Brexit: A view from afar.

Brexit (or British Exit) has been the focal point of any discussion not only in the UK and Europe but elsewhere. In a sense, other than the seriously politically minded within us, most people are fed up with the whole discussion about Brexit. This is precisely what is wrong with the way our British friends are dealing with the Brexit issue. Boris Johnson, the British PM, seems to have stepped a few strides closer to the exit from the European Union, and even though there is no certainty that Parliament will go with the deal he has brokered, there is considerable merit in the thought that being tired of this issue the MP's who could sway this vote might just cave in.

Boris Johnson the other day commented that he is determined to get the deal done as that is what the majority of the voters wanted. He could not ignore, he said, the wishes of this majority and called it the will of the people. Most people focus on the 'will of the people' which was 17.4 million who voted to leave the EU, however, 16.2 million voted to remain in the European Union, and in all this 'will of the people' argument we forget the large segment who wanted to stay. It therefore makes sense that whatever deal is finally done should go to the people of the UK for final say in a referendum.

One understands the entire emotional appeal of leaving the EU and British people having their say in their own affairs. Yes in a sense no one likes to be told what to do within their own country. However there always was an alternative to leaving the EU and could have been moving the EU to roll back some of the powers that Brussels (the EU head quarters are there) have over domestic policies of member states. While a longer path to achieve this it would have been a less painful path for the British people.

Beyond the emotional hype of regained independence from Britain, the economic cost of leaving the EU has never really been put to the average British person. Just during the leaving process, (mind you the divorce has not been done) the inflationary pressures of Brexit have caused an average increase of expenses to each household in the UK of approximately £ 404 per annum.

In the long terms UK's GDP will slow down from between 1.2% to 2.9% (depending on the final divorce terms), unemployment is expected to rise by 1.9% and net foreign investments into British Industry will shrink. Already British export industries have moved some of their manufacturing jobs to Europe to avoid the new tariffs that would affect them post Brexit. In the same sequence European industries have cut back investments and job which were within the UK causing considerable strains to British industrial production and jobs.

The argument that the UK will benefit from new deals with USA and the Commonwealth countries is not based on any economic reasoning. The US remains, under President Trump, a highly mercurial and temperamental trading partner and the most of the Commonwealth nations have very favorable trading terms from China and Japan, which Britain, in its current state cannot match. some have suggested that since UK was a net contributor to the EU, that money saved will augment the effects of leaving the EU. Yes indeed the UK was a net contributor to the EU by about £ 9 billion a year. However when accounting for over all effect of jobs and investments in UK created by being in the EU  one can be sure that this £9 billion would have been more than offset by the job creation and investments and exports into the EU.

Brexit was sold to the UK people as an emotional deal, and the economic realities of its effects were glossed over to the point of suggesting that the average British citizen will be better off. NO free borders, hence less foreigners taking the jobs, not subsidizing the EU meaning more funds to the British people etc etc. The realities are that, as an example, many of the jobs that lower paid Polish workers were taking up in Britain are usually not taken by British people. The pros and cons of such policies will never be crystal clear but after decades of integration into system disengagement is not going to  be painless. The British economy will shrink and with it jobs and the common man will feel the pinch. EU workers came to Britain because the economy was doing well and expanding, much of this from being in the EU. Take the financial sector, where perhaps British employees will be hit the hardest as major financial institutions will find being in London is no more beneficial in a post Brexit environment.

The skeptics would argue that losing 10,000 jobs in the banking sector cannot do much harm but this is just one important segment. We must consider this is a high salaried sector so the knock on effect into the consumer spending side is larger than just 10,000 jobs. These higher salaried people spend more, buy houses, send kids to school, and of course pay taxes. So the trickle effect into the economy would be far greater than just losing 10,000 jobs to Europe. This story repeats itself into other sectors of the British economy and gradually the pinch of Brexit will be felt across a wider cross section of British society than we care to admit today.

In all honesty rather than just focusing in the people who wanted to leave the EU one should consider that a great deal has changed since the 2016 referendum and more realities have come to show that while the emotional euphoria of leaving EU is all fine, the economic pinch is going to be much worse. It would be appropriate therefore to have a new referendum on the issue of leaving the EU.