A Look At Brexit

The term “Brexit” has recently become part of our everyday language. You are probably sick of hearing the word. It is a combination of the words “Britain” and “Exit” and has become an easy way to refer to the forthcoming decision made by the UK public to exit the European Union. Brexit has become a poisonous term to many.

Despite the fatigue over the issue, it is one of the most important periods in the country’s history. Moolr have taken a look at the background to the issue. And how we got to where we are today, just two weeks before the UK is due to leave the EU on 29th March.

Background information

Britain initially joined the EU in 1973. At the time it was called the EEC. The European Economic Commission, or the Common Market. Two years later, in 1975, under Harold Wilson’s Labour government, a referendum was held. Two thirds of UK voters voted in favour of remaining in the EU.

The EU is an economic and political partnership involving 28 European countries. Its original aim was to foster economic co-operation between countries. It has since grown to become a “single market” allowing goods and people to move around as freely as if they were in one country. It is a trade and political bloc, the biggest there is.

Its Evolution

As you will know, the EU has its own currency, the euro, as used by 19 countries, of which the UK is not one. It has a parliament and sets rules in an increasing range of areas. These areas include the environment, transport, consumer rights and even issues such as mobile phone charges.

In a referendum initiated by Prime Minister David Cameron in 2016, the country voted to leave the UK, by a margin of 52% to 48%. The wording in the vote was as follows: “Should the United Kingdom remain a member of the European Union or leave the European Union?”

Since the result, Brexit has constantly been in the news. A growing number of high profile politicians, business leaders and celebrities have jumped in to give their opinions.

Business Owners

For many, the decision to leave has been catastrophic. There have been numerous allegations of lies in the initial campaigning by the Leave campaign, and talk of voter fraud. Those that import/export have been left in limbo. Many companies have moved production away form the UK or are threatening to. The government under Theresa May has failed repeatedly to nail down the precise terms for leaving the EU. They have been hindered further by the issue of how to deal with the border with Ireland.

Trading Opportunities

The EU is currently the UK’s main trading partner, comprising 52% of our total trade in goods and services. If Britain were to leave the EU it would need to negotiate some kind of a free trade deal. In other words, an agreement whereby trading could take place without trade barriers or tariffs or quotas. This is a monumental undertaking, one the UK has shown to be wholly unprepared for since the referendum almost three years ago.

Those opposed to leaving the EU are concerned about Britain’s ability to hold its own in a global trading market. A market dominated by the EU, the US and China. However, those who do want to leave are convinced that the UK would not be at a disadvantage. They point out that countries such as the US, India, China and Japan all currently export to the EU relatively easily. They have not had to extricate themselves from a huge trading bloc however. Brexit has led to many businesses failing to survive the bumpy ride and uncertainty.

The UK job market

Opinion is totally divided on the impact that the EU has on jobs within the UK. So far, the evidence has been catastrophic. The forecasts are similarly gloomy. The areas that most voted Leave are often the ones that have suffered most. Those who want to stay in the EU claimed initially, with some justification, that millions of jobs could be lost. They cited in particular global manufacturing industries such as cars. And also the UK financial services industry. Some such production has already ceased in the UK.

Banks

The main reason for this concern is in terms of the UK’s credibility as a place to invest being linked to its membership of the EU. Several banks have also warned of decrease in foreign direct investment. Also there has been a depreciation of the pound.

However, those that want to leave the EU strongly disagree. They claim that there would in fact be a jobs boom as companies no longer have to comply with EU regulations. They claimed that SMEs who do not trade with the EU would realise the most benefit.

Job Opportunities in Europe

As citizens of a member country of the EU, Britons are able to live and work in other member states without a work permit or visa. Government estimates are that around 2.2 million British citizens live in other EU nations. In future it will be much more difficult to do this. There is still huge uncertainty about what the future holds for freedom of movement after Brexit. However, many EU residents living in the UK have had a painful two years worrying about their right to remain in the UK in future.

The Impact on Large Businesses

The majority of large businesses are coming out in favour of staying in the EU and against Brexit, citing reasons such as it being easier to move money, people and products around the world. A joint letter by business owners stated that Britain will be stronger, safer and better off remaining a member of the EU. They claimed that leaving the EU would threaten jobs, deter investment in the UK and put the economy at risk. Its 198 signatories represented companies such as BT, Marks & Spencer, Vodafone and Heathrow and Gatwick airports.