Brexit: A tripodal vote against globalisation

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 UK’s financial centre.

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 UK 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, UK 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 labour shortage of two million workers by 2030. Those jobs will no longer be as readily available to the UK 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.

The most likely scenario is that nothing happens before the April 2019 deadline. In that case, the UK 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 UK. Custom delays could create food shortages. The UK is vulnerable because an extreme heat wave and summer drought caused by global warming have already reduced food output.

Tariffs would be re-imposed: they are as high as 74 per cent for tobacco; 22 per cent for orange juice and 10 per cent 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 UK. One -third of its food comes from the EU. Higher import prices would create inflation and lower the standard of living for UK 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.

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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 Theresa May has rejected the EU proposal that there be a customs border between Northern Ireland and Great Britain.

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 UK often voted against many EU policies that other members supported.

The day after the Brexit vote, the Dow fell by 610.32 points. Currency markets were also in turmoil. The euro fell two per cent to $1.11. The Pound fell. Both increased the value of the Dollar. That strength is not good for US stock markets. It makes American shares more expensive for foreign investors. As a result, gold prices rose six per cent from $1,255 to $1,330.

A weak Pound also makes US exports to the UK more expensive. It affects the US farming and manufacturing sectors. The UK is America’s fourth-largest export market. US 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.

Brexit is a vote against globalisation. It takes the UK off the main stage of the financial world. It creates uncertainty throughout the UK as The City seeks to keep its international clients. US stability means London’s loss could be New York’s gain.

In June 2016, 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 Cameron, 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.

Aduwo writes in from Lagos.