What are the consequences of a no-deal Brexit?
A little more than a month is left until March 29, the day the UK is set to leave the EU after spending nearly half a century as a member. The bloc emerged out of the ashes of World War II, which brought the continent to its knees. The pursuit of deeper economic integration, and the need to reinforce the principles of liberty and democracy, birthed the politico-economic union we have today.
Even though the EU has had its fair share of crises, it boasts a $23 trillion gross domestic product, the second-largest in the world. This collection of advanced economies and modern societies has become one of the three major engines of the global economy, the other two being China and the US. There is an exhaustive list of the advancements and achievements tied to the level of integration among EU members, of which the UK is a part.
Well, until March 2017, when an ill-thought-out referendum meant to quiet Euroskeptics in the UK’s Conservative Party resulted in a shocking 51.9 percent of voters choosing to leave the EU. As a result, in the past two years no major news segment has concluded without some mention of Brexit and the numerous developments that go along with it.
The highly publicized tug of war in Westminster and Brussels has done little to calm nerves across the globe. Officials have continued to jostle on the particulars of this highly contentious divorce, amid calls for scuttling the entire ordeal to keep the status quo, while others appeal for a delay to iron out kinks.
From before the referendum until now, the UK has become polarized and paralyzed by anticipation and numerous predictions, from doomsday scenarios to murky utopias once “free” from Brussels. Such fault lines are certain to last long into the future, regardless of whether the UK crashes out of the EU or slinks away quietly to some unknown fate.
British Prime Minister Theresa May faces the daunting task of corralling votes in pursuit of an amicable break. The odds are not in her favor, as a raft of defections across the political aisle has further muddled the impossible mess in Westminster. Also, as many as 15 government ministers have threatened to vote to stop the UK leaving the EU if no deal is agreed, daring May to fire them should they vote against her next week.
Thus, it is increasingly likely that the UK will exit the EU without a deal. Or, by some stroke of luck, an 11th-hour appeal for a delay could spare the country from the innumerable ramifications of a no-deal Brexit. But what does that even look like?
Theresa May faces the daunting task of corralling votes in pursuit of an amicable break
First, there is a good chance that British consumers will see lighter wallets, since prices are currently lower as a result of EU membership. Telecommunications, travel and non-UK goods will likely cost more, especially when the value of the pound continues to slide. Consumers will have to spend more to get the same amount of goods.
Trade is likely to slow considerably as points of entry get accustomed to new regulations and tariff regimes. There is also the potential that the UK will have to establish its own quality standards after dismantling EU import quality standards.
Second, even though Brexiteers like to pontificate on the burdensome cost of EU membership, the benefits still outweigh the costs, and other countries contribute more per capita than the UK does. Worse yet, even if the UK wished to maintain access to the Common Market after Brexit, London will still have to contribute to the EU purse.
Third, UK universities and research institutes receive generous EU funding, which will likely dry up, affecting the country’s ability to make contributions to, and benefit from, ground-breaking innovations, technologies and other breakthroughs.
Fourth, as a net importer of energy, the UK’s energy security is vital, especially as a means to invigorate an economy reeling from post-Brexit woes. As part of the EU, the UK could easily secure its energy needs, negotiating from a position of strength with the rest of the bloc. Unfortunately, crashing out of the EU will see energy costs rise — some estimates put that increase at about £500 million ($653.7 million).
Fifth, in matters of international security and geopolitical influence, a lone UK is far less influential on the global stage than as a member of a union with the world’s second-largest economy. Also, working with other EU members via training, sharing intelligence and policy coordination has helped keep Britain safer.
Sixth, immigration — one of the hot-button issues for Brexiteers — will also see some effects. Brexiteers claim that the mass migration of (especially blue-collar) labor into the UK burdened health and welfare systems while denying employment opportunities to indigenous workers.
To them, Westminster had lost the ability to direct its own immigration policies, which were supplanted by EU mandates for the free movement of people across borders. Unfortunately, even if the UK does leave the bloc, access to the single market will likely still force Westminster to accept the free movement of EU labor.
All in all, Europe and the UK are in unchartered territory. The daily deluge of news reports, analyses and developments in the ongoing Brexit saga will continue to inundate onlookers elsewhere in the world. There is no telling what will happen after March 29, and the British government has not restored any confidence in its ability to calmly navigate these storms.
• Hafed Al-Ghwell is a non-resident senior fellow with the Foreign Policy Institute at the John Hopkins University School of Advance International Studies. He is senior adviser at the international economic consultancy Maxwell Stamp, and at the geopolitical risk advisory firm Oxford Analytica. He is also a member of the Strategic Advisory Solutions International Group in Washington DC, and a former adviser to the board of the World Bank Group. Twitter: @HafedAlGhwell