U.K.’s decision to leave EU is becoming costly
LONDON – Eighteen months after Britons narrowly voted to leave the European Union, the Brexit’s negative impact on the United Kingdom is growing.
As the U.K. takes part in a summit in Brussels on Thursday and Friday to assess the progress of its EU divorce talks, the cost of leaving the political bloc continues to climb for Britain.
A poll published in October by YouGov, an online research firm, showed
47% of Brits said they thought the country was wrong to vote to leave the EU, compared with 42% who said it was the right thing to do.
The same study found that 18% want a second vote. Only 14% would opt to abandon the Brexit completely while
52% said they think the Brexit should “go ahead.”
Jon Worth, an expert on European Union affairs who is staunchly pro-EU, said he does not expect a second national vote until there are more dramatic Brexit impacts on ordinary life.
“Brexit hasn’t yet entered into everyday people’s consciousness,” he said.
Among the Brexit’s negative consequences on the U.K.:
Huge divorce payment
Britain agreed to pay the EU $54 billion to honor budget commitments from EU officials’ pensions to investments in European infrastructure.
The bill could climb before the country leaves the EU in March 2019.
Weaker economy
The RAND Corp. published a study this week that suggests Britain is likely to be economically worse off outside the EU under most scenarios.
RAND’s analysis shows that if Britain leaves the EU without agreeing to a new trade deal with the bloc, its GDP could lose 5%, or $140 billion, over 10 years.
Jonathan Portes, a professor of economics and public policy at King’s College London, said that because of volatility in currency markets and an increasingly uncertain business environment, the Brexit has knocked about 1% off of Britain’s GDP.
“We have a reasonably good idea of what’s happened so far. What comes next ranges from ‘no impact’ to pretty serious,” he said.
Plummeting pound
In the year after the vote in June 2016, the British pound lost 16% of its value against the dollar, Bloomberg data show. There were similar steep declines against the euro. The pound has clawed back 9% of this loss against the dollar in 2017 but not before pushing up inflation, strangling wage growth and reducing consumer spending power.
Companies operating in Britain’s services sector — hotels, restaurants, banks — raised prices in November at the fastest pace in nearly a decade, according to data firm IHS Markit and the Chartered Institute of Procurement and Supply. Many blamed the weaker pound and Brexit-related uncertainty for the acceleration in prices.
On the bright side, the weaker pound boosted U.K. exports and made Britain a more appealing tourism destination.
Lost jobs
Britain offers easy access to markets in 27 other EU countries. But the Brexit could cause a loss of as many as 75,000 jobs in banking and insurance as major firms such as Goldman Sachs, Deutsche Bank and UBS Group question whether to shift operations and staff elsewhere in the EU, Sam Woods, Britain’s top banking regulator, told lawmakers last month.
“Brexit uncertainty looms over almost every aspect of doing business in the U.K.,” Paul Drechsler, president of the Confederation of British Industry, a lobbying group, said. “Companies are having to plan for the worst while hoping for the best.”