We are on the 29th of march 2019, it is midnight: the United Kingdom plunges in the unknown. After months of negotiations, and despite the emergence of an agreement between this country and the european Union, no agreement was finally reached between the two parties. Since then, the country began a “hard Brexit”, or “no deal, “Brexit” and out of the Union without the preliminary framework. This scenario, considered unlikely a few weeks ago, just to earn credibility in the aftermath of the rejection of the proposal from Theresa May to the british Parliament on Tuesday evening. A sensational debut of the Union, however, would have major consequences for the overall economy of the United Kingdom, and affect all the companies that the everyday life of the citizens of her Majesty.
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● Growth
Two reports published at the end of November to discuss this topic: one, published by the british government and the other by the central Bank in English. In the long term, the uk government believes that a lack of agreement will lead to a decline of 7.7% of GDP next year, a sharper decline after the recession of 2008. In the long term, however, the authorities consider that “the economy will continue to strengthen, regardless of the scenario” of Brexit. The main aspect that would limit the economy would be all new tariff and non-tariff trade, including customs duties. The analysis also includes the impact of “no deal” on economic migration, which would penalize also the economy. For its part, the Bank of England also arrives at a “maximum impact” estimated a decrease of 8% of GDP.
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in comparison, the uk government believes that the decline in GDP would be much less important if a agreement was signed: it would then be between 0.6% and 2.5% depending on the scenarios. In the long term, a “no deal” would also limit the growth potential of the country, which would develop its economy from 9.3% less than if it remained in the Union on the same length of time.
● Unemployment
today established around 4.1%, the unemployment rate could explode in the event of a “Brexit” without agreement: the uncertainty, the decrease in productivity, difficulties of supply, the less demand, the initial difficulties to re-establish a normal activity would limit the number of hires and would put the companies in difficulty, causing layoffs. According to the Bank of England, a break up disorderly with the european Union would cause “significant structural adjustments” to almost double the unemployment rate, from 4.1% to over 7.5%. In the long term, it would come down then, from 2020 to 2023, and repasserait below 5% in four years. For the moment, the Brexit had no effect on employment: unemployment has fallen steadily since 2014 in the United Kingdom.
● Inflation
again, the available data coming from the analysis of the Bank of England. The establishment of customs duties and the difficulties encountered – at least during the first few months – to obtain certain products would result in price increases, massive inflation would be between 4.25%, and 6.5% in 2020, before returning on the long term at its current level. The government of Theresa May promises that it will put in place a macroeconomic framework to keep inflation “low and stable”.
● Rate of interest, rate of exchange
In the mirror of the economic difficulties, the rate of interest would rise between 1.8% and 5.5% in the worst-case scenario, considered unlikely, however. In parallel, the interest of the national debt in the uk would increase also: according to the projections made by the government, they could increase of 12.8 billion pounds sterling compared to the current arrangements of the State.
According to the Bank of England, “Brexit” messy would lead to a depreciation of the pound sterling of the order of 25%.
● Trade
This is one of the most dreaded of “Brexit” without agreement: the challenge is immense, while the United Kingdom carried out, in 2015, more than 55% of its imports and 45% of its exports, in value, from and to the european Union. New barriers such as customs duties would thus have an effect feared by the business community. According to projections from the british government, “Brexit” without agreement would lead to a decrease of 37% in average of the total volume of trade between the Union and the United Kingdom. In total, british exports would decline by 12% and imports by 18%.
In parallel, the Bank of England points out that many unknowns remain, for example in the sanitary and hygienic requirements, the known quality of the products, the “passport” that is essential to financial services, or the license essential for certain services in order to operate in the european Union.
● real Estate
various forecasts are pessimistic: in the event of a Brexit, without agreement, the real estate prices could fall 25% to 35% in three years. The average price of housing in london are already trending downward for several months, after many years of uninterrupted growth.
● Research, education
in Early January, 150 higher education institutions in the uk have co-signed an open letter warning the parliamentarians against the risk of a lack of agreement on teaching and research. “We host one of the best ecosystems research in the world, which attracts the best students and partnerships from around the world, and we must not allow this to be compromised by “Brexit” without agreement”, writes professor Janet Beer, chair Universities UK.
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The signatories of this message are also concerned about the loss of european funds essential for the proper development of scientific research, for example on topics such as new technologies, the fight against cancer or global warming. “The programmes of the european research Council and Marie Skłodowska-Curie Actions will account for approximately € 1.3 billion in the Uk in the next two years” and help fund research, “vital”, warn the authors, who see the loss of these european funds as a major risk for their work.
● Transport
The return of borders uk will be at a price. The british airlines and the european would lose the automatic right to operate flights between the european Union and the United Kingdom, and should seek informed consent, and the Eurostar. At the same time, the ferry should strengthen their links with the continent in order to overcome the shortcomings and difficulties on the road.
authorities are particularly concerned about the possibilities of traffic jams, monstrous, between the Albion and the continent. “New control procedures at the customs will cause delays at the border,” in airports, train stations, ports and on the roads, say the experts of the Bank of England as their counterparts in the government of his Majesty. For the time being, the government of Theresa May seems little prepared to deal with plugs: ten thousand trucks on average spend daily in Dover, and lengthen the time required to complete the administrative formalities of only two minutes would cause, in fine, the plugs of almost 30 kilometers, according to the estimates of the port authorities. A road test was conducted in early January, in order “to test the effectiveness of the measures” provided for in the event of leaving without agreement. Featuring 87 trucks only, this test has been widely criticized and deemed inadequate by the elected representatives in the uk.
● daily Life
driving Licence, streaming, digital data, online shopping, weight of the in the administration of the life business… All areas would be affected by “Brexit” without agreement, and would have to negotiate with their european partners to return to a rhythm and a classical operation. For example, the British would have to pay roaming charges when traveling in the european Union, and the banks may also establish commissions in case of use of credit card by a european customer in the United Kingdom or the british in the Union. Similarly, the trade could no longer use european labels as a sign of quality of its products. The government’s Theresa May has also stored a quantity of superb drug to deal with a potential shortage of nearly five months. The country will continue to follow, at least temporarily for the testing and certification european in this field, but will leave all the same as the european medicines Agency and will be required to put in place its own studies. Some of the topics that still need to be addressed, so that the deadline for the Brexit approach dangerously.
