by Leon Benskin
On June 2016, the British electorate made the monumental decision to leave the European Union in the United Kingdom European Union membership referendum. 52% of votes cast favored an EU exit, with the referendum yielding a national turnout of 72% (the highest recorded for a UK-wide referendum and any national vote since the 1992 General Election) (Hunt, A. and Wheeler, B. (2016). The UK government has reiterated its intention to invoke Article 50 of the Treaty on European Union, the formal withdrawal procedure, by the end of March 2017. This would therefore put the UK on course to leave the European Union by March 2019. This has undoubtedly created a period of instability and insecurity with an array of challenges facing the United Kingdom post-Brexit. Within this essay, I intend to analyse the economic, social, and political challenges the United Kingdom faces post-Brexit and shall conclude that although it is almost an impossibility to meet the EU related challenges, Britain is more than likely to meet domestic issues albeit in the wake of an inevitable ‘hard’ Brexit.
One of the biggest challenges the United Kingdom faces post-Brexit is negotiating a trade agreement which retains access to the EU’s single market. When the United Kingdom joined the then European Economic Community in 1973, one of its core objectives was the development of a common market which eventually became a single market (Blair, 2010). Proponents of Britain’s continued membership of the EU during the referendum cited the perceived economic benefits of the single market. The ‘single market’ refers to the free movement of goods, capital, services, and people within the EU and full access is exclusive to EU member states (Pelkman, 2013). In 2016, the European Union’s GDP was an estimated $16.7 trillion, 22.8% of global GDP (IMF, 2016). Access to the $16trillion single market is crucial to British enterprise and Britain’s economy because of the level of foreign investment it attracts. The United Kingdom has been the EU’s leading investment destination due to its access to the single market as foreign firms saw the UK as a path to other EU markets. In 2014, Britain possessed the second largest stock of inward investment – accounting over £1 trillion and 7% of the global total (Gov, 2016).
One discussion point which has arose for post-brexit Britain is the adoption of other states trade policies with the EU. The UK government has the option of many trade models including the Norwegian, Swiss and Turkish, all of which would offer limited access to the single market at the expense of either free movement of people or contribution to the EU budget – which the British electorate would surely be unwilling to accept given a large portion of Brexit voters wanted to restrict the movement of people. Additionally, these options would mean limited access to the single market. The UK would also lose its significant voting and veto rights over EU laws. Loss of influence in voting would be felt heavily by UK business as they would be unable to protect and promote the interests of British firms involving tariffs and taxation. The UK would not be able to dictate its future relationship with the EU as any model other than the basic World Trade Organization arrangement needs approval in the European Parliament. It would be neither quick or straightforward to establish fresh trade relations. Reciprocating previous trade deals such as the Canadian trade model would also be unideal given “services account for almost 80% of the UK economy and the EU-Canada trade agreement does not offer anywhere near the level of access the UK’s previous arrangement did and financial services companies would not benefit from passporting under the agreement” (Gov, 2016). It is increasingly unlikely that any trade option Britain negotiates will retain full access to the single market to the extent of its prior deal with the EU without securing the free movement of people or contribution to the EU budget, making many pledges made by the leave campaign redundant. Therefore, the United Kingdom has no other choice than to embrace a hard Brexit and an exit from the single market, or negotiate a bespoke deal, unique to Britain.
Although much of the concern for Britain post-Brexit have been from an economic standpoint, the social challenges Britain face during this period is of equal importance. A leave campaign engulfed in nationalism and provocative rhetoric has facilitated an increase in hate crime in England and Wales, therefore combatting rising nationalism and fostering greater social division. After an extremely divisive referendum, preventing hate crime and encouraging greater integration between EU nationals and British-born citizens is paramount. “Per official Home Office statistics, racial and religious abuse incidents recorded by police in England & Wales have risen by 41% a month after the Brexit vote. 3,886 crimes were recorded in July 2015, compared to 5,468 in July 2016” (BBC, 2016). Despite a decrease in the subsequent month, hate crimes have remained at a higher level than before the referendum. The amount of hate crimes in 2015-16 were up 19% from 2014, with reported hate crimes rising 57% four days after the referendum (BBC, 2016). One of the most notable instances of hate crime post-Brexit occurred last August when Arkadiusz Jozwik, a Polish national, was attacked by six teenagers and died in hospital as a result of injuries he sustained. Ultimately, hate crime has decreased since the tragic events of the summer but remains a social concern (BBC, 2016). It’s extremely difficult to determine whether the spike in hate crime was down to a greater volume or reports or incidents as hate crime typically goes unreported. The government has recently announced plans to tackle hate crime in both England and Wales with police handling of such incidents to be reviewed.
Arguably the most worrisome challenge that the United Kingdom faces post-EU regards political status of Scotland – ensuring a ‘United’ Kingdom whether hard or soft Brexit. Two years prior to the EU membership, Scotland voted to remain part of the United Kingdom in the 2014 Scottish referendum – however two years removed and the future isn’t so clear. Scotland overwhelmingly backed remaining in the European Union by 62-38% (Hunt, A. and Wheeler, B. 2016), but the whole UK opted to leave which has raised the prospect of Scotland being withdrawn from the EU against its will. “A draft bill on a second Scottish independence referendum has been published by Scottish First Minister Nicola Sturgeon who’s pledged to host a poll if a hard Brexit were to be the case, directly challenging incumbent Prime Minister Theresa May” (Brooks, 2016). As it has been made clear that separate negotiations by EU institutions with pro-EU regions of the United Kingdom (eg Scotland, Northern Ireland, and London) would be in violation of the Lisbon Treaty – which keeps the integrity of a member country explicitly under protection, Scotland has no chance of avoiding a hard Brexit. Sturgeon has proclaimed that Scotland may block legislation required to leave the EU, employing filibuster-like tactics to prevent an EU exit. The legality of such an action is questionable and highly controversial as it would defy the results of the referendum. It is possible that a ‘hard’ Brexit would lead to Scotland to redefine their relationship with the United Kingdom, and perhaps devalue the pound even further.
In conclusion, the challenges that the United Kingdom faces post-EU are almost an amalgamation of the many problems Britain has faced over the past six decades: the devaluation of the pound, question of Scottish independence, rising nationalism facilitating hate crime and the possibility of recession. The challenges that Brexit produce range in complexity, but during the post-EU period of undoubted instability and uncertainty – one can only remain optimistic. In regards to economic implications it is quite clear Britain will not find a better deal accessing the single market than it already possesses and shall probably be excluded from the single market as a whole because of refusal to adopt the core principle of freedom of movement. Hate crime will be blatant and undeniable, however there’s reason to believe that greater emphasis placed on curbing racial abuse by politicians and police commissioners will help suppress it. Scottish Independence seems likely second time around given the inevitability of a ‘hard’ Brexit.
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