In recent days, the UK media have constantly touched upon the failure of the Brexit discussions to attain any agreements between the UK and the EU, especially after UK Prime Minister Theresa May set out new negotiation targets. May’s plan was said to not receive the approval of the members of the Conservative Party, while many Britons criticised that the content of the plan gives the EU too much concession. Two members of the UK’s cabinet also had to “leave” for this reason. Meanwhile, Brussels wants further concessions from London. Such a situation has driven the UK public to raise the issue that “no deal is better than a bad deal”. The UK’s Economist.com website said that PM May has also resumed the preparation for a no-deal Brexit. UK trade minister Liam Fox acknowledged there was a 60% risk that the UK would exit the EU without a deal in place.
Meanwhile, the UK public is also becoming increasingly pessimistic about the country’s risk of suffering a Brexit of “double damage”. According to a survey conducted by YouGo, 74% of respondents said that Brexit is going badly so far, and 68% thought that there would be a bad deal reached for the UK. Half of the UK respondents said that if no deal is reached concerning the UK’s Brexit, a referendum should be held to make the final decision.
Although there is only eight months left until Brexit is scheduled to happen, PM Theresa May has still yet to put forward any proposals that would please her Conservative Party as well as being acceptable to the EU negotiators. Meanwhile, analysts have warned of the immediate consequences if the UK leaves the EU with “empty hands”. First of all, in terms of trade, the UK now benefits from the agreements that the EU has signed with more than 50 countries. If they fail to reach a Brexit deal with the EU, the UK will have to independently promote its trade activities in line with the World Trade Organisation (WTO)’s rules, which promises to be a thorny and risky process. Tariffs are also a big issue, as the EU will impose taxes and controls on the UK goods. Experts estimate that in the case of a no deal Brexit, the volume of customs procedures for the UK to perform will increase fourfold, causing a loss of 20 billion pounds annually and placing a burden on the UK businesses and economy. The UK companies’ supply chains will also fall victim to the aforementioned situation because all of the activities related to the transition and supply of materials and equipment will be disturbed.
In addition to the issues mentioned above, the risk of capital shift is also a big worry for London regardless of the Brexit circumstances. The UK media stated that there is currently a huge concern within the UK financial sector that the Brexit-related risks will cause divisions among the European financial markets, forcing banks to split their capital that was previously focused in London in order to facilitate the efficiency of capital size. UK financial minister Philip Hammond stressed the importance of preventing the shift of emergency capital reserves to European countries. He also noticed the UK government and businesses on the growing pressure on the movement of operations in the UK to EU member states. Banks are starting to launch preparation plans for Brexit, including the establishment of their alternative financial exchange centre in Europe, such as in Paris (France), Frankfurt (Germany) or Ireland.
More than two years ago, the UK voted for a referendum on the country’s “divorce” with the EU. At that time, the UK seemed to be at the forefront against an EU engulfed in debt and immigration crises. However, analysts said with such a state of “dilemma” and disorientation which London is currently in, the UK could become a “failed example” so that other EU member countries have to consider when intending to exit the union.
