Hi everyone, I hope you have all enjoyed the long bank holiday weekend, didn’t we have great weather for once? Although here in Braintree we now have nothing but rain, fingers crossed it brightens up again and we get a sunny summer.
As promised last time here is the second half of my blog on the forthcoming referendum on EU. Last time I talked about some of the points and information relating to the UK and Europe and this time I will cover off Trade, Investment and post Brexit options.
You have already seem my first five points so here are 6 – 10.
6. Trade – The EU is our biggest import and export trade partner. The UK currently runs a trade deficit, although trade with the EU has been declining as a percentage of the total in recent years. the EU makes up 44% of exports and 53% of imports.
7. Investment – The UK has been a very attractive location for Foreign Direct Investments and makes up just under 50% of the total.
8. GDP Growth in the UK – The UK’s GDP (gross domestic produce) was weaker in the 10 years prior to joining the EU in 1973. since then it has performed slightly above the EU average.
9. Lengthy Process – the Likely timeframe for Withdrawal could be a lengthy one:
June 2016 – Referendum June 2018 – Two Years to negotiate the terms of withdrawal under Article 50 of the EU treaty. 2025 – Negotiate with EU and the rest of the world to replace treaties that no longer apply.
10. Uncertain outcome – There are a number of different outcomes for the UK should we vote to Leave. These range from the ‘soft exit’ such as membership of the EEA (European Economic Area) and EFTA (European Free Trade Association) which would largely maintain the Status Quo to the ‘hard exit’ such as Free Trade Agreements and Most Favoured Nation status. I have put a chart below to show how the options differ.
EEA EFTA CU FTA MFN
Full Freedom of trade within EU Y Y N N N
Access to single market Y ? N N N
Adhere to EU regulations Y ? N N N
Influence over EU regulations ? N N N N
Freedom trade independently N Y N Y Y
EU budget contributions Y Y N N N
Control over immigration N ? Y Y Y
Each post-Britex scenario has different implications for the UK economy. Most studies point to there being a negative impact over the long term under most scenarios.
Hopefully these points may have clarified our situation and provided information to form your own views on BRITEX.
Until next time.
All the best
Claire Blake IFA