SECTORAL IMPACT OF BREXIT
On March 29, British PM Theresa May triggered Article 50 which will begin the two-year negotiations for the country to formally exit the EU. In her letter, the official stated that around six months ago, the citizens voted for change as they chose to depart the bloc for a brighter future. The event has caused turmoil among individuals and industries, as they scramble for an idea of how the move will affect them. Below is a glimpse on how some sectors are impacted by this referendum, and whether the effect is beneficial for them or not.
Banking and finance This department is projected to lose the most and is currently facing the highest uncertainty regarding their outlook. This is because they operate in as a surplus while the country administers an account deficit in the European region. This means the UK exports more than it imports, and the industry makes up around 26% of these exports. In the case of a hard Brexit, the trading will return according to the WTO policy, wherein failure to function on a level field will have a negatively influence jobs in this area.
Even before initiating the formal process, banks are already preparing for the worst. Since the action equals to a loss of ‘passporting rights’ which allows firms to sell their offerings through European Economic Area. The idea of UK joining the EEA after leaving is unlikely due to certain conditions such as free movement of workers, which is something Brexiters disapprove of.
Airlines This is another messy field after the vote because the start of the union is a flourishing time for tourism as low-cost carriers entered the picture. However, an EU departure would prohibit airlines to fly in between the region’s cities and allow direct flights only. This is why officials in this division were the most vocal regarding their concern about the issue, and even asked for another voting round.
Retail Initially, retailers have benefited from the departure because the fall of pound against the US dollar raised spending especially from other states. In December foreign people spent £725M in stores--a 222% increase from last year’s figure. Boutiques and high-end stores have benefited the most, especially Hong Kong and Chinese shoppers.
However, this trend was short-lived as the continuous currency depreciation gave rise to inflation, pressuring retailers to hike costs especially when it reached 2.3%, which is above the BoE’s target.
Food imports Food prices are expected to jump by 8% this year after the official exit process, as confirmed by an analyst. The country’s imported food and agricultural goods totaled £47.5M, in which 71% came from the EU nations. In an attempt to protect safeguard local farming, UK might try to impose tariffs to fuel prices but even if they implement a tariff-free accord on their imports the savings will be offset by a plunging pound.
Citizens The event has also left residents and non-residents of the nation in a limbo, despite the constitution reiterating their rights to move freely within the territory of other member states. This is because the verdict casted an unknown state of their employment, further burdened by a possibility of deportation.