Brexit … Exit or No Exit?
Almost three years after the UK’s 2016 referendum to exit the EU (“Brexit”), there is no UK agreement on the substantive terms of exit or its timing. It is clear, however, that Brexit is causing devastating economic loss and unemployment, particularly in UK’s motor vehicle industry.
The exit plan agreed to by UK/EU leaders has been repeatedly rejected by Parliament. That plan has now been split into two parts – a withdrawal agreement (the legally binding terms of exit – how much the UK must pay to leave and a two-year transition providing for status quo on trade, travel/treatment of UK/EU citizens) as well as a political declaration (the future relationship with the EU). Deadlines have come and gone. Even the UK Prime Minister’s promise to resign if the plan were approved hasn’t moved the ball closer to the goal. As the latest deadline approached, the EU granted the UK an option to leave at any time before October 31 if the withdrawal plan were approved, thus avoiding a “hard exit” that would otherwise occur. While the EU clearly prefers an agreed-upon exit, EU patience is running out.
This spectacle reminds one of Jean-Paul Sartre’s play “No Exit” in which three bickering characters find themselves punished in the afterlife by being locked in a room together for eternity. Stay tuned!
Negative economic consequences of Brexit for the UK are everywhere apparent – reduced competitiveness, escalating unemployment, brain drain and capital flight. The UK motor vehicle industry – employing 856,000 people and accounting for more than 5% of total UK GDP – is particularly hard hit. In 2018, investment dropped 46.5% from 2017 and vehicle production fell to its lowest level in 5 years. Multinational manufacturers are voting with their feet. Some companies are either idling/shuttering UK production or realigning their supply and distribution infrastructures outside the UK. The UK’s credibility as a safe and secure place for business has been badly damaged by the economic and political wreckage that the Brexit crisis has created.