A Brexit tipping point

Sunday, January 8, 2017

 

At some point this year we will find out what Theresa May thinks Brexit means. Whether it comes in Parliament as a result of the Supreme Court forcing the Prime Minster to work with Parliament and MP’s or whether it comes through leaks once negotiations start. We will end 2017 knowing much more about Brexit than we do now. In that space of time the question may go from wondering what Brexit means to how to stop it. 

 

If 2016 was the year when political mistruths took over, 2017 may well be the year the mistruths come home to roost. Inevitably this year we will see very little, if any, extra money for the NHS as was promised so regularly in the referendum campaign. We will not see any lower immigration figures this year, we will not see any remarkable growth in either the value of Sterling or the level of growth in the UK economy generally.  The concern is that when the Brexit clouds start to clear, where is the tipping point at when we start to think Brexit is a bad idea or will we simply Brexit at any cost?

 

The Single Market

 

Theresa May has made it clear she wants to leave the jurisdiction of the European Court of Justice rule, single market members must abide by the court’s rules so the UK will likely leave the single market. This will be a catastrophe for Britain’s economy and as this outcome becomes more evident businesses and people will begin leaving for other countries.

Banking, which contributes almost £127bn to the UK economy, relies enormously upon being able to trade freely with other European markets. Unless a ‘passporting’ deal is arranged, which could come at a large monetary cost, then banks and bankers may well make plans to relocate at a major blow to the economy. A report from the House of Lords Brexit Committee claimed that banks will begin making decisions in 2017 about their UK future and also suggested 200,000 jobs could be lost in the sector.

 

During the EU referendum campaign the Leave campaign declared that £350m each week for EU membership was too much. Although that figure was untrue, lying closer to £250m per week, how will those Leave campaigners react when it becomes clear that the UK may still make some financial contributions in exchange for some limited single market benefits. David Davis revealed on December 1 in the House of Commons that, “Of course we will consider it,” in exchange for, “The best possible access for goods and services to the European market.”

 

When the financial implications of leaving the single market becomes clearer and businesses see the likely outcome and make alternate arrangements will that be enough of a tipping point? When Leave campaigners realise we may still have to contribute financially, making fools of both their promises and the case for leaving, will that be the moment minds begin to change?  

 

Immigration

 

The keystone to the Leave campaign’s victory last year, immigration fears conquered any economic worries. The promise was that immigration numbers would reduce but once Article 50 is invoked and we begin to ‘take back control’ immigration numbers will not fall at all, because we simply rely too heavily on immigration and a lot of Brexit ministers are fully aware of this.

 

“I know how important seasonal labour from the EU is, to the everyday running of your businesses” Andrea Leadsom told farmers recently  in her role as Environment secretary.

 

Philip Hammond suggested the government would use immigration controls, “in a sensible way that will facilitate the movement of highly-skilled people between financial institutions and businesses.” Mr Hammond has also stated that he could not, “conceive of any circumstances” in which “highly qualified, highly skilled people” would be denied a place at in the UK under any new restrictions.

 

Business, Energy and Industrial Strategy secretary Greg Clark would continue the current visa arrangement for international students saying, “We can have visa arrangements in place so that people can work in graduate jobs after that, and it is important that they should be able to do so."

 

That is without mentioning the 127,000 EU citizens that work currently for the NHS who will either need to be retained or replaced, which might be tough after Jeremy Hunt frustrated so many junior doctors with his contract offer and considering new doctors take around 10 years to train.

 

It is therefore reasonable to assume that either immigration will not fall dramatically or at all, or a large number of government ministers will be unhappy and many UK industries will be understaffed and under-skilled. When this becomes clear is that enough of a tipping point for the UK to think Brexit might not be worth going through with?

 

A Tipping Point

 

The UK needs a strong, confident and prosperous economy. More money entering the country means more money spent within the country and a larger number of jobs being created. It all leads to a greater tax income for the Treasury which, outside of austerity times, would be spent on new homes, schools, hospitals, transport systems or better wages for public sector workers. If businesses are scared away, it means job losses and a reduction in income at the treasury, hitting the public in innumerable ways.

 

So if during the negotiations UK based businesses, politicians and even the public see an outcome that would hurt the country rather than boost it, when does that tipping point come? Will we Brexit at any cost, because “that’s the democratic will of the people” or does someone stand up and say this is going to be incredibly painful for the country? Will the tipping point come when immigration numbers continue to rise rather than fall? Will it come when we're forced to pay to visit other European countries or when business and banks start leaving these shores? There may be a tipping point at some time this year, but will anyone be brave enough to recognise it?

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