The world, Britain especially wake up on Friday to the news that the UK in a referendum has decided to leave the European Union.
Results released early on Friday by UK authorities indicated that 17, 410,742 Britons voted to leave EU, while 16,141,241 others voted to remain.
What could be the negative implications of this ‘victory’ over EU?
1. Trade implications
The EU is a single market in which no tariffs are imposed on imports and exports between member states. Britain also benefits from trade deals between the EU and other world powers. Britain will lose some of that negotiating power by this move.
2. Weaker currency
Brexit would also likely cause the sterling (£) to be weaker. This already has been manifesting.
3. Higher inflation
A lower pound sterling means that imports would become more expensive. This is likely to mean the return of inflation – a phenomenon with which many Britons are unfamiliar with because prices have been stable for so long, rising at no more than about 2 per cent a year.
4. Less foreign investment
There will be less investment from overseas companies. Foreign firms invest in UK because of the access to the free EU trade market and this, will cease to exist.
5. Diminishing Status
UK's status as one of the world's biggest financial centres will be diminished if it is no longer seen as a gateway to the EU for the likes of US banks
6. Impact on manufacturing
Fears that car-makers could scale back or even end production in the UK vehicles could no longer be exported tax-free to Europe were underlined by BMW's decision to remind its UK employees at Rolls-Royce and Mini of the "significant benefit" EU membership confers. Those benefits now have been voted against and the workers await what the implication would be.
7. Less accruable tax
According to Business for New Europe, tax revenues would drop if companies that do large amounts of business with Europe – particularly banks – moved their headquarters back into the EU.
8. Labour deficit
A drop in immigration would, all else being equal, mean more jobs for the people who remained, but labour shortages could also hold back the economy, reducing its potential for growth. Writing for the London School of Economics, Professor Adrian Favell says limiting freedom of movement would deter the "brightest and the best" of the continent from coming to Britain and reduce the pool of candidates employers can choose from.
9. Labour immobility
Free movement of people across the EU also opens up job opportunities for British workers seeking to work elsewhere in Europe. But now, that may have to seek visas and permits to work in EU countries.
10. Reduced European influence
Brexit would result in the country giving up its influence in Europe, turning back the clock and retreating from the global power networks of the 21st century.
11. Great security implication
Defence Secretary Michael Fallon has also said the UK benefits from being part Europe, as well as NATO and the United Nations. "It is through the EU that you exchange criminal records and passenger records and work together on counter-terrorism," he said. This exit may on the negative side restrict UK access to what may be perceived as ‘EU classified.’
12. More expensive foreign holidays
The Prime Minister will probably say that the Government stands ready to do whatever it takes to protect the British economy, but there are limits to what it could actually do. One of the first practical effect of a vote to Leave, therefore, is that the pound will be worth less abroad, meaning foreign holidays will cost us more.
Results released early on Friday by UK authorities indicated that 17, 410,742 Britons voted to leave EU, while 16,141,241 others voted to remain.
What could be the negative implications of this ‘victory’ over EU?
1. Trade implications
The EU is a single market in which no tariffs are imposed on imports and exports between member states. Britain also benefits from trade deals between the EU and other world powers. Britain will lose some of that negotiating power by this move.
2. Weaker currency
Brexit would also likely cause the sterling (£) to be weaker. This already has been manifesting.
3. Higher inflation
A lower pound sterling means that imports would become more expensive. This is likely to mean the return of inflation – a phenomenon with which many Britons are unfamiliar with because prices have been stable for so long, rising at no more than about 2 per cent a year.
4. Less foreign investment
There will be less investment from overseas companies. Foreign firms invest in UK because of the access to the free EU trade market and this, will cease to exist.
5. Diminishing Status
UK's status as one of the world's biggest financial centres will be diminished if it is no longer seen as a gateway to the EU for the likes of US banks
6. Impact on manufacturing
Fears that car-makers could scale back or even end production in the UK vehicles could no longer be exported tax-free to Europe were underlined by BMW's decision to remind its UK employees at Rolls-Royce and Mini of the "significant benefit" EU membership confers. Those benefits now have been voted against and the workers await what the implication would be.
7. Less accruable tax
According to Business for New Europe, tax revenues would drop if companies that do large amounts of business with Europe – particularly banks – moved their headquarters back into the EU.
8. Labour deficit
A drop in immigration would, all else being equal, mean more jobs for the people who remained, but labour shortages could also hold back the economy, reducing its potential for growth. Writing for the London School of Economics, Professor Adrian Favell says limiting freedom of movement would deter the "brightest and the best" of the continent from coming to Britain and reduce the pool of candidates employers can choose from.
9. Labour immobility
Free movement of people across the EU also opens up job opportunities for British workers seeking to work elsewhere in Europe. But now, that may have to seek visas and permits to work in EU countries.
10. Reduced European influence
Brexit would result in the country giving up its influence in Europe, turning back the clock and retreating from the global power networks of the 21st century.
11. Great security implication
Defence Secretary Michael Fallon has also said the UK benefits from being part Europe, as well as NATO and the United Nations. "It is through the EU that you exchange criminal records and passenger records and work together on counter-terrorism," he said. This exit may on the negative side restrict UK access to what may be perceived as ‘EU classified.’
12. More expensive foreign holidays
The Prime Minister will probably say that the Government stands ready to do whatever it takes to protect the British economy, but there are limits to what it could actually do. One of the first practical effect of a vote to Leave, therefore, is that the pound will be worth less abroad, meaning foreign holidays will cost us more.
