As of now, the United Kingdom’s post-referendum future relationship with its European Union and member countries is largely governed by the Article 50 exit bill and the EU-UK Trade and Agreement. It is anticipated that a new relationship will emerge between the EU and UK in the coming years. The UK’s vote to leave the EU was triggered by a strong dissatisfaction with the high level of immigration and a lack of job opportunities in the country. The high level of immigration has been a sore spot for the UK population for many years; the population feels that enough has been done to reduce the amount of illegal immigration but not enough to maintain the levels of prosperity enjoyed by their parents and grandparents.
Although the government has indicated that it will fight for the rights of citizens in the UK to remain in the EU, the hardline Brexiteers in the cabinet have threatened a hardline stance against any compromise with the remaining members of the EU. This is proving difficult, particularly as the Remain campaign is enjoying a massive lead in the polls. The remain camp feels that the result of the vote will be a major blow to the Remain camp and are insisting on the full removal of all forms of free movement across the EU. The remain camp is also demanding the right for Britain to continue using the EU Single Market and the Common Travel Area.
A Brexiteer government will be looking to strengthen the economy in the short term and to minimize the damage to the UK economy by leaving the EU. In order to achieve this goal, the post-brexitotiation deal is expected to be extremely damaging to the sectors that are most vulnerable in the short term. These sectors are manufacturing, agriculture, and tourism. The agricultural industry is expected to take the largest hit by being allowed to continue using the Single Market for goods that are produced in the UK. The dairy industry is set to lose the most by losing access to the European market for milk and dairy products, which provide a large part of the UK’s dairy needs.
The agricultural sector is also one of the UK’s largest economic drivers, so losing access to the Single Market would have a significant adverse effect on the country’s farming sector and the incomes of the farmers. Agriculture is a key driver of the country’s economy and losing access to this trading platform would have a severe negative impact on the country’s agricultural production and ultimately the country’s economy. As the country negotiates its post-brexit position the impact this will have on the country’s trading environment will need to be carefully assessed. Other important agricultural industries that are currently facing difficulties post-brexit include sheep and beef, which are both farmed products that play a large role in the country’s food supply.
As important as access to the Single Market is to the UK economy, leaving the European Union would cause huge problems for the City of London. Access to the London financial market would be severely limited and this would have a serious knock on effect to the UK economy. The City of London is currently based on cross currency markets, which means that trading would still be possible, but at a much reduced level. Other countries would continue to seek to take advantage of the City of London’s superior commercial banking and liquidity position and therefore there will be a major short term hit to the UK economy from leaving the EU. However, should the remain camp win the upcoming vote there will be immediate access to the Single Market once again and London will once more be able to serve as a financial capital as it has been over the last thirty years.
Another immediate effect that leaving the EU will have on the UK economy is the effect that it would have on financial and monetary policy. There are various reports across the Channel about the potential effects on policy and whether this could negatively affect the economy. However, it is worth noting that Remain does have a slightly higher opinion of the Remain camp than the Leave camp and this could have a positive effect on policy. Some Leave supporters are worried that a post BREXIT scenario could result in a period of low growth and investment and jobs lost. This would negatively impact on employment numbers and add to the mass of unemployed people that have been a cause for concern in the UK over the last few months.