What if the UK just leaves?

By Pawan Naidu

After securing an extension earlier this year, the U.K. is now scheduled to leave the EU on Oct. 31. Even though Parliament voted not to leave the union without a deal, Prime Minister Boris Johnson has told EU officials the U.K. is leaving the EU on Oct. 31 whatever the circumstances. So what exactly would happen to the EU if they leave without a deal?

On June 23, 2016, the U.K. voted to leave the EU by a slim 52 to 48 percent margin. The Prime Minister David Cameron resigned the next day and Teresa May was chosen to lead the two year transition of leaving the EU. May put in front of parliament her deal three times, but was defeated each time. The deal was primarily rejected because supporters of Brexit were upset the deal didn’t not include a “hard” border between Northern Ireland and the Republic of Ireland (where the EU and U.K. meet). Boris Johnson was elected as Prime Minister in July and is now tasked with overseeing the U.K.’s separation from the EU with or without a deal.

If the U.K. does end up leaving without a deal it also means that a 21 month transition that the EU is offering will not take place. Consumers, businesses and the public would need to respond immediately big changes to trade and immigration.

“The U.K. would leave the EU and everything associated with that would come to an end,” Dr Simon Usherwood, a reader in politics at the University of Surrey, told iNews. “[A no deal] doesn’t stop the U.K. leaving but it means there is absolutely no clarity about what happens.”

Trade

If the U.K. exits without a deal, it will mean that they revert to the World Trade Organization’s rules of trade. They would longer be bound to the EU rules on trade and they will face tariffs on their goods and services exported to EU countries.

Pro-Brexit economists have argued that most world trade is done through the WTO, which will give Britain access to EU markets. Other economists have argued that although the U.K. could indeed adjust, WTO terms would be damaging for several sectors of the British economy, including services, manufacturing and agriculture.

A no deal scenario could impact trade with the rest of the world as well. Currently the U.K. trades with the world as a member of the EU. Some 40 existing trade agreements fully or partly in place between the EU and dozens of countries would no longer apply to the U.K.

The Confederation of British Industry estimates that 90 percent of the U.K.’s exports to the EU would face tariffs. The average tariff on UK exports to the bloc would be 4.3 percent, it calculates, while the average on imports from the EU into the U.K. would be around 5.7 percent. Tariffs in some sectors – for example in agriculture and food, the car industry and textiles – would be “significantly higher”.

New trade barriers as a result of a hard Brexit could discourage major businesses in investing in the U.K. Nissan has cancelled plans to build a new model in Britain, Jaguar Land Rover has announced job cuts, while Ford has warned of more cuts if there is a no-deal Brexit. Honda has announced plans to close a factory, but denied that Brexit was a reason.

Immigration

Immigration played a central role in the campaign to have the U.K. leave the EU. There were worries about immigrants and refugees arriving and taking the British nationals jobs. There was also a worry about a changing culture that people wanted to fight back against.

If on Halloween there is a hard Brexit, the British government will no longer be bound to the EU laws regarding the free movement of people and will be licensed to create their own laws regarding immigration.

One of the main basis of the EU is the free movement of people. This means that nationals from any member state of the EU can take up employment in any other member state on the same conditions as the nationals of that particular member state.

In the decade leading up to the referendum, net migration — the difference between the number of immigrants (people coming into an area) and the number of emigrants (people leaving an area) throughout the year — from the EU to the U.K. soared. This increase was largely made up of lower-skilled migrants from the eight new Eastern European countries, namely the A8 group of countries, comprising Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia, which joined the EU in 2004.

The U.K., along with Ireland and Sweden, decided not to impose labour access restrictions on citizens from these countries, an option that is available to all EU members during the initial seven years of the new members’ accession agreement.

A proposed plan for the post Brexit U.K. is “The U.K.’s future skills-based Immigration System.” The plan states to “prioritize high-skilled workers” and the same criteria will apply for EU and non-EU citizens. During during the transition period the U.K. will implement the EU Settlement Scheme. This gives EU citizens already here, and also those who arrive in the UK during the Implementation Period, the opportunity to secure their future residence in the UK.

Under this proposal the U.K. will not impose visa requirements for short-term stays and has existing youth mobility arrangements with certain countries and we will be looking to expand these.

Students traveling to the U.K. to study will need to obtain “permission” before they travel. With the exception of non-visa nationals who can be granted entry as a short-term student for a course up to six months without permission to travel.

The proposal also states that the U.K. will continue to provide support and protection to refugees under their existing resettlement schemes, including the Vulnerable Persons Resettlement Scheme and the Vulnerable Children’s Resettlement Scheme.

While pro-Brexit economist say one thing and other economists say another, there seems to be a lot of uncertainty about what a post-Brexit will look like. One thing we do know for sure is that Europe and the world will be different after Brexit. Trade agreements and migration patterns are going to change drastically and the U.K., the EU and the world are going to have to adjust.

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