Hard Brexit

 Hard Brexit

Introduction

On June 23^rd, 2016, a significant proportion of British citizens voted in favor of Brexit. The citizens’ decision was motivated by different reasons (Kauders 2016). Despite the Brexit vote, there has been a lack of consensus on the approach that Britain should adopt in enacting Brexit. This led to emergence different approaches to Brexit amongst them the ‘hard’ and ‘soft’ Brexit. Under the ‘hard Brexit’ approach, Britain will completely break from the European Union while under the ‘soft Brexit’ Britain will remain in the European Union (EU) single market as non-European Union associate (Kauders 2016).

As the Britain Prime Minister, Theresa May is committed at enacting Brexit.  However, the Prime Minister is increasingly inclining towards the ‘hard Brexit’ approach.  Enactment of ‘hard Brexit’ may lead to long term negative impact on the UK economy.  One of the areas that the concept of ‘hard Brexit’ might impact relates to international relations. Alalade (2017) affirms that ‘British international relations will strain under the pressure of Brexit and the changes yet to come’ (p. 37).Therefore, it is imperative for decision makers charged with the responsibility of enacting Brexit to understand the issues associated with enactment of the ‘hard Brexit’ approach. This paper entails an analysis of some of the issues that Britain is likely to encounter from the ‘hard Brexit’.

Analysis

The European Union is founded on the concept of liberalism, which advocates for economic integration in order to foster economic growth (Kauders 2016). Under the liberal system, Britain was required to eliminate barriers to cross border movement that apply to people, goods and services. However, Britain has over the past few years perceived the EU liberal economic system to be a hindrance to the country’s economic growth, which forms the foundation of Britain’s decision to exit the EU. One of the issues that motivated the British government to enact ‘hard Brexit’ is to control immigration and free movement of European Union nationals into Britain. By enacting ‘hard Brexit’, Britain intends to control free movement of EU citizens into Britain. Enactment of ‘hard Brexit’ means that Britain will shift from its current neoliberalism system, which advocates for free movement of people and goods across countries (Chomsky 1999). Therefore, entry of EU nationals into Britain will be restricted. In the quest to control free movement of EU workers, Britain may develop specialized work permits, hence limiting Britain’s reputation as an open and tolerant society (Alalade 2017). This will negatively impact the labor mobility. This means that Britain’s access to the EU labor market will be limited. A survey conducted by the Office for Budget Responsibility (OBR) in Britain projects that enacting hard Brexit will significantly lower Britain’s supply of labor. This could cost Britain over £ 6 billion annually because of few workers in Britain ().

In addition to the above aspect, implementation of hard Brexit will significantly curtail the ease of British citizens travelling to other EU countries. For example, Britons will be required to apply for visas in order to travel to the Schengen Zone, which is an area comprised of 27 EU members. Countries that are signatory to the Schengen Zone have abolished the passport requirement, which makes it easy for citizens from member states to travel to these countries.   Thus, hard Brexit will result in decline in simplicity and increase in the cost incurred by British citizens in travelling to the Schengen Zone (Kauders 2016).

Implementation of ‘hard Brexit’ approach will further curtail free trade, which is based on the concept of neoliberalism. On the basis of the ‘hard Brexit’ approach, Britain will become a protectionist economy (MacShane 2015).  Britain’s access to the EU single market will be limited. As a member of the EU, Britain benefits significantly from the single market system. Britain is able to trade with trade freely with the other 30 members of the EU due to elimination of quota or tariff barriers (Kauders 2016). Hard Brexit will mean that Britain will not easily access the EU free market. This will have significant negative impacts on the Britain. Currently, Britain’s export into other EU member countries account for 12.9% of Britain’s Gross Domestic Product (Kauders 2016). By losing the EU single market, Britain will be forced to seek an alternative approach to replace the decline in the value and volume of trade. Britain might experience a challenge in replacing the lost value in trade. The 12.9% loss in the country’s GDP is relatively high than the 10% generated by the manufacturing sector. Rodionova (2016) asserts that ‘Britain’s GDP will be within minus 0.8% to plus 0.6% by 2030’ (para. 6).  Britain will be required to negotiate trade agreements with other non-EU countries in order to caution itself against the expected decline in GDP.

Britain’s inability to access the EU single market as a result of enacting hard Brexit might trigger some multinational companies operating in Britain to consider exiting Britain and relocate to other EU countries. One of the factors that might trigger firms exiting Britain entail increase in the degree of uncertainty associated with doing business in Britain. For example, Rodionova (2016) asserts that approximately 40% of US firms that have established an operational base in the UK are considering relocation to other EU countries. Implementation of such a decision could have significant negative impact between the US and Britain.

Considering the benefits associated with the single market, it is essential for Britain to consider a realism approach in enacting ‘hard Brexit’. Shimko (2015) affirms that realism is concerned with putting national interests first. Country’s failure to put its national interest first might result in such a country being dominated by other countries. By enacting the concept of realism in its international relations, Britain will succeed in protecting its economy. Britain can achieve this outcome by establishing international relationship with individual EU countries as opposed to being a signatory to the European Union. In enacting the realism approach, Britain can consider establishing trade relations with other non-EU countries in an effort to address the decline in GDP as a result of the country exiting from the European Union.  MacShane (2015) accentuates the concept of realism is based on the view that ‘the single market project has run its course and that the EU is fatally fractured’ (p. 21). By employing the realism approach, Britain will caution its economy from being hurt by the harmonization associated with its EU membership. However, under the realism concept, Britain will continued benefiting from the free trade agreement with other European Union countries.

Conclusion

The above analysis indicates that enactment of ‘hard Brexit’ approach will result into significant negative impact on Britain economy. By enacting this approach, Britain will not access the EU single market, which will result in significant reduction in the country’s GDP.  Britain might experience significant difficulty in the quest to restore the lost market value. For example, Britain might be required to enter into trade agreements with other non-EU countries. However, the terms of trade with the other non-EU countries might not be conducive to promote the countries economic growth. The analysis further reveals that enactment of hard Brexit approach will significantly limit free movement of people. Subsequently, the country’s labor market will be adversely affected. Despite the fact that Britain intends to protect the countries economy by implementing Brexit, it is imperative for the British government to take into consideration the long term effects associated with enactment of hard Brexit. The government should ensure that a balance is achieved in enacting Brexit in order to eliminate the likelihood of the country experiencing negative economic impact.

References

Alalade, D 2017, Brexit; what the hell just happened, Lulu.com, New York.

Chomsky, N 1999, Profit over people; neoliberalism and global order, Seven Stories Press, New York.

Kauders, D 2016, Understanding Brexit options, Sparkling Books, London.

MacShane, D 2015, Brexit; how Britain will leave Europe, I.B Tauris, London.

Rodionova, Z 2016, Brexit: 40% of US firms with British offices are considering relocating to the EU . [Online].

Shimko, K 2015, International relations; perspective, controversies and readings, Cengage Learning, New York.