Divorces are tricky matters, what more with one that involves 27 countries and 1 seemingly disgruntled one. And after a 40-year ‘marriage’ with the European Union, there have been more hurdles for Prime Minister Theresa May and the United Kingdom to overcome before Brexit finally materialises this 29 March.
Just recently on 15 January, she faced an overwhelming rejection of her Brexit deal at a vote of 432-202, leading to a vote of no confidence. May narrowly emerged victorious in the vote with a 325-306 margin, the first held in 26 years and is expected to return with a new plan in the next week.
At this point, there are several ways it could go before the official 29 March date: the UK government might lean towards a break with the European Union minus a deal, attempt departure on gentler terms, or there is even the possibility of another referendum taking place that could reverse the decision to exit the EU.
So how could Brexit impact us? Here are some of the effects it could have.
Local media reported last year that there would be a possibility of a visa needed by travellers from more than 60 countries who wish to enter Europe’s Schengen area by 2021 due to changes made to EU travel access rules. According to website etiaseurope.eu, ETIAS (European Travel Information and Authorisation System) will be required by travellers from select countries for short stay visits up to 180 days.
It’s valid for five years with an unlimited number of entries and will allow for easier movement across borders in an attempt to strengthen internal border controls and security. With the requirement of a visa, it’s likely that we can expect longer lines at EU airports since British passport holders will be joining everyone else in line at immigration checkpoints. So much for efficiency.
There’s no denying that Brexit will impact businesses stationed in the UK or EU. Experts are looking at the possibility of companies having to reassess present investment strategies, the implementation of new tariffs and having to take into account new trade deals if different trade agreements are signed. And according to global macro research consultancy Fathom Consulting, talks of a no-deal Brexit are could result in the pound facing a drop of 10% in value.
Businesses are also looking at the risk of companies and manufacturers moving their headquarters out of the UK. Edward Alden, a senior fellow at the Council on Foreign Relations says, “Asian companies will have no choice but to move operations to the European continent, if the UK’s unfettered access to European markets is blocked.”
Already, Japanese electronics giant Panasonic has moved their headquarters out of Bracknell, UK, to Amsterdam in October last year to avoid potential tax issues, which could arise from Brexit. EY’s Financial Services Brexit Tracker revealed that as of mid last year, 75 out of 222 of the companies they monitored had “publicly confirmed, or stated their intentions, to move some of their operations and/or staff from the UK to Europe. This is a 2% point rise since March, building on the 1% point rise the previous quarter (December 2017).”
Currently, students from outside the EU can pay fees of up to 40,000 pounds but under EU law, the UK is not allowed to charge EU citizens more than the capped 9,250 pounds or US$11,933 a year. This could all change unless a new agreement is put in place. But for international students looking to call the UK their home away from home, it’s good news should the value of the pound drop from the latest rate of USD$1.28 – acquiring that esteemed British degree would likely end up being more affordable.
With Brexit looming, overseas buyers looking to invest in UK or EU property have an open window to purchase properties at cheaper prices if there are falls to respective currencies. A monthly survey by the Royal Institution of Chartered Surveyors’ (RICS) of members revealed falling prices and lower demand from buyers and sellers in November 2018. House prices dropped in London, the South East and East Anglia, while remained flat in the South West, East Midlands and North East. The number of sales fell, with the net balance down to -15 per cent from -10 per cent in October.
Though market numbers seem bleak, property consultants advise that for those looking to buy, now is a good time to do so. “This is a good time to buy property in the UK, especially properties in central London around the £1-3 million range. New builds are where some of the largest discounts are available, with some developers considering discounts of up to 25%, as well as currency fluctuations potentially offering discounts of up to 10%,” says Taylors Properties Director Kingsley Goh. So now should be a good time to strike while the iron is hot and prices are low.
Source: South China Morning Post, Reuters, BBC, Forbes