Three months on from Britain’s referendum result to leave the European Union, the reality of Britain’s fate seems hidden by a rally of “he said, she said” amongst British politicians regarding the outcome of Brexit. Regardless, the cogs begin to turn, steering the United Kingdom to a future separate from the EU under a pressure from the rest of Europe to trigger Article 50 of the Lisbon Treaty and speed up negotiations of Britain’s exit. Brexit politics dominate headlines across the United Kingdom, but how has the country and its endeavors been affected up to now?
Looking first at the economy, many economists feared a sudden hot on the economy and consumer confidence post Brexit, however despite the value of the pound reaching a 30-year low, the Office for National Statistics (ONS) has noted no significant effect so far. Although the ONS have warned that these figures do not include the official figures for the service sector, which is accountable for more than three quarters of the economy, in fact survey figures have shown August saw an improved economic performance in the service sector. Opinion remains divided over the long term effects of Brexit. Interest rates were cut by the Bank of England to avoid recession and stimulate investment, however the small and medium business sectors remain pessimistic. Larger firms such as Easyjet and John Lewis have also noticed heightened costs due to the fall of the pound.
The trade sector is perhaps one of the most complicated domains regarding the potential consequences of Brexit. Up to now, ONS figures suggest rising inflationary pressures for UK businesses, with materials and fuels purchased by UK manufacturers seeing a 7.6% increase in price, however uncertainty in trade negotiations means that no-one has any real idea how Brexit will impact trade rates and laws. International Trade Secretary Liam Fox remains positive on the matter, seeing Brexit as a ‘golden opportunity’ in terms of trade. In a speech in Manchester he expressed that the UK “has the opportunity to forge a new role for ourselves in the world” and that the UK would “carry the standard of free and open trade as a badge of honour”. To leave the single market of the EU would lead to the necessity of a new free-trade agreement with the EU, and this also throws into question trade agreements with third countries, who will want to see the terms of a putative EU-Britain free-trade agreement. Whilst British exporters may have gained from a lower exchange rate since the referendum, they face huge uncertainties over vital trade terms.
In positive news for Mexico-UK relations, Mexico, amongst other countries, has already drafted a new free-trade agreement despite the British decision to leave the EU. Mexican Secretary Ildefonso Guajardo released a statement regarding a new deal with the UK, claiming: “In practice countries that have trade agreements with the UK via the EU are likely to continue those trade agreements after Brexit. Mexico is just the first of many, as it always was the commercial imperative. The desire to trade is much stronger than politics or politicians”.
While Prime Minister Theresa May has met with other EU leaders such as Germany’s Angela Merkel, and France’s Francois Hollande, formal negotiations have not yet started. Terms such as a ‘soft or hard Brexit’ have been coined in the British media, claiming that a ‘soft’ Brexit would see a future with the UK retaining some form of membership of the European Union single market in return for a degree of movement. Whilst economic modelling would suggest that such a route would have the most minimal impact on growth, immigration controls retain a controversial matter for debate and negotiation.
Here at the Chamber, we will strive to keep you up to date with any updates regarding Brexit. We wait patiently while developments unfold, and remain optimistic of future relations between Mexico and the UK.
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