Yes, Brexit poses some serious threats to the UK’s economy. Yet while the media only likes to portray the future of the UK’s economy in constant doom and gloom, there exists many advantages and positive signs from the UK’s perspective. Brexit’s economic challenges can be overcome, and although it may take a while for the UK’s economy to adjust, if there is one country in Europe capable enough of growing and sustaining its economy independently, it is the United Kingdom. Not a believer? – The UK accounts for just under a fifth of total EU GDP and is the second largest EU economy behind Germany (Eurostat). On top of this, we remain one of only two countries within the EU to have kept its own currency, which should be pointed out is stronger than the Euro. One of the best economic decisions we made in the past was to choose to exempt ourselves from adopting the Euro, so before you say we are making another mistake, let’s wait and see how this all unfolds before jumping to any conclusions.
The UK’s shift away from the EU market can all start with the vital trade deals it makes with other countries, allowing them to strike further exporting partnerships into markets outside of Europe. Having said that, the European market is currently the UK’s largest trade market (Office for National Statistics GB). Brexit will bring new barriers to trade and break supply chains and deals with EU businesses. This will undoubtedly affect the UK’s flow of trade and, consequently, revenue into the country. However, what we have not been told is that the percentage of UK exports to the EU has been steadily declining over the past few years (Lynn 2019). In fact trade statistics have shown that this percentage has continued to decline even into 2018 as results from the last year were recorded (ibid.). This might be implying that the importance of the EU as an export market is declining. The rest of the world’s economies, for the most part, are growing at much faster rates while Europe’s economies are stagnating (ibid.). Consequently, trade is service based and follows where the most of the demand is, and with the UK’s shift away from European markets, Brexit may only speed up this trend away from European markets. To highlight this trend, last year UK export sales to countries outside of the EU went up by a notable 7.3% (ibid.). This comes in addition to the near 10% decline in exports to EU over the past fifteen years (ibid.).
In light of these statistics, it is important to consider that trade relationships and markets are built over years rather than the short term. No shift away from the EU market will happen so quickly. Therefore in the meantime it is still vital that the UK secures some sort of trade deal with the EU, despite this greater trend of exporting to markets outside of the EU. What I am trying to point out is that some positive signs of trade do exist going into our departure from the European Union. For example, UK export sales to China increased by 25% over the last year (ibid.). Going into Brexit, with a deal or not, the trade statistics do make one thing clear. The UK’s economy has already been separating itself from European markets for some time now and this trend isn’t going to stop. With Brexit you could almost say that the political side of things are only just catching up with the economic reality.
Bottom line: Brexit began even before the vote to depart the EU. While the political situation is currently a mess, I would argue that with time, a UK economy free of the EU’s regulations can thrive despite the uncertainty surrounding the UK’s future. I’ll take it that the UK’s economy may suffer for the first few periods after Brexit. But come back to me in ten years time, see where our economy is standing in comparison to the EU, for good or for worse, and then let’s talk about Brexit.
* Please help my Growth & Development Economics students by commenting on unclear analysis, alternative perspectives, better data sources, etc. (Or you can just say something nice 🙂