With the referendum results burdening the minds of many and the indefinite separation from the EU looming ahead, what can one say to vindicate the split or see that there is a light at the end of a potentially dark tunnel?
The UK, post industrialisation, has moved predominantly out of the manufacturing industry. We have much-reduced industrial sectors meaning to continue economic growth we will have to rely on foreign investment. Furthermore, some say the UK may struggle to source the labour needed to fuel our economy. The perception that the UK has already left the EU, and having a currently weakened currency has discouraged migrants from moving to work in the UK. Add to this the recent rise in racist or xenophobic attacks reported by the news, and it is no wonder why workers that may have been considering living in the UK have been discouraged - which hurts everyone in the UK, as there are fewer potential taxpayers.
Interviewing successful UK businessman James Barden (lone shareholder of private corporation Rextrek), I got an inside look on how many UK businesses trading with the EU and Far East have been affected. The exchange rate having deteriorated has hit many British-based companies hard, meaning importing goods sourced in countries where labour is more affordable, such as the Far East and Portugal, has increased in cost by about 20%. He said how he could not possibly predict how events will unfold in the coming months, with the imminent separation. Most worryingly for British independent businesses, it is possible that a tariff may be imposed on exporting goods along with a quota to restrict the quantity exported. This would make many businesses potentially uncompetitive in the face of these extra costs and damage UK exporters.
But is there a silver lining? Would we reindustrialise to subsidise our own needs? It is highly unlikely. It is simply far too expensive to mass-produce in the UK: the average citizen would benefit far more from the lower prices when they are produced abroad. Much of the time, UK citizens have narrow-mindedly failed to see past EU trade, and doubted our ability to adapt and trade with not only Europe, but the rest of the world. We do, however, now need to accept the decision with regards to the EU and look at the new exciting opportunities concentrating on trade outside the EU.
Gilpin Bradley of the company Wester Ross Salmon, which trades internationally, and predominantly outside the EU, gave the opinion that it is in the UK’s interest to leave the EU. He looked forward to being free from the burden of EU regulations, arguing many had been hypocritical and unnecessary. For instance, the enforced environmental regulations on SMEs in the EU have been exceedingly restrictive for development and expansion putting them at a commercial disadvantage. His company has thrived in the past year, with exports expanding from 62% to 75%, showing huge potential in international trade outside the EU. While trading more with China than the whole of Europe, they sell in a foreign currency, and are enabled to make a significant return with profits increasing greatly this year.
There has undoubtedly been excessive scare-mongering by politicians, convincing the nation that it is all doom and gloom and that we will now be excluded from many trade markets. But banks want to loan to us and countries want to trade with us. The proportion of exports to the EU, according to the ONS (2015), has actually been declining for the past 10 years and some argue that many of the exports to the EU had not reached their final destination but were just ‘passing through’ ports like Rotterdam. Our stock market continues to grow and the prospective trade deals after Brexit will also create jobs in many sectors. Accountancy firm KPMG, for example, announced a new position, ‘Head of Brexit’, advising customers on its impact.
There have been reports that the crash in the pound was caused intentionally, to attract FDI from other countries and stimulate growth. Hence, FDI has increased considerably and the stock market has continued to thrive. London will remain one of the world’s most prosperous cities and new trade deals with the rest of the world will create new opportunities. It is now expected that Theresa May will deliver fully in her Brexit agreements by ending free movement of people and thus leaving the single market. A sovereign Britain could then monitor its own immigration at more sensible levels, allowing in workers proportionate to the amount of jobs available.
There are clear economic benefits in Brexit; there has been market upheaval, but the same was true after Black Wednesday, when the UK left the Euro pegging mechanism - and it was followed by a decade of prosperity.
Image sourced under Creative Commons Attribution. Copyright of the EU Flag held by the Council of Europe.