Finally, the British left the European Union, despite the fact that many problems have been foreseen for their future. After January 31, 2020, Britons are facing unprecedented uncertainty and experts believe the tangible consequences of this choice will soon become clear. Until the end of 2020, which is considered a transition period, the UK and EU will continue to negotiate on a range of issues. In some cases, experts predict that even an agreement will not prevent potential challenges for Britain. The following are some of the problems that most likely will not preclude a good agreement with the European Union.
Financial Storm in Britain
The British will understand the economic problems in the short term, but in the long run these pressures will be overwhelming for the people. Britain is the world’s fifth largest economic power whose exit from the EU has also had an impact at the international level. Currently, the stock market has fallen in Hong Kong and Tokyo, the London market is down 7% and the Paris and Frankfurt markets are down 10%. Markets have moved to the ultimate real value, gold. The value of the currency has declined and is said to be a precursor to the financial storm in Britain.
Long Years of Negotiations with Economic Partners
Leaving the EU is not easy, and for many years there are still complex negotiations ahead. Britain will lose the benefits it has had in agreements with the European Union and EU partners. According to the UK government’s own prediction, long years of negotiating and bargaining with the EU for an exit are expected with some concessions. The same amount of time or more is required to negotiate with partners outside the EU and talk on new contracts with the EU. Until the UK breaks out of the Union, it cannot sign contracts with partners outside EU.
Britons Become Poorer
British Treasury experts have stated that there are various areas for negotiating future accords. In the case of scenarios where the UK concludes a free trade agreement with the European Union, similar to the one between the EU and Canada, each British household loses about £4,300 (about €5,400) of its annual income. According to these surveys, the country’s GDP will be about 6% lower than it is today by 2030, which the UK could have gained by staying in the Union.
Emergence of Customs Barriers for Britain
With Brexit there will occur a long period of uncertainty coupled with unintended consequences for British companies regarding the economy and attracting investment. According to the World Trade Organization (WTO) during the transition period, trade barriers could be remedied by British exporters by paying £5.6 billion (€7.2 billion) a year. It is unclear, however, how the manufacturing sectors, such as Airbus and BMW, will deal with these new tariffs.
A Country with Little Attraction for Investment
Many international companies have previously used the UK as a gateway to the European Union, with many now seeking to change their location and exit the UK. Bank of America JPMorgan, which employs 16,000 people in the UK, plans to relocate between one and four thousand of its employees. Other banks are likely to follow suit. In general, Brexit means lowering US and Chinese investment in the UK.
Outlook of Possible Recession in Britain
Britain’s economic growth is likely to decline as trade swings and unemployment increases. The IMF has considered two possible scenarios: In the first scenario, UK GDP growth will gradually decline. In the second scenario, there will be a severe economic downturn in the UK and the economy will collapse. In this case, inflation will rise sharply.
Growing Unemployment in UK
Another implication of Brexit would be rising unemployment rate in the country. The slowdown in economic growth affects the labor market. In the IMF’s first scenario, for 2017, the unemployment rate was forecast at 5%, which was almost true. The spending of 129 billion euros has reduced the cost of activity, which means that about 950,000 jobs will be lost by the end of 2020, leading to an unemployment rate of 2 to 3 percent. The financial sector is the sector that will experience the most unemployment after Brexit. Leaving London’s banks alone is enough to lose thousands of jobs.
Cut in UK Government’s Tax Range
The slowdown in economic growth will be accompanied by lower government tax revenues. The Institute for Fiscal Studies has predicted that the British government will lose about £20-30 billion annually. Even with the suspension of British participation in the Brussels accounts (EU share), there is still a huge blow to the UK government’s budget. Sick economic growth, reduced tax revenues and difficulties in business transactions are all indicative of the future economic situation in the country.
Brain Drain from Britain
If Britain fails to reach a Brexit agreement on free movement of people in the European space, for example, many European players will leave the Premier League (especially in English football). In fact, this is because they have to play a certain number of their games in one or more years in distinctly European teams, while playing in British teams excludes them from the European community.
Visa Required to Visit London
If Britain succeeds in reaching an agreement with the Union that keeps it in the common European market, free movement of people on both sides of the sea will not be an obstacle, so it is entirely up to the future agreement. Unless the agreements are in place, as the UK is outside the Schengen zone, European citizens will need a visa to travel to the UK.
Questioning British Territorial Integrity
The result of the Brexit referendum showed that the country was divided into London, Scotland and Northern Ireland, which were keen to stay in the EU, and north of England and Wales which largely opposed the idea. In the future, British territorial integrity is likely to be challenged. The Scottish vote in the recent election also highlighted the issue. All future decisions on Brexit will be made in coordination with the British and Scottish prime ministers. The Scottish prime minister has announced that the region sees its future in EU membership and has called for another referendum in the country. As the prospect of a referendum is now diminished, the debate on independence will become more intense. In Northern Ireland, Sinn Fein, which has agreed to stay in the EU, has called for a referendum on the Irish Union.
Drop in Number of British Tourists
With the depreciation of the British national currency against the euro and the USD people in the country will have difficulty converting their money, so they would prefer to reduce their more expensive trips to Europe. In addition, if people from the UK travel to the EU, their purchasing power is definitely diminished.