On June 23 of 2016, a referendum was made. Everyone in the voting age decided whether the UK should leave or stay in the European Union (EU). A decision was made and the majority (51.9%) of the votes cast for the UK to leave the EU.
On March 29, 2017, the British government initiated Article 50 of the EU treaty to leave the EU, thereby, officially starting the Brexit process. However, the withdrawal process and implications did more harm than good on the British economy.
In March 2019, British Prime Minister Theresa May traveled to Brussels to meet the European leaders. She was looking for an extension on the deadline of the UK leaving the EU. It was said that the extension would only be allowed if, and only if, the British Parliament approves the Brexit plan. However, the British Prime Minister felt like the other side of parliament was not fighting and that they do anything to avoid coming up with a choice.
But much of the parliament blames her. “None of you is a traitor. All of you are doing your best. And I believe passionately in the institution of the Parliament, in the rights of the members of this House, and their commitment to their duty,” said Nonpartisan Parliament Speaker John Bercow.
According to Dominic Grieve, a member of Theresa May Tory’s party, she was beating around the bush rather than looking at and considering the nation’s interest. Britain’s political parties also can’t agree amongst themselves, and instead of working together, it’s breaking them apart.
The two-year negotiation time was not able to address other relevant issues, and the deadline was moved back to October 31. Though, other industry and manufacturers temporarily shut down their plants in anticipation of the no-deal exit.
With the delay in the UK leaving the EU, a 0.1% drop in the economy was reported in March. It went worse on the next month, with a drop four times greater than that of the previous month. The 0.4% drop in April was reported as the second month of reduction in the UK’s economy.
For the earlier months of 2019, the country’s Gross Domestic Product (GDP) numbers increased as the manufacturers of specifically built up supplies have been heightened. After the effect, a significant decline in industrial production and manufacturing plants have been noted. Following the sharpest drop on June 2002, a 3.9 percent drop has been noted in March in manufacturing. In industrial production, a drop of 2.7 percent was reported in April. Car plants also shut down the same month as the manufacturers prepared for the no-deal exit.
Financial markets are also greatly affected as 80% of the EU’s activities, and financial market segments currently occur in the UK. Brexit would lead to UK-based companies losing their rights to conduct business with EU clients. In the absence of these rights, the companies would only receive access to the EU market under third-world country rules. The decision would subsequently restrict business with EU states.
Although time-consuming and costly, some of the UK-based companies are planning to move their business to the EU when the UK officially leaves the EU.
UK Foreign Secretary Jeremy Hunt stated in an interview with BBC News about the damaging effects of delaying Britain’s exit from the EU. He pressed on the leaders to make up their mind and agree on a deal. He stated that Japan and other countries “are very, very keen to protect their trading relationship with the UK, and the point that I impress on Japanese people I meet is our absolute determination to resolve this quickly.” He also added that Britain is going to be the best place to invest in Europe, whatever the outcome of Brexit will be. However, if this indecisiveness continues for a long time, it will become destructive to the UK’s international standing with their trading partners.
With the Brexit paralysis and slow economic growth, Ruth Gregory, the senior UK economist at Capital Economics doubted that the GDP would grow by more than 1.5 percent in 2019 as a whole. She also expects interest rates to remain as is until the middle of 2020.