How Will Brexit Work?

January 31 2020, ushered in the final phase of one of the biggest divorce cases ever known to man. This split has been brewing for three years and was set into motion on June 23 2016, after a poll in which 52% of participants voted for Brexit.

This begs the question, what is Brexit about actually? “Brexit” simply refers to the withdrawal of the United Kingdom (UK) from the European Union (EU).

It is a decision that has widespread connotations for the UK and the EU at large seeing as the rest of the EU is one of the biggest markets for British trade. Also, Britain has played an integral part of the EU’s emergence as a world power.

February 01 2020, marked the beginning of an 11 month period of decision making in which Britain decides what type of relationship it wants to have with the EU.

In today’s edition of SWOT, we take a look at the SWOT analysis of a post-Brexit Britain.

STRENGTHS

 

1. Improved housing opportunities

 

With a population of approximately 1.7m European workers currently in the UK, the government has been experiencing great difficulty with providing housing and related services.

2. More independence

 

Despite its considerable influence, the UK as a part of the EU had only partial control of its own borders and affairs. The UK gave up a portion of its control over the decisions related to the borders in exchange for the trade and other security benefits that come with being a member of the EU.

3. Increased opportunities for SMEs

 

SMEs, despite playing an integral part in maintaining balance in the economy, did not enjoy many benefits from the EU. As a matter of fact, they faced restrictions related to the trade regulations between EU member countries. It’s believed that after Brexit, SMEs will be free from some of these regulations which will undoubtedly lead to a positive impact on this important part of the economy.

WEAKNESSES

 

1. Restricted access to EU countries

 

One of the highlights of the Brexit argument was that citizens of other nations in the EU were flocking to the UK to take advantage of the social amenities.

2. What that argument ignores is that this goes both ways, Britons may live, work and stay in any of the EU countries also.

 

It is common knowledge that English families may see schooling as too expensive in the UK, so there have been many cases of British students travelling to other EU countries to get their degrees for lower and sometimes no cost.

3. Shrinkage of the UK market

 

The EU operates as a single market, eliminating tariffs on import and export activities. Trade to EU countries currently makes up 50% of the UK’s exports. Brexit would mean that the UK loses a bit of clout in future trade negotiations in addition to shrinking the UK market.

4. Job loss

 

Much has been said about the number of exports from the UK to EU countries. Brexit could cause significant job loss, especially if negotiations fail to yield positive results and the UK experiences difficulty in replacing the lost businesses.

5. Diminished workforce

 

The UK being a part of the EU meant that many skilled workers from member nations have been able to work in the UK unencumbered by visa and immigration laws, therefore, enriching its talent pool. Leaving the EU has a negative impact on the number of candidates UK companies can recruit.

6. Revenue loss(tax)

 

If the UK fails to agree to a proper trade deal with the EU which makes up about 50% of its export market, it will lead to reduced tax revenues especially if the government fails to open up new market opportunities elsewhere in the world.

7. The UK diminished influence

 

Brexit has the potential to teach the UK the real meaning of the saying “United we stand, divided we fall”. Following its exit from the EU, it is very possible that the UK will lose a bit of its status as a superpower in Europe without the might of the EU behind it.

OPPORTUNITIES

 

1. Cost Savings

 

In 2018, the UK made a net public sector contribution estimated at £8.9 billion to the EU. Pro-Brexit campaigners have argued that such funds can be better utilized within the economy.

2. Blank slate

 

During the Brexit campaign, much was said about the UK no longer being the global superpower it once was before joining the EU. It is argued that this will change with EU’s restrictions out of the way.

THREATS

 

1. Unknown Challenges

 

The UK is the first country to leave the EU and this has caused real fears because there is no previous case to benchmark against. The signs are definitely there, you only need to see that since Brexit was announced, the value of the pound has plunged to new depths not seen in the last 25 years. There are real fears of a potential recession if Brexit brings with it a loss of market confidence.

2. Tough Turnaround

 

Even though it was made possible by article 50 as amended by the treaty of Lisbon (2007). In the event that this present course of action fails, politically it is tough to rejoin the EU.

What are your thoughts about Brexit?


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