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What could Brexit spell for Europe, EMS and the UK?
On June 23, 2016, people in the UK voted – by a small margin (52 vs 48%) – to leave the European Union. The key argument or perhaps lack of it, was centred upon immigration to the UK from other EU states under the principle of free movement of EU people.
Peter Brent, Consultant Editor for the The European Electronic Manufacturing Services Report at analyst firm Reed Electronics Research, has given us an initial analysis on what happened and what may come in the future.
- The UK was split in the voting with under 45’s voting to remain and over 45 voting to leave with the bias being more notable at the ends of the age spectrum. Additionally, the more affluent and better educated were in the majority to remain whilst the less well-off and those with fewer qualifications and skills were largely voting to leave. Urban and city dwellers were more likely to remain than residents in the countryside.
- Despite some calls for a re-run of the referendum and a repeal of the result from Parliament, it is almost impossible to imagine the ‘Leave’ result being overturned and people must accept that the UK is out of the EU. The future of Scotland and Northern Ireland is not clear since they both voted to remain in the EU but the overall UK vote to leave means that they must either leave against the will of their people or find some compromise with the EU which may include full EU membership or some accommodation which gives advantageous benefits to those countries.
- The UK and the EU are now in a twilight period where the official departure cannot begin until the UK triggers Article 50 of the EU constitution and although the EU wish to move ahead quickly with the negotiations, the UK itself is in some political turmoil due to the resignation of Prime Minister David Cameron, the election of a new Prime minister plus the Labour opposition party is itself in a leadership and ideological crisis. It is unlikely that article 50 will be triggered until end October 2016 at the earliest and perhaps the end of the calendar year 2016.
- The greatest test for the UK in the forthcoming months and years is both the negotiation of new trade agreements with the EU and the rest of the world (since being in the EU the UK was under the umbrella of the EU trading agreements) and untangling itself from many other national and EU regional agreements and laws which are enshrined in the UK’s legislature during its 40 year membership. The EU is predictably closing ranks and vigorously countering any ‘contagion’ effects from other existing members. It desperately wants to avoid the exit of another country from the EU club and is likely to make negotiations with the UK quite difficult to discourage any other countries from leaving and putting in place reforms which go some way to answer concerns on immigration, accountability of EU officials and dispensation of the budget, that other EU countries share with the UK.
- However, aside from politics, the companies in the EU who trade with the UK, and vice versa, will want to see trade tariffs established quickly in order that the economic relations with the UK and EU can be normalised. The nub of the negotiations will centre around what the UK will want, notably access tariff free to the EU market, but the EU will demand that this can only come with the free movement of people which was the main reason that the UK voted out. How this will be compromised is not yet clear.