Brexit

Bumpy road ahead

Print edition : July 22, 2016
The departure from one of the world’s biggest markets has immense ramifications for Britain’s economy and workforce.

AS the world braces for the fallout of the United Kingdom’s (U.K.) exit from the European Union (E.U.), it is time to take stock of the extent to which both economies are intertwined and other issues, such as migration for work, that are at stake. Data from the U.K.’s Office for National Statistics (ONS) show that the country’s trade deficit with the E.U. widened over the past 15 years, zooming to 61.58 billion pounds in 2014 from 8.93 billion pounds in 2000. While its exports grew 55 per cent during the period, imports increased 85 per cent.

The U.K. was the second biggest member state, after Germany, in terms of Gross Domestic Product (GDP) in both 2014 and 2015, according to statistics from the International Monetary Fund (IMF). Significantly, both nations recorded contractions in GDP numbers in 2015. The U.K. also accounted for 17.6 per cent of the E.U.’s GDP in 2015.

The E.U. has also been a key contributor to foreign direct investment in the U.K. in the years since 2005, although its share of the total investment has dropped consequent to a rise in non-E.U. investments. E.U. assets in the U.K., which were worth 244 billion pounds in 2005 and accounted for 50 per cent of all investments in the country, had risen 86 per cent in 2013 to 453 billion pounds, but its share was down to 46.4 per cent as non-E.U. assets had grown 114 per cent in the same period from 244 billion pounds to 523 billion pounds.

Brexit is also raising the question of E.U. nationals currently working in the U.K. According to the ONS’ Migration Statistics Quarterly Report May 2016, there were 2.1 million employed E.U. nationals as of the January-March 2016 period, up 224,000 from a year earlier. In the year ended December 2014, the net migration of E.U. nationals was 184,000 while the figure for non-E.U. citizens was 188,000.

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