The Brexit Won’t Really Affect Britain’s Trade

Published on 29 Jun, 2016

Brexit & Britain Trade

While the markets are rife with speculation about an exit’s aftermath for both the UK and the EU, Britain’s trade turnovers ought to bounce back with gusto after an initial lull.

The UK is staring down the barrel of a recession if it decides to leave the EU officially.

If Britain really pulls out, it’s going to be a turbulent two years ahead, marked by plenty of political posturing and speculation in her financial markets. An unsettling state of affairs to be sure, and one that’s likely to last for the next 18 months at least.

Beyond that however, the Brexit will be mildly positive for the UK.

Free trade with Europe will most likely be the same, as the UK is a big importer (i.e. €100 bn p.a) and a truly international market. EU regulations would no longer apply to several segments of the economy, allowing them far more leeway and the flexibility to grow.

While manufacturing contributes just about 11% to Britain’s GDP, a weaker Sterling could be good news for the sector, boosting earnings from exports.

Autonomy would also allow the country to establish trade deals with non-European countries more easily, primarily as they’d have less bureaucracy to contend with.  The UK could also see a mild increase in inflation, as imports from EU members will be expensive on account of customs and trade tariffs.

The world’s fifth largest economy still hasn’t invoked Article 50 of the Lisbon Treaty, which would signal its formal withdrawal from the EU.

If it does, the UK will have just two years to hammer out fresh trade agreements with its former EU associates.

The markets won’t wait that long though.

They’ve likely already worked out their workarounds.