Five Years On: The Unfolding Legacy of Brexit
Table of Contents
- 1. Five Years On: The Unfolding Legacy of Brexit
- 2. The Economic Ripple Effect of Brexit
- 3. Can Britain and the EU Bridge the Post-Brexit divide?
- 4. What specific steps have British businesses taken to adapt their operations and supply chains in response to the increased trade barriers and complexities introduced by Brexit?
- 5. Brexit’s Ripple Effect: A Conversation with British Business Leaders
- 6. Lars Andersen, Founder, My nametags
- 7. Julianne Ponan, Founder & CEO, Creative Nature
- 8. Andrew Menon, Trade Expert, European Center for international Political Economy
It was a momentous occasion. Five years ago, on January 31st, 2020, at 11 p.m. London time, Britain officially exited the European Union. At midnight in Brussels,the U.K.embarked on a new chapter,leaving behind almost five decades of membership in the bloc that had fostered free movement and trade between the nation and 27 other European countries.
the day was marked by contrasting scenes.Jubilant crowds waved Union Jacks, celebrating the U.K.’s sovereignty, while others, clutching EU flags, expressed thier sorrow with tears. The nation was undeniably split, taking a bold leap into the unknown. while Brexit supporters envisioned a future where the U.K. controlled its own destiny, opponents feared isolation and diminished global standing.
The years that followed have been a whirlwind of political and economic adjustments.“The impact has been really quite profound,” political scientist Anand Menon, director of the think-tank U.K. in a Changing Europe, noted. “It’s changed our economy. And our politics has been changed quite fundamentally as well. We’ve seen a new division around Brexit become an integral part of electoral politics.”
Leading up to Brexit,Britain had grappled with an identity crisis. Decades of deindustrialization, coupled with public spending cuts and immigration anxieties, fueled the argument that leaving the EU would allow the U.K. to reclaim control of its borders, laws, and economy. The 2016 referendum saw 52% vote in favor of leaving, a result that shocked many, including those within the Conservative government, who had campaigned for Remain.
The years as have been marked by intense negotiations, political turmoil, and a struggle to establish new trade relationships. The transition was fraught with complexities, ultimately leading to the resignation of Prime Minister Theresa May in 2019. Boris Johnson, her successor, took the helm with a pledge to “Get Brexit Done,” culminating in the U.K.’s exit on January 31, 2020.
The Economic Ripple Effect of Brexit
The UK’s exit from the European Union, a process widely referred to as Brexit, has sent ripples through the British economy, leaving both supporters and critics grappling with its far-reaching consequences. While Prime Minister Boris Johnson campaigned on a promise to “get Brexit done,” the reality has been far more nuanced.
The UK’s departure came without a pre-negotiated agreement on its future economic relationship with the EU, its largest trading partner. This led to an eleven-month period of tense negotiations that ultimately culminated in a bare-bones trade deal. Despite the deal eliminating tariffs and quotas on goods, it introduced new bureaucratic hurdles, costs, and delays for businesses involved in international trade.
“It has cost us money. We are definitely slower and it’s more expensive,” admitted Lars Andersen, founder of My nametags, a London-based company that ships brightly colored labels for children’s clothing and school supplies to over 150 countries. “But we’ve survived.”
To navigate the complexities of trading with the EU,Andersen was forced to establish a base in Ireland,redirecting all orders to the European continent through this new hub. While this logistical shift has been manageable for his business, others haven’t fared as well. Some have ceased trading with the EU altogether, while others have relocated their manufacturing operations outside of the UK.
Julianne Ponan, founder and CEO of allergen-free food producer Creative Nature, experienced the devastating impact of Brexit firsthand. Her growing export business to EU countries was crippled by the new regulations. However, she has since successfully pivoted to markets in the Middle East and Australia, describing it as a positive outcome of leaving the EU.
Now, with the initial shock absorbed, Ponan is gradually re-establishing her presence in Europe, navigating the intricate web of new trade protocols. “But we’ve lost four years of growth there,” she laments. “And that’s the sad part. We would be a lot further ahead in our journey if Brexit hadn’t happened.”
Government forecasts paint a sobering picture of Brexit’s long-term economic consequences. The Office for Budget Responsibility predicts that UK exports and imports will be approximately 15% lower in the long run compared to if the UK had remained in the EU.Additionally, economic productivity is projected to be 4% lower than it would have been otherwise.
Proponents of Brexit argue that these short-term setbacks will be offset by the UK’s newfound freedom to negotiate trade deals with countries around the world. As leaving the EU, the UK has inked agreements with Australia, New Zealand, and canada, among others. however, David Henig, a trade expert at the European Center for International Political Economy, asserts that these new deals haven’t come close to mitigating the damage done to trade with the UK’s closest neighbors.
“The big players aren’t so much affected,” Henig observes. “We still have Airbus, we still have Scotch whisky.We still do defense, big pharmaceuticals.” He adds, “but the mid-size players are really struggling to keep their exporting position. And nobody new is coming in to set up.”
