10,000 quit. The number of nurses from Europe registering to practice in Britain has dropped  by almost 90 percent.

Under a hard Brexit, the U.K could lose Scotland. It could join the EU on its own, as some countries within the kingdom of Denmark have. It may even have a referendum to leave the United Kingdom. 

The most likely scenario is that nothing happens before the April 2019 deadline. In that case, the U.K. would no longer be a member of the EU, and it would have no trade agreement. It would have all of the disadvantages of a hard Brexit and there would be no trade agreement.

Britain would have to pay its outstanding EU bills of $51 billion. It would have to find a way to guarantee rights to EU citizens living in the U.K.Custom delays  could create  food shortages. The U.K. is vulnerable because an extreme heat wave and summer  drought caused by global warming  have already reduced food output.Tariffs would be reimposed. They are as high as 74 percent for tobacco, 22 percent for orange juice, and 10 percent for automobiles. That would hurt exporters. Some of that pain would be offset by a weaker pound.

Tariffs would increase prices of  imports into the U.K. One -third of its food  comes from the EU. Higher import prices would create inflation  and lower the standard of living for U.K. residents.Northern Ireland  would remain with the United Kingdom. The country of Ireland, with which it shares a border, would stay a part of the EU.

A no-deal Brexit would create a customs border between the two.

This could  reignite the troubles. It 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. It would also force  35,000 commuters to go through customs on their way to and from work. Some of those in Northern Ireland who want to remain in the EU could call for a referendum to rejoin the country of Ireland.Prime Minister May  has rejected  the EU proposal that there be a customs border between Northern Ireland and Great Britain. The United Kingdom is Ireland's second-biggest export destination. But under a no-deal Brexit, she would have no choice.

The Brexit vote has strengthened anti-immigration parties throughout Europe. As a result, Germany's Chancellor Merkel has already announced she will not run for re-election. If these parties gain enough ground in France and Germany, they could force an anti-EU vote. If either of those countries left, the EU would lose its most robust economies and would dissolve.On the other hand, new polls show that many in Europe feel a new cohesiveness. The U.K. often voted against many EU policies that other members supported. IMF Managing  Director Christine Lagarde said, "The years are over when Europe cannot follow a course because the British will object." She added, "Now the British are going, Europe can find a new elan." 

The day after the Brexit vote, the Dow fell by 610.32 points.Currency markets were also in turmoil. The  euro fell 2 percent to $1.11. The pound fell. Both increased the  value of the dollar. That strength is not good for U.S. stock markets . It makes American shares more expensive for foreign investors. As a result, gold prices  rose 6 percent from $1,255 to $1,330. 

A weak pound also makes U.S. exports to the U.K. more expensive. It affects the U.S farming and manufacturing sectors. The U.K. is America's fourth-largest export market.U.S. companies invested $588 billion and employed more than a million people. These companies use it as the gateway to free trade with the 28 EU nations. Many have opened subsidiaries elsewhere in Europe to protect against a hard Brexit or no deal.Britain's investment in the United States is at the same level. That could  impact up to 2 million U.S./British jobs. It's unknown exactly how many are held by U.S. citizens. The uncertainty over their future will dampen growth. 

Brexit is a vote against globalization. It takes the United Kingdom off the main stage of the financial world. It creates uncertainty throughout the U.K. as The City seeks to keep its international clients. U.S. stability means London's loss could be New York's gain.  

In June 2016, The former Prime Minister David Cameron called  for the referendum. He wanted to silence pro-Brexit opponents within his Conservative party. He thought the referendum would resolve the issue in his favour. Unfortunately for him, the anti-immigration and anti-EU arguments won.They felt that EU membership was changing their national identity. They didn't like the budgetary constraints and  regulations  the EU imposed. They didn't see how the free movement of capital and trade with the EU benefited them. Younger voters and those in London,  Scotland ,and Northern lreland wanted to stay in the EU. They were outnumbered by older voters who turned out in droves.

Olufemi Aduwo 

Permanent Representative of Centre for Convention on Democratic lntegrity( CCDI) to United Nations.

Note: The only Nigerian accredited by U.K Electoral commission as observer  for Brexit referendum in 2016.