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How the Predictions of No Deal Brexit Has Lead to an Extension Till 31 Jan 2020


Published on Dec 09, 2019

“The EU has revised the Brexit’s deadline from 31 October 2019 to 31 January 2020 as the MPs were unsuccessful in passing the new Brexit deal into law” – BBC News

Although Boris Johnson had proposed ‘no deal’ Brexit by 31 Oct 2019, with a ‘do or die’ notion, the advent of even more complexities in legal terms and practicality has led to the Brexit extension till 31 Jan 2020. Also, Johnson’s inability to get out of the stalemate prompted the general election on 12 December 2019.

What happens after the election? EU taxonomy

Why and when did Brexit start?

The UK joined the European Communities (EC) in 1973, looking forward to harnessing the benefits of: 

  • A barrier-free trade and travel among EC states

  • Strong common regulatory framework

  • EU funding to industries, science, and research.

However, the union has been a hindrance to the UK’s principle “that decision about the UK should be taken in the UK”; along with the ongoing compromises regarding its sovereignty including the control over immigration and its own borders. 

This belief served as a key driver in overpowering the economic consideration in favour of nationalistic fervour and ultimately leading the referendum in favour of Brexit (Britain Exit).

Brexit TimelineThe UK has already seen one referendum in 1975 when the people voted to stay with the European Economic Community (EEC). However, in the 2016 referendum, 52% of people voted to leave the EU. The referendum witnessed the historical turnout with 72% of the UK’s population casted their vote; of which 17.4 million opted for Brexit.

England election rateThough comprehensive plans were crafted to maintain harmony across citizenship rights and trade agreements for both the UK and the EU, the overshadow of no-deal Brexit churned the anxiety of commoners in the UK, leading to the opposition of their own Prime Minister’s statement “no-deal was not an outcome the government was seeking, but it is an outcome for which we are ready”.

So, How the future would have been for the UK with a No Deal Brexit

No Deal Brexit also known as Hard Brexit refers to the UK leaving the European Economic Community with no deals in place, implying all trade will come under the purview of the World Trade Organization’s rules, and services will no longer be provided by agencies of the European Union.

Nevertheless the exit agreement, Brexit is definitely creating havoc in businesses and households; causing a paradigm shift for both the UK and EU citizens’ livelihood. Here let’s discuss the aftermath and consequences that the UK might have faced with a ‘no deal’ Brexit. 

Trading – no more a piece of cake:

Expect delayed delivery of goods and essentials.

The port of Dover is the key supply route and handles 17% of the UK’s goods trade; up to 10,000 trucks pass through the port in a day. New boundary restrictions imposed due to Brexit would affect the entire supply chain due to traffic jams stretching to 80 miles; leading to long (min 48-hour) delays in delivery.

The UK sources ~30% of food from the EU, which would be subject to tariffs. If disruption prolongs, the UK is likely to face food shortage; especially in November and December as it is the worst time of year for food storage.

Origins of food consumed in the UK in 2017

A Perfect Storm for Health and Social Care:

The health and social care sectors are huge employers with 1.5mn and 2mn staff respectively; where about 5% of the registered workforce is from Europe. ‘No deal’ could worsen the staffing shortage that is currently overwhelming the health service. Furthermore, it can cause border delays for ‘just-in-time’ manufactured products used in the NHS, from relatively simple medical consumables such as syringes to complex biopharmaceuticals.

EU referendum

Additionally, as a world leader in medical research, the UK is likely to face havoc on the research funding that it benefits from the EU. Also, collaboration on rare diseases could also be put at risk as nearly a fifth of academics from various streams such as science, technology, engineering, and mathematics at UK institutions are from the EU.

About 27mn people in the UK have European Health Insurance Cards (EHIC) covering pre-existing medical conditions and emergency care. If there is no deal, then the cover provided by EHIC would cease to exist.

Social disparities and Asset losses to hit the nail on the head

The UK is likely to lose USD 900bn worth of assets to other locations which would result in ~0.8mn job losses and trouble for the real estate market.

Snowball Effect on Law and Order 

No-deal Brexit implies an immediate end to the UK’s access to data and EU instruments such as Schengen Information System, European Criminal Record System (ECRIS) and Europol, and an abrupt interruption in all forms of co-operation with the EU. This would significantly impact the UK’s policing and national security.

In a world where data is key to solving a crime and with the rapid growth of organised crime, it is going to be a tough assignment for the UK to effectively protect its residents.  With the current scenario, future security arrangements would take a substantial amount of time to negotiate.

Economic costs to be on thin ice

As per OECD (Sep 2019), the UK would face a near-term recession with a 3% GDP decline over the next three years. The Bank of England forecasts the total level of GDP to be 1.2% lower than it had expected three years ago.

Costs to UK businesses (tariffs and non-trade barriers) are GBP27 billion (GBP17.5 billion for remaining in the customs union).

Analysis commissioned by the Society of Motor Manufacturers and Traders (SMMT) predicts that falling back on World Trade Organisation (WTO) rules would add GBP3.2bn a year to car making costs making it difficult for the industry to be able to absorb without price rises and production cuts. 

AutoAnalysis’ data suggests that car prices would rise and annual output could fall to as little as one million by 2024.

UK real GDP growthBrexit is not an isolated event where the UK leaves the EU; it is a process that perhaps generations ahead will be dealing with. The result of the election on 12 Dec 2019, will impact citizenship rights and the political and economic environment. This momentous decision will be critiqued and studied by future historians to determine whether the decision was the right one.