For months, international media has been speculating about the possible outcome of Brexit. Some fear the activation of Article 50 of the Lisbon Treaty might bring around an economic recession, widening the poverty gap amongst Britons. Others believe that the time is ripe for Britain to lead, both economically as well as within the international political arena.
The head of the British Bankers’ association warns that major finance corporations are planning to relocate away from London as soon as early 2017. There seems to be a consensus amongst European leaders to deny the UK the freedom of movement of goods and services, should it decide to leave the EU. With banking and other financial services being the UK’s largest exports, David Davis [Brexit secretary] and Phillip Hammond [Chancellor of the exchequer] need to step up their efforts in making sure that this crucial industry gets minimal harm. It is estimated that the trade of financial services from the UK to Europe amounts to more than £20 billion annually.
When Theresa May formed Her Majesty’s government back in July, she appointed Liam Fox, a Brexit campaigner as Secretary of state for International Trade. Being aware of the advantages the single market had to offer to the UK, Prime Minister May appointed Mr. Fox to the cabinet specifically to renegotiate Britain’s trade deals with the rest of the world. As a country which revolved its economic activity around trade for decades, it is essential for Britain to remain a key player in international trade.
The Australian Government has ruled out a trade agreement with the UK until it departs from the EU. Economists have warned that the pound sterling may plunge to a record low once Article 50 is activated. Whilst the IMF had originally predicted a post-Brexit recession, it now believes a growth of 1.7% can be achieved during 2016, making it the second fastest growing economy amongst the G7 group. On the 3rd November 2016, the High court in London ruled that only parliament can trigger Article 50 of the EU treaty. The British Government believes that it has the right to invoke Article 50 under the royal prerogative, which gives it sole authority over foreign policy and over the making and unmaking of treaties. The court has rejected this argument, arguing that Britain’s EU membership is domestic law.
As politicians, analysts, economists and other stakeholders share a different opinion on the outcome of Brexit, one must realise that uncertainty and speculation can have dire economic and political consequences. The sooner the Brexit negotiations are concluded, the better.
The author Dario Cacopardo, is 19 years old and is currently reading for a Bachelor of Commerce in Economics and Public Policy.