The Brexit Countdown: What's Next for the UK Economy?

18th January 2020

With the UK set to officially leave the European Union, the economy stands at a crossroads. How will this historic event affect business, trade, and markets?

As the UK inches closer to its departure from the European Union, the economic uncertainty that has loomed over the nation for years now reaches its zenith. Officially scheduled for 31st January 2020, the departure marks the beginning of a new era—one that promises change, but also challenges. The Brexit referendum of 2016 set in motion a process that many predicted would be fraught with difficulty, and as the deadline approaches, it is clear that both optimism and trepidation abound in equal measure.

In the coming weeks and months, businesses, traders, and consumers alike must grapple with the implications of this momentous shift. For some, it represents a fresh opportunity to chart an independent course, free from the constraints of EU membership. For others, it is a deeply unsettling prospect, fraught with economic risks that could reverberate for generations. As with many grand shifts in history, there are those who view it as an opportunity for reinvention, and those who regard it as a tragedy in the making.

Drawing from the well of English literature to better understand the complexity of these transitions, one might think of Shakespeare’s The Tempest—a work in which characters are tossed by the winds of fortune, yet ultimately find themselves remade in new environments. Much like Prospero, whose mastery of the forces of nature allows him to shape his destiny, the UK must now attempt to harness the unpredictable forces of a post-EU world. Yet, as any reader of The Tempest will know, even the greatest of sorcerers cannot always predict the outcomes of their actions.

Economic Impact of Brexit: A Brave New World?

To begin with, it is essential to consider the potential short-term effects of Brexit on the UK economy. These effects will likely be most felt in key sectors such as trade, investment, and labour markets. The uncertainty surrounding the terms of the UK’s future relationship with the EU has already contributed to a slowing economy, with investment in particular taking a hit as businesses adopt a ‘wait-and-see’ approach. Many international companies have hesitated to commit to long-term investments in the UK, particularly in the absence of clarity around issues such as customs arrangements, tariffs, and regulatory alignment. The finance and manufacturing sectors have been particularly vocal in expressing their concerns, with banks and businesses warning of the potential disruptions to supply chains and access to talent.

Shakespeare’s Julius Caesar offers a poignant metaphor here. Caesar, the great leader, becomes ensnared by his own ambition and the ever-changing dynamics of Roman politics. In his case, it is his overconfidence and the inability to manage his surroundings that leads to his downfall. Similarly, the UK’s political and economic