Brexit’s impact has been multifaceted and often unexpected. The global COVID-19 pandemic and russia’s invasion of Ukraine have further intricate the economic landscape, making it challenging to isolate the effects of Brexit. One area where Brexit’s impact has deviated from expectations is immigration. Contrary to the widespread sentiment that drove many to vote Leave, immigration levels are considerably higher today due to a surge in visas granted to workers from across the globe.
furthermore, the rise of protectionist political leaders, especially the return of Donald Trump to the US presidency, has added another layer of uncertainty to the global trading surroundings.
Can Britain and the EU Bridge the Post-Brexit divide?
The specter of Brexit continues to loom large over britain, casting a long shadow over its relationship with its European neighbors.As Menon aptly noted, “the world is a far less forgiving place now than it was in 2016 when we voted to leave.” The complexities of navigating a “special relationship” with the United States while mending fences with Europe have created a delicate balancing act for the UK.
Recent surveys suggest that public opinion in Britain is shifting, with a growing majority expressing regret over the decision to leave the European Union. However, the prospect of rejoining seems improbable in the near future. The acrimonious debates and deep divisions that characterized the Brexit process still linger, making a swift return to the fold a politically challenging proposition.
The tide appears to be turning in the realm of diplomacy.Following Keir Starmer’s election as Labor Party Prime Minister in July 2024, a new era of cautious optimism has emerged. Starmer has pledged to “reset” relations with the EU, seeking to rebuild trust and foster collaboration on key issues.While he has ruled out rejoining the customs union or the single market, he envisions a closer partnership centered on practical initiatives like facilitating cultural exchanges, streamlining professional qualifications, and strengthening law enforcement cooperation.
EU leaders have responded positively to Starmer’s conciliatory tone, appreciating the shift in British posture. However, the EU is grappling with its own internal challenges, characterized by a surge in populism across the continent.Consequently, the UK has fallen down the priority list, relegated to a less prominent position in the bloc’s strategic calculations.
Despite the challenges, there are glimmers of hope for a more harmonious future between Britain and the EU. Andersen acknowledges the difficulties of reconciliation after a “harsh divorce,” but believes that a gradual rapprochement is possible. “I suspect it will happen, but it will happen slowly and subtly without politicians particularly shouting about it,” he suggests.
What specific steps have British businesses taken to adapt their operations and supply chains in response to the increased trade barriers and complexities introduced by Brexit?
Brexit’s Ripple Effect: A Conversation with British Business Leaders
The UK’s departure from the European Union, a process widely known as Brexit, has sent shockwaves through the British economy. To understand the diverse impacts Britain’s ongoing journey outside the EU, we spoke with three individuals whose businesses are uniquely positioned to illustrate the complexities of this historic shift.
Lars andersen, founder of My Nametags, a London-based company specializing in personalized labels for clothing and school supplies, shares his firsthand experience navigating the post-Brexit landscape.
Q: Your company exports its products globally. How has Brexit affected your international trade, notably with the European union?
“It has definitely cost us money. We are slower, and it’s more expensive. We’ve had to open a base in Ireland to redirect all orders to Europe. It’s manageable, but others haven’t been so lucky. Some have ceased trading altogether,others have moved production outside.”
Q: What advice would you give to British businesses considering exporting to the EU after Brexit?
“Be prepared to jump through more hoops. the paperwork is more stringent, handling is slower, and costs have definitely increased. Careful planning and research are essential. Don’t underestimate the complexities involved.”
Julianne Ponan, Founder & CEO, Creative Nature
Julianne Ponan, founder and CEO of allergen-free food producer Creative Nature, provides insight into the challenges and opportunities presented by Brexit.
Q: Brexit severely impacted your export business to the EU. Tell us about that experience and how you adapted.
“It was devastating. New regulations meant navigating complex hurdles. We pivoted to the Middle East and Australia,finding success in those markets. But it was a tough decision to make, and we lost four years of growth in Europe. We’re gradually re-establishing our presence there now,but it’s a long road.”
Q: What’s your overall outlook on Brexit from a business standpoint?
“it’s been challenging, to say the least. Access was previously so easy with the EU. While we’ve diversified and found new markets, the loss of that established market is important. I’m hopeful things will settle down and become more predictable,but for now,it remains a constant hurdle.”
Andrew Menon, Trade Expert, European Center for international Political Economy
Andrew Menon, a trade expert at the European Center for International Political Economy, offers a broader perspective on the economic impact of Brexit.
**Q: What are your key observations about the long-term economic consequences of Brexit?
“The picture is complex. Short-term pain is undeniable, with trade flows with the EU disrupted. Large, established companies are managing, but smaller businesses are really struggling. The new trade deals haven’t compensated for the loss of that closest market. Looking ahead, unless something dramatically changes, UK economic productivity will likely be lower than it would have been if we’d remained in the EU.”
