Readers will learn:
Why will the UK lag behind other advanced countries in the global recovery?
How does leaving the EU affect the UK’s economic activities?
When did Brexit referendum and Brexit deal take place?
What are the social and economic disadvantages of Brexit?
Where in the UK does Brexit hit the worst?
Six years after the Brexit referendum, Britain’s economy is crumbling. Leaving the EU has not led to a boom in the UK. Brexit is one of the key reasons for the soaring prices and the cost-of-living crisis. According to experts, inflation and recession are the disadvantages of Brexit for the UK.
Britain Fall Behind Rivals Because of Brexit
Strategists at an American investment bank have warned that Brexit will cause several years of inflation in the UK. According to Citigroup, the UK economy is extremely fragile, and Brexit is a major reason for the fragility. Bank of America Corp. and Standard Bank have predicted years of searing inflation in the UK because of Brexit. Citigroup’s financial service corporation has said investors avoided the UK after the country left the EU.
The UK’s damaged economy will make the country an outlier in the developed world. Britain has experienced skyrocketing price pressures, and its inflation will be higher than normal due to Brexit rules and regulations. The cost-of-living crisis is not only because of leaving the EU, but Brexit makes it harder to solve the problems. The disadvantages of Brexit for the UK caused its economy to be in poor shape and sub-trend growth.
Brexit Makes It Hard to Handle Inflation Crisis
Brits are facing the highest inflation rates since the 1980s. Inflation in the UK jumped to 10.1 percent in August, hitting a 40-year high. Wage stagnation is one of the disadvantages of Brexit for the UK that have squeezed household budgets. Although rising prices are a global problem, Britain’s inflation rate stands out. Brexit complicated the problem in the UK and limited Britain’s choices. It comes at a time when the two contenders for Britain’s premiership will compete next week.
Leaving the EU, the European single market and customs union has cost Britain’s economy. The UK left the EU on 31 January 2020, but it began an 11-month ‘transition’ period. In January 2021, Britain formally left the EU and its goods trade had reduced by 15 percent in December 2021. Leaving the EU has made the country’s economy a less trade-intensive target. Experts blame Brexit for limiting the UK’s trade performance and missing out on global trade.
Brexit Increased Exports & Imports’ Costs
One of the disadvantages of Brexit for the UK is higher trade costs for businesses. The UK businesses feel more pain because of the increased paperwork, delays, and rising trade costs. Border restrictions have pushed up expenses and added to delivery time. The process has undermined the competitiveness of UK goods in Europe. The UK government had exaggerated the profits of trade deals with non-EU countries. However, it has not done enough to support the UK exporters in global markets.
The UK exporters have faced big headaches by spending their time filling in forms and extra money. Consequently, shipments of clothing and footwear, food and vegetable, and also live animal exports to the EU have fallen. Because of Brexit, the number of workers in the UK dropped, and it disrupted production and transportation systems. UK goods imported from the EU were also down as importers cited higher costs. London and Brussels’ bureaucracies resulted in a lose-lose trade partnership during the post-Brexit period.
Inflation & Recession Are Disadvantages of Brexit for Britain
The Bank of England has predicted a recession for the UK at the end of this year. Different factors, such as the pandemic, the Ukraine crisis, and Brexit, have caused the recession. Since Britons voted to leave the EU in 2016, the competitiveness and productivity of Britain’s economy have fallen. Brexit’s impact on the economy will reveal more in the long-term period. Recession and inflation are the immediate disadvantages of Brexit for the UK.
On the day of the referendum result in June 2016, the pound dropped to a 31-year low. The pound’s value against other leading currencies has been falling since then. Over the last six years, the disadvantages of Brexit for the UK were the key factors influencing the exchange rate. The immediate consequence of a fall in the pound is higher costs for foreign goods and services. This could effectively raise inflation levels and lead to a recession in the long term.
Financial Pressure Squeezes British Households
Experts have forecasted that living standards in Britain have fallen at the fastest rate since the 1950s.UK living standards in 2022 had fallen rapidly since 1956 when the records began. Prices have been rising accelerated for three decades, and British households are struggling to handle the increased pressure. Soaring living costs and inflation upsurge will hit lower-income households harder than richer ones.
Brexit has reduced the productivity of many sectors across Britain. Consequently, wage growth will be weaker than it would have been without Brexit. Resolution Foundation think-tank has already reported about the disastrous impact of Brexit on British workers. Leaving the European Union could make workers in the UK poorer. The post-Brexit period will be a stagflation era when the economy shrinks, and inflation soars. Nationwide strikes could halt vital services such as health services and transportation.
Nationalism Increased Across the UK
Brexit and its new trade obstacles have deepened social and political division within the UK. Scots had overwhelmingly rejected Brexit in 2016, but Scottish businesses and people have paid the price for leaving the EU. Brexit has disproportionately impacted Scotland, with its GDP set to drop. Scottish nationalists have stressed holding a second independence referendum to rejoin the EU. The Scottish government has planned to hold an independent vote to leave the UK by the end of 2023.
Northern Ireland is not satisfied with Brexit, eighter. London and Brussel agreed on a protocol to avoid turmoil in Northern Ireland. So, an open border is on the island of Ireland, but a trade border emerged between Northern Ireland and Britain. Unionists have strongly criticized the protocol and want the country to be treated as the rest of the UK. Disagreements on the protocol may increase nationalistic feelings in Northern Ireland, leading to an Irish unification referendum.
Brits not Satisfied with Brexit
Most people in the UK think the 2016 Brexit vote could not deliver on its lofty promises. Leaving the European Union could not have been a chance to rebuild the old British empire for the 21st century. Britain could not become a sovereign nation or a leader of a free-market world with cutting-edge finance. Although Westminster has struggled to show the benefits of Brexit, Britain’s economy shows the disadvantages of Brexit for the UK.
The Brexit vote of 2016, which came into force in 2021, continues to be a hot economic and political issue. After leaving the EU and the single market, the UK has been involved in a difficult situation. Brexit damaged the commercial relationship between the UK and the EU. The UK’s economy has performed poorly among all European countries. The UK has lost freedom of trade in services and goods trades. It has also lost freedom of movement and a cheaper labour force.
Brexit Financial Failures Could Integrate the UK
The UK ruling Conservative party pledged to take control back by Brexit. However, the EU immediately imposed more controls on British exports. Thus, British businesses saw less trade and bureaucracy, and UK travellers saw more queues in other EU countries. The disadvantages of Brexit for the UK will cause its inflation to last longer than the advanced countries. The UK’s struggling economy and high inflation discourage investors and trigger a slowdown that could turn into a recession.
Leaving the EU has social effects inside the United Kingdom itself. Politics in the twenty-first century are involved in nationalism and borders. The UK government is ruling based on the pledge to separate the UK borders from the EU. This could exacerbate national identities coexisting inside the country. Brexit has economic and political implications and could even disintegrate the UK.