Brexit is due in less than two months, yet no deal has been made between the United Kingdom and the European Union. This certainly raises business uncertainty on both sides of the English Channel. There is significant risk that many companies will leave the UK for Europe, reports Marketwatch in a recent article.
One of the worries is the potential departure of top professionals from London to European capitals such as Dublin, Frankfurt, and Amsterdam. The U.K.-based banks could certainly lose business and the best workers to Europe. Another factor is whether sensitive business data can be transferred without interference in the case of a hard Brexit.
And that’s only a tip of an iceberg. According to Toscafund, a London investment firm, there will be further pressure on the pound sterling. Back in 2007, the British pound was worth $2; now it trades at $1.30. Some economists don’t rule out a possibility where it will fall below a dollar.
Whatever the outcome is, Britain is likely to lose more than the European Union. First of all, the EU’s economy is six times bigger than British economy. No wonder, the EU is dictating the terms. The UK is simply not an equal to Europe. China and the United States are, but not the UK.
What’s more, Scotland and Northern Ireland may separate from the UK. The Scottish are already calling for another independence vote. If they go independent, they will apply for the EU membership. In fact, a majority in Scotland had voted against Brexit back in 2016. Also, there’s a possibility that Northern Ireland will vote to join the Republic of Ireland. Then, England and Wales will stand alone.
Furthermore, many of businesses will leave the UK and settle in Europe. This will do irreversible damage to the UK’s economy. At the same time, the Brits hope for closer trade ties with Canada, Australia, and New Zealand. However, combined populations of these three countries barely exceed 60 million, which is several times less than the population of the European Union. Also, these three nations are far away.
As Brexit nears, there is likely to be lots of turmoil in the financial markets. This doesn’t do any good for the pound sterling and the British stock market. But, the Brits wanted Brexit and now they will get it.