27.01.2020 Author: Vladimir Odintsov

Brexit: UK’s Paradise Lost?


By the end of this month London will be bound to formally leave the European Union, marking the beginning of a transition period. During this period all involved parties must agree on how to regulate their trade, finance and other areas of common interests, thus pre-arranging the final separation of the United Kingdom from the EU, which must conclude by December 31, 2020. The European side believes that there’s no way that it’s even possible to agree on anything within such a small timeframe, especially when there’s no shortage of disputed questions in play.

Although the question of London’s abandoning the EU has already been resolved and there’s a set date when this is to happen, the issue is still widely discussed not only in the European Union and Great Britain, but also across the globe.

Last July, upon taking the position as Tory leader, Boris Johnson didn’t just promise to successfully implement Brexit, but he vowed that his government would change the country for the better without the EU. In particular, he stated back then with unexpected bravado that:

And we are once again going to believe in ourselves and what we can achieve. And like some slumbering giant, we are going to rise and ping off the guy ropes of self-doubt and negativity with better education, better infrastructure, more police, fantastic full-fibre broadband sprouting in every household. We are going to unite this amazing country and we are going to take it forward.

In a certain sense, this statement was in tune with the promises made by Theresa May two years ago after the British referendum on Brexit, when she bravely laid out the strategies, desires and aspirations of the British government and the bright future ahead of the UK.

But is there any reason for the British public to rejoice at the steps taken by its leaders, and is the paradise promised going to materialize in the weeks and months to come?

It is no longer a secret to anyone that the referendum on the fate of British membership in the EU was stolen by the manipulations of the United States, through an asset of its intelligence agencies working hand-in-hand with a number of Western and Middle Eastern countries. As it’s been noted by American media sources, Brexit has clearly demonstrated that those traditions that were the backbone of the United Kingdom are gradually collapsing. Since this referendum the kingdom with its protracted negotiations over the terms of its exit resembled a terminal patient kept on life support, with no more than a threat keeping together the union of England, Scotland, Wales and Northern Ireland. The prospect of this whole balance collapsing under its own weight left local politicians in a state of perpetual shock.

It’s well-understood the UK is entering a period of uncertainty, since no one can predict all the risks and all the benefits of the decision to leave the EU. Moreover, they cannot be properly calculated. Brexit supporters, of course, predict a great future for Great Britain achieved by the quick signing of trade agreements with both the EU and the US. However, so far we have seen nothing but a significant decline in the economic growth of the kingdom which came as no surprise to analysts, as businesses do not like uncertainty, therefore they reduced their production levels, as delivery chains came under strain.

So far, the economic advantages of Brexit are yet to be seen, while the economic damage inflicted by the decision to leave the EU remains clearly visible. A month ago, Bank of England experts predicted that by the end of 2019, UK’s GDP growth could plummet to 1%. The slowdown was largely associated with a decrease in foreign trade and the departure of large financial entities that were scared by the “bad divorce” between London and Brussels, a fact that paves the way for new economic difficulties in 2020. Against this background, in the last quarter of 2019, the Confederation of British Industry (CBI) business optimism indicator fell from –32 to –44.

Brexit has led to an exodus of wealthy foreigners from the country, Bloomberg says. It’s the people who have accumulated a fortune of 5 million pounds or more that are leaving. Together with their families they head to Paris, Zurich, Brussels, Geneva, Mallorca, and a number of Italian cities.

The financial sector has always contributed more to the British treasury than any other niche of the economy, bringing some 75 billion pounds a year. Yet, major banks and financial institutions are now heading out, which in itself constitutes a severe blow to the country’s economy. Moreover, companies that used to work with those banks may choose to follow their example. The European Banking Agency – the EU banking regulator – is now moving from London to Paris. Banks and other financial entities have already exported at least 1 trillion dollars in assets from the country. This figure amounts to roughly 10% of all the assets stored in the UK banking sector.

Residents of the UK are afraid that due to the country’s exit from the EU, they may experience problems with the acquisition of drugs vital for their physical survival, so they have already started buying such medicines in advance, notes The Guardian.

Brexit may result in the collapse of the entire car industry of the UK, local media sources say. Foreign companies have already begun laying off their employees in the UK. Thus, Jaguar Land Rover (JLR) factories owned by the Indian company Tata, which provide jobs to some 18.5 thousand people, have recently fired four and a half thousand employees.

The biggest uncertainty regarding Brexit is that it is completely unclear how Boris Johnson’s cabinet will compensate for the losses associated with the loss of the European market, which accounts for a half of all export earnings of British manufacturers and service providers. The markets of Canada and Australia can not be compared with that of Europe, and Trump’s promised “massive deal” with the UK can turn into just another beautiful promise of the “beautiful days to come”, which Boris Johnson likes to refer to so often.

In November, during a speech at the College of Europe in Bruges, Donald Tusk expressed the opinion that Brexit may as well be the real end of the British Empire. According to Tusk, upon leaving the EU, the UK will eventually become an outsider, a second-rate player, while China, the United States and the European Union will be the ones to compete for leadership.

Vladimir Odintsov, expert politologist, exclusively for the online magazine ‘New Eastern Outlook’.

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