Brexit – A nation divided and uncertain
It has been a week since the UK declared the results of the EU referendum. During the past week, there have been calls for a second referendum, and suggestions of illegality in the Brexit decision. If the decision is unlawful then Britain will have no choice but to remain part of the European Union.
NPR says “official proceedings for the “divorce” have not yet begun. But repercussions of the decision are already multiplying.” It has impacted on financial markets and the value of British currency, while recent incidents of xenophobic hatred have been blamed on the vote to leave the EU.
It has been claimed that as many as 2.3 million leave voters have regretted their decision and would vote the other way given the chance. However, some remain voters have also regretted their choice, and it has been suggested that a second referendum could see an even closer vote.
While there is animosity between the two sides, no official proceedings have begun. When and if Article 50 is implemented, there are likely to be up to three years of negotiations before Britain finally leaves the EU.
In November 2015, British universities predicted that leaving the EU would be a disaster. Their concern was that millions of pounds of funding would be lost. According to the complete university guide the UK provides 11% of the EU’s overall budget, while UK universities received 15.5% of funds available from the EU funding programme.
The Telegraph assures that “We have received confirmation that current EU students, and those aiming to start courses this autumn, will continue to receive loans and/or grants for the duration of their courses.” The future possibilities for students in the longer term is, as yet, uncertain.
According to the BBC, there have been claims that “The damage done to the economy has already been many times the value of the UK’s contribution to the EU Budget.”
There is, however, no clear data but “the indicative cost of borrowing for the government has actually fallen.
There is no question that there have been big falls in the stock market since 23rd June but such losses are only ‘on paper’ as a fall in share prices means a loss of money only if the shares are sold. The FTSE 100 showed a huge slump in the days since the Brexit vote but shares shot up again between 27th June and 1st july, with an increase of 1.13% on Friday. http://www.londonstockexchange.com. The FTSE 250 is more useful in showing the effects of the UK economy because, unlike the multi-national companies of the FTSE 100, the FTSE 250 consists of the UK’s top companies, which are more dependent of the economy of the UK. While there has been some recovery since its 13% fall after Brexit, it has not held up as well as the FTSE 100.
On Friday 1st July, although the FTSE 100 is beginning to signs of recovery , George Osborne has abandoned plans to restore government finances to a surplus because “the economy is showing clear signs of shock following the vote to leave the European Union.”
According to the Institute of Directors, for businesses preparing to leave the EU, a “worst-case scenario would lead to a 2.6% decline in GDP, while the best case would give a 1.1% rise. His ‘most likely’ scenario implied a 0.1% gain.” http://www.iod.com
In a press release, Dr. Jason Wouhra, Midlands Chair for the IoD has said that a vote to leave was “not the result that the majority of our members wanted […] and it is now imperative that our political leaders manage the transition as smoothly as possible.” Furthermore, Dr. Wouhra worries that “The weeks and months ahead are going to be a nervy time for business leaders, so they have to know that the Government is focussed on maintaining stability while a new relationship with the EU is established.”
With instability in the housing market, some estate agents are finding their buyer and seller clientele at a stalemate.. Homebuyers are reluctant to complete their purchases due to a lack of clarity over the future.
The Global Counsel says “For the majority of businesses in Britain the possibility the UK might leave the European Union – Brexit – is a major source of concern.” (www.global-counsel.co.uk)
Some local, independent businesses have found their sales increase this week, and others have seen no change, such as small Bedworth business owner, Naomi, who has said that she does not feel that leaving the EU will make any difference to her home-based business. She says, “Mine is a local business and therefore unlikely to be affected by this.” Another small business owner, who requested anonymity, thinks it is too soon to tell if there has been, or will be, any major impact and says “I have been employed on several EU grants. I expect that any withdrawal from the EU will take a couple of years at least – by which time I will have formulated alternative strategies to cope with the changing market place.” However, larger businesses, including those in the FTSE 250, have been warned not to be misled by the shares revival. www.fool.co.uk says that foreign investments may be reduced and there is likely to be “considerable volatility” over the coming years.
Whatever happens, the future still seems uncertain for businesses, students, and the UK economy. It may be several years before the effects are truly known.