Brexit: The EU and the UK

SEATTLE, Washington — January 31, 2020, is a historic day for the United Kingdom. This day marks the U.K.’s separation from the European Union based on a referendum held in June 2016. Around 17.4 million citizens opted for Brexit in 2016. After several talks and negotiations, the U.K. became the first former member of the E.U. However, a large-scale decision such as this can greatly distort economic stability. The relationship between the EU and the U.K. will never be the same again.

The Effects of Brexit

  • Trade: The EU is the world’s largest single market that allows free trade amongst all its members. The EU is also responsible for arranging trade policies on behalf of its members, establishing a single, strong voice throughout various negotiations. Since the U.K. is no longer a member of the EU, the U.K. must create suitable trade policies with EU countries whose borders the country wishes to trade within while also negotiating its own demands. The U.K. is projected to lose $32 billion post-Brexit since there is no trade agreement is currently in place between the U.K. and the EU. Losses incurred are more likely to increase as the EU accounts for nearly 46% of the U.K.’s exports. Ireland’s exports to Britain project to drop by at least 10%. This will create a serious trade imbalance and contribute to the national deficit of the nation.

  • Food Poverty: British citizens gain a significant amount of the food they consume through imports. Brexit will lead to a rise in food poverty as the EU exports about 30% of food and 11% from outside countries holding trade policies the EU negotiated. Since there is no trade policy in place, food insecurity in the U.K. will likely surge. Experts estimate food prices will rise by 6% by June 2020. Overall, citizens can expect increased food poverty in the tentative future.

  • Immigration Restrictions: The U.K. announced that only highly-skilled immigrants will be able to secure jobs, leaving a considerable impact on the economy. Immigrants mostly work low-skilled jobs; therefore, the implementation of this policy has led to shortages. At least one in 11 job postings are left vacant. Additionally, immigrants occupy nearly one-sixth of care-worker jobs. The new regulations will soon prompt vacancies, greatly affecting the elderly and people with disabilities.

Potential Solutions

The EU and the U.K. continuing trade talks. British Prime Minister Boris Johnson proposed a “Canada-style free trade agreement.” The EU is considering a counter agreement that would not have tariffs or quotas. This proves that negotiations are powerful and that the U.K. seeks to avoid distortion to the economy as much as possible. Aware of its reliance on imports from the EU, the U.K. willingly opted for a free trade agreement that would be mutually beneficial as the cost of imports and exports reduce and correct trade imbalances. This in turn would influence food poverty as the general price levels will decrease and imported food will be affordable once again.

Additionally, there are multiple organizations and government schemes that help combat food poverty in the U.K. For example, the Trussel Trust network and other independent foodbanks distributed nearly three million food packages between 2018-19. The Healthy Start program allows the purchase of basic food necessities for pregnant women and young mothers.

Benefits of Brexit for the UK

  • The U.K. will be free to trade effectively with other nations such as Japan, the U.S. and India without EU restrictions. This will stimulate growth in all nations involved in possible free trade. Free trade will help tackle domestic issues such as unemployment and hunger since effective trading leads to increased employment opportunities and better living standards.

  • The U.K. has given almost a half-trillion pounds to the EU since becoming a member. The country will save a significant sum of money used to lessen the load of rising food insecurity, short-term deficit and unemployment.

  • The U.K. will also be able to craft specific policies to suit its needs instead of being subject to the ones crafted by the EU. The ability to do so will help the U.K. and other nations involved as all policies will be tailored to be appropriate and mutually beneficial.

Overall, Brexit is a challenge. The transition is bound to be a difficult adjustment and poses serious threats to economic stability in the future. However, this is only a short-term issue. Once the transition period is over in December 2020, a structured agreement between the EU and the U.K. regarding crucial matters such as trade will help their economies regain stability.

– Mridula Divakar
Photo: Pixabay


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