Will the UK regret its decision​ to leave the EU?

The European Union is a unique economic and political union containing 28 EU countries that together cover much of the continent of Europe. The European Economic Community, founded in 1958, was formed due to the detrimental aftermath of the Second World War, initially increasing economic cooperation between six countries: Belgium, Germany, France, Italy, Luxembourg, and the Netherlands. Since then, 22 other members have joined and a massive single market has been created. What was purely an economic union evolved into an organization spanning policy areas, the name change from the ECC to the EU in 1993 reflected this. A Referendum was held on Thursday 23 June 2016, to decide whether the UK should leave or remain in the European Union, Leave won by 51.9% to 48.1% with a turnout of 30 million people (71.8%).

The key issue at stake here is the question: will the UK benefit or suffer from its exit from the EU? In order to provide the best analysis, it’s necessary to look at the different types of deals the UK may end up leaving under, as these will have different effects on the UK as a whole. The concept of a No Deal Brexit is at the centre of the debate. Mrs May has made it clear that the UK does not want an “off the shelf” trade deal, and has repeatedly stated, “no deal is better than a bad deal”. The underlying cons of a no-deal are causing much concern and creating a situation in which a loss of confidence from foreign countries and business alike are rising, affecting the UK politically and economically simultaneously. With that being said, let’s look at the potential pros and cons of a no deal Brexit.

This scenario will arise if British politicians fail to come to an agreement before the UK is scheduled to leave the EU on March 29, 2019, the country will walk away with no deal. There are undeniably numerous cons from the UK exiting the European Union without a proper deal in place, such as The Bank of England has warned that a No-deal Brexit may shrink the UK economy by 8% in a year and lead to domestic house prices falling via a third. “The U.K constituents only about 2% of the global economy and 4% of the world goods trade, so global ramifications of all realistic scenarios are likely to be manageable”, said John Lynch. Capital Economics has warned that a disorderly exit could hurt British GDP Growth by 1%-2% spread over 2 years.

Furthermore, politically a No Deal Brexit would prove to be detrimental to the Irish Backstop. A No-Deal may reignite the troubles that once subsided in Ireland, as Ireland is an EU state and Northern Ireland will remain part of the UK. This will cause a hard border to come into place, and 35,000 commuters will be forced to have to travel across the hard border to get to work. However, as opposed to the overwhelming negatives of a No-deal Brexit, there may be some benefits which may leave the UK not regretting the Brexit vote, for instance, the Government would not have to pay the annual £13 billion contributions to the EU budget. However Britain would lose out on some EU subsidies – the Common Agricultural Policy gives £3 billion to farmers, but it is likely that both the EU and the UK will have to honour financial commitments under the 2019 budget. Also, the UK would revert to World Trade Organisation rules on trade. While Britain would no longer be bound by EU rules, it would have to face the EU’s external tariffs. The price of imported goods in shops for Britons could go up as a result. All this suggests that a No-deal Brexit might overall leave the UK regretting Brexit, due to the uncertainty it will cause politically and economically.

Looking into detail at the scenario of a no-deal Brexit, we can clearly see how this would cause the UK to regret its decision on Brexit. However, with the new Tory leadership race coming to a close and the deadline looming, there is still a chance for another type of deal to be struck with the EU about its divorce with the UK.

This may be in the form of a ‘Hard Brexit’. This term is essentially another way to say a clean break from Europe. That means Britain giving up membership of the single market. If Britain finds itself outside of the Customs Union, imported goods will become suddenly more expensive, squeezing consumer spending across the country. It is undecided and disputed between British politicians alike whether the UK will end up regretting a hard Brexit, as the terms we would leave under aren’t yet decided. At present, roughly 45% of the UK’s exports are to the EU with 50% of its imports coming from the EU. “Should the UK go down the hard Brexit path, the UK economy would likely slow further as EU trade uncertainty weighs on consumer sentiment and business investment”, said John Lynch, chief investment strategist at LPL Financial. Furthermore, even with an agreement, a hard Brexit could prove to be detrimental to the country. The city of London reported that 5,000 jobs could be lost. Housing prices have already started to fall. London is already losing many nurses and other health care professionals. In the year following the Referendum, almost 10,000 quits. On the political side of things, under a hard Brexit, Scotland could end up leaving the UK. This is because it may opt to join the EU on its own, as some countries within the kingdom of Denmark have. It may even have its own referendum, as 62 to 38% of Scots voted to remain. The entire concept of a hard Brexit is not entirely negative and though it might leave the UK regretting its decision to leave, there are some irrefutable positives that may arise. With a hard Brexit, the goal is to take law-making powers away from Brussels and return them to Parliament. The Conservatives’ Great Repeal Bill aims to gradually remove the UK from EU courts’ jurisdiction and all EU legislation will be copied into UK domestic law, allowing the British parliament to “amend, repeal and improve” laws as necessary.  A hard Brexit will also increase UK involvement with the commonwealth and the UK will devote its entire budget to it, ‘keeping money in the family’ so to speak’, this is beneficial to the UK as keeps commonwealth member states from leaving. A group of economists who do back Brexit has predicted that Britain leaving the EU will add £135bn a year to Britain’s economy. Overall, it is clear to see that Britain has more to lose than gain from pushing for a hard Brexit. In the long-term, though, its citizens may find that the autonomy and right to self-determination afforded by that decision to be worth it. 

On a continued note, as opposed to completely leaving the EU and having a minor agreement with it, there is a possibility of that of a ‘soft Brexit’. Such a scenario would minimize disruption to trade, supply chains and businesses in general, as the UK will remain closely aligned with the EU. Economists have described that the least damaging path for Brexit to take. Supporters, of a soft Brexit to benefit the UK called for a deal similar to what Norway has with the EU. This is because Norway is a part of the single market but in return abides by the free movement rules. It’s already become clear that UK Politicians aren’t willing to compromise on immigration with the EU, claiming that such a deal will betray the wishes of the British public. “We expect UK domestic stocks to outperform UK exporters by 20% if a soft Brexit materializes,” said Sebastian Raedler, head of European equity strategy at Deutsche Bank, in an interview with Bloomberg. However, many parts of a soft Brexit will actually leave a lot of the UK pleased with the terms, for instance, the UK will keep control of Immigration control, which has been the main goal for UKIP (a rising single goal party). Also, both the EU and the UK will have access to its single market, resulting in non-tariff trade. Some pro-exciters have estimated that with a clean break from the EU, the UK will be free to negotiate trade deals with other countries, this is to make up for 12-24 months of non-EU trade. The Irish border is likely to be open with clean negotiations, so there is no need for a hard border. Overall, a soft Brexit may leave the UK not regretting its decision on leaving the EU, as it will still have access to the single market and it’ll have control over immigration levels. However, there are still unfavourable terms within a Soft Brexit, as the UK may have to abide by the EU’s free movement laws, which contradicts UKIPs policy on controlling immigration.

In conclusion, A soft Brexit has the pros of keeping the UK within the Single market but comes at a cost of the UK accepting the EU free movement laws, which contradicts Britain wanting to keep a tighter grip on immigration. A hard Brexit will bring about (in the short term), uncertainty and major losses to the British economy (e.g. the city of London reported that 5,000 jobs could be lost) but in the long term, the British citizens may like the increased autonomy and self-determination. A hard Brexit will cause major economic and political problems but will allow the UK to be an entire spate entity from the EU. Overall, the UK might regret its decision to leave the EU, as a Hard Brexit and a No Deal Brexit are likely to happen, and these carry too many major cons for the UK politically and economically. 

(Biography) … 













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