Brexit: What’s Happening?
What is Brexit?
‘Brexit’ is the name given to the UK exiting the European Union (EU), which is a political and economic union between 28 countries that allow free trade and easy migration between them, as well as having common laws regarding human rights and security.
The process for Brexit had started on the 23rd of June 2016, when a referendum (a public vote) was held on whether or not the UK should leave the EU. The result of it was this- 48% voted to stay, and 52% voted for leaving. After a long process of negotiations, the date for Brexit was set on 29 March 2019, however, was delayed several times. In the end, the UK officially left the EU on the 31st of January 2020. However, not much change has been seen in the period since. This is because the UK has entered an 11 month transition period in which the UK is still bound to obey the EU’s rules. During this period, the UK and the EU negotiate on their future relationship. This transition period, however, will officially end on the 1st of January 2021, after which the rules of the EU will no longer apply to the UK.
What has led to Brexit?
What exactly led to the Uk voting for Brexit is a complicated question to answer as there was a multitude of reasons, and why people voted for Brexit varied drastically from person to person. However, there are some common factors that can be identified.
Ever since the UK joined the EEC(predecessor of the EU) in 1973, the relationship between them has been rocky, and Euroscepticism (the criticism of the EU) has always been prevalent on the island. This distrust and disapproval played a large role in the UK voting for Brexit.
Another factor that contributed to Brexit was immigration from countries that are newer members of the EU(eg Poland), which caused a big impact on the UK labor market. Many of the people who voted to leave the EU were concerned about the negative impact that immigration has had on the UK’s economy, as well as culturally, socially, and politically.
Finally, it’s the UK’s sovereignty, which many people thought was threatened by the EU. The UK wanted to remain independent, have the right to make its own laws without worrying that they may be overruled by anyone.
Key industries after Brexit.
Although the UK is seen as a ‘service-based’ economy (which means that services - such as financial, legal, research and development, real estate, etc), however, industries such as manufacturing are still significant to the UK’s economy.
The manufacturing industry is hoping to have a deal to avoid the extra paperwork and tariffs which would be put in place due to the UK's departure. With an agreement in place, it will allow firms to continue their current supply chains of car parts and aircraft components across the English Channel. However, if the UK should be separated from the EU’s market, the majority of manufactures don’t have a ‘plan B’. The car industry expects the prices to rise for consumers once 10% tariffs are imposed. In the long run, there would be less investment made by EU manufacturers in the UK. Furthermore, the aerospace industry will be most likely to be damaged as well.
The pharmaceutical sector will no longer align with EU regulations on medicines whether or not there would be a deal. Pharmaceutical companies such as AstraZeneca and GlaxoSmithKline have prepared parallel testing labs throughout the country. However, the Association of British Pharmaceutical Industries warns/predicts that there would be a delay by four to six weeks in the supply of medicine. If there will be a mutual recognition agreement, it means that the UK and EU can recognize each other’s standards and there would be no need for duplicate testing. There are several countries where the UK has signed these agreements. However, if there is no deal made, drugmakers have been collecting their stockpiles of medicine to ensure there are no shortages. Since medicine doesn’t have any tariffs, still there will be border checks.
Education and research will be different as well. If there will be a deal, from September 2021 EU students will no longer pay the same tuition fees as UK students. Moreover, students will not have access to student loans and will have to apply for student visas if they stay for more than six months. The same rule will apply to UK students. Furthermore, with an agreement, British researchers and universities could still have access to the EU’s science funding programs. However, without the deal, the UK will not have access to funding programs, such as Horizon Europe and Erasmus. Although they can negotiate for a membership. The government will have to provide a replacement for funding programs.
Financial services and banking need to be prepared for changes. The UK citizens living in the EU will have to close their bank accounts by the end of the transition period whether or not there will be a deal. Due to the fact that the UK will lose the ‘passporting’ rights, which means that they will not have the same customers’ service/bloc as EU-member banking firms. With a deal, it could encourage EU regulation to allow the UK to have similar access rights to financial firms after Brexit. However, since 2016 most investment banks have been preparing for the worst scenario. They also have been collecting the right documents and licenses to continue serving EU customers.
Written by Aidana Assylbek and Togzhan Batyrbekova; edited by Alexey Dudarev.
