BREXIT: Five ways a no-deal could affect International Trade
It’s fair to say that Brexit is one of the most historic and talked about events to happen in Britain in recent years.
In fact, it’s an unprecedented economic and political shift that many people never thought would happen in their lifetimes.
From immigration restrictions to the swaying value of the pound, the referendum result has sent waves of uncertainty across a variety of industries.
And as negotiations rumble on and October 31st edges forward – talks of a ‘no-deal Brexit’ have never been more rife.
In response to this possibility, world leading businesses, from countries such as the US, Japan and Australia, have warned the UK that a no-deal Brexit could damage its reputation with some of its most valuable trading partners.
However, current Prime Minister Boris Johnson has stated that the UK will leave the EU on October 31st "do or die" - even if it means walking away without a deal.
In light of this, we’ve looked into five ways this could impact the way the UK trades internationally…
Limited negotiating leverage
Due to having limited resources to negotiate trade agreements, the UK may find it has limited negotiating power with major regions, given its potential lack of relevant and coherent trade policies.
Industries could grow
For example, the British Government has said that after Brexit the UK will be an “independent coastal state and be fully responsible for managing fisheries in the UK’s Exclusive Economic Zone of 200 miles”. Essentially, the UK would be able operate out of the EU Common Fisheries Policy which manages fish stocks across Europe.
The UK macro policy needs to be supportive
Even if the UK secures a trade agreement, UK macro policy (a policy that affects a whole country) needs to be supportive to be competitive and win market share, e.g. managing currency and wage strength and investing in skills and trade infrastructure.
A new relationship with the EU
For businesses concerned about being trapped in ongoing relations with the EU, a no deal is like a hard reset on a computer – you’re pretty much starting from scratch. But could this end in a bitter trade-off?
Power to instantly make new trade deals
The UK would have the freedom to sign up to new trade deals immediately in a no-deal Brexit, with countries such as the US – which could boost GDP and net productivity!
Looking forward, it’s virtually impossible to predict with complete accuracy exactly what the trading landscape will look like in the post Brexit era.
But, whatever changes the future brings - If you’re armed with information and well prepared, there’s nothing to say you can’t mitigate risks and reap the rewards of new and successful trade relationships.