New Brexit Landscape- Opportunity or Hurdle?
The Conservative Party had a sweeping majority last week; therefore, it is almost certain that Boris Johnson will now be in a position to deliver Brexit on 31st January 2020, as promised. Whilst, as we all know, there are sound arguments for and against Brexit, the firm’s Managing Partner, Rahul Batra outlines the opportunities it could bring for the United Kingdom.
First and foremost, there is no doubt that the UK leaving the EU would result in an immediate cost saving for the UK, as we would no longer be responsible for contributing to the EU budget. To put things in the right perspective, in the year 2016, the UK paid £13.1bn to the EU, however it also received £4.5bn worth of spending, making the UK’s net contribution to be £8.5bn. It has never been easy to ascertain if the financial advantages of EU membership e.g. free trade and inward investment, outweighed the upfront costs the UK has had to bear all these years.
The EU being a single market mandates imports and exports between member states as exempt from tariffs and other barriers- the EU-28 is treated as its own import/export block on the global stage. Services, including financial services, can also be offered without restriction across the continent. It is also an accepted fact that more than 50% of our exports go to EU countries.
Separating the UK from the EU gives the country an opportunity to negotiate its own trade partnerships instead of relying on a governing body to do it for us. Although we would no longer benefit from the trades arranged by the EU, we will also have the final say in what happens instead of being a contributing voice to the process. The UK could arguably compensate for those disadvantages by establishing its own trade agreements – and that most small and medium-sized firms, which have never traded overseas, would be freed of the regulatory burden that comes with EU membership.
In the wake of Brexit, a continued ‘tariff-free’ trading would be secured even when the UK leaves the single market. The UK had a large trade deficit with the EU; therefore, it would be in their best interest to find a compromise – for goods and financial services. On the other hand, the UK could cut links with Europe and reinvent itself as a Singapore-style economy, free from EU rules and regulations.
Sovereignty is undoubtedly seen as a major win as EU membership involved giving up some control over domestic affairs. EU institutions have been notorious in draining power from the UK parliament. Exiting the EU would allow the UK to re-establish itself as a truly independent nation with connections to the rest of the world.
The UK has not been able to prevent a citizen of another member state from coming to live and work in the UK, and Britons benefited from an equivalent right to live and work anywhere else in the EU. The result was a huge increase in immigration into the UK, particularly from eastern and southern Europe. According to the Office for National Statistics, in 2016 there were 942,000 eastern Europeans, Romanians and Bulgarians working in the UK, along with 791,000 western Europeans and 2.93 million workers from outside the EU. China and India were the biggest source of foreign workers in the UK.
The UK should now be in a position to “regain control” of its borders by adopting an Australian style points-based system, where only the best and the brightest talent can come and work in the UK.
The Migration Advisory Committee in its latest report advocated for review of the shortage occupation list (which has already been implemented), eliminating the need for Resident Labour Market test when sponsoring Tier 2 migrants, return of the Tier 1 Post Study visa amongst other positive immigration measures. This would undoubtedly create more jobs in the UK for the brightest talent.
There has been a growing concern that the UK has been leaving its “door open” to terrorist attacks by remaining in the EU. The open border does not allow the UK to check and control people entering the UK in the most efficient manner. In the wake of Brexit, such critical bilateral relationships would persist regardless of membership- it is simply absurd to suggest that the EU would put its own citizens, or the UK’s, at greater risk by reducing cooperation.
The EU has been well known to create and implement regulatory frameworks that do not always work in the UK’s best interests – the membership block is a bureaucratic burden with far too many regulations to follow. By creating a separation between the two governing structures, it becomes possible for our government to create a framework that is much more specific to the needs of the UK.
In conclusion, we are not advocating for or against Brexit; rather we are merely trying to look at the positive side of Brexit outlining the potential opportunities it brings for us as a nation. We respect the referendum and Boris’ deal- we just need to make it happen and step away from the uncertainty.
Please contact Rahul Batra at firstname.lastname@example.org or by telephone on +44(0) 20 3318 5794 should you have any questions.