Brexit is one of the most divisive issues to present in the UK, having become a wedge issue not only on a partisan basis but also within each of our political parties. Even today, years from the initial vote, arguments rage on over the legitimacy of the referendum and the interpretation of its result by the UK’s successive Conservative governments. That Brexit has happened is undeniable; so, too, are its impacts on business in the UK.
Impacts to Trade
The leading impact of Brexit has been the hampering of trade between the UK and the EU. Previously, the UK enjoyed unfettered access to the Single Market, which allowed the free movement of goods, services, businesses and people between the dozens of borders that constituted the market. However, the UK’s withdrawal from the EU also saw it withdraw from the Single Market.
This withdrawal, seen as necessary by the Conservative government to stifle the free movement of refugees into the country, created significant barriers to trade. Rather than the frictionless access that businesses once enjoyed, businesses now have to contend with national regulations and paperwork for each individual nation state with or through which they wish to trade.
Businesses Most Impacted by Brexit
The loss of frictionless trade has had a profound impact on both the accessibility and affordability of imported goods, whatever their nature and whatever their prior cost. The increase in wholesale costs has been partially responsible for the ongoing cost-of-living crisis, with supermarket goods prices increasing disproportionately to the average rate of inflation.
Of course, these price rises have had detrimental impacts for the average household. Businesses have suffered too, though, with different industries experiencing different levels of difficulty.
The automotive industry has had a tougher time, as a result of increased costs associated with both imports and exports as well reduced investments in the UK by automotive manufacturers in favour of countries with better access to the single market, such as Germany or Poland for example.
Meanwhile, the construction industry has been less impacted, with essential construction materials still available on a local basis thanks to the steady production and supply of these goods nationally.
And arguably the most important sector of all, the financial industry has certainly been hit in various ways by Brexit, firstly by creating an uncomfortable level of uncertainty among investors, which can be seen in the drop of the value of the Pound. As well as encourage institutions in Europe to favour Paris more over London.
The Outlook Past 2023
2023 is an unusual time in which to be examining the after-effects of Brexit. It has been supremely difficult to properly measure the impact of the UK’s withdrawal from the EU, on account of other global issues which have comingled with Brexit to create a uniquely dire landscape for both businesses and individuals. Beyond 2023, though, what is the outlook for a UK unmoored from the EU?
There is little data to support a conclusion either way, but economists remain worried about the longer-term impacts of existing trade barriers. Should Ukraine succeed in their defence against Russian aggression, areas of industry would ease – but the UK would not see the same benefits as the EU. There are those that theorise the end of the UK as a leading Western superpower – but whether this is conjecture remains to be seen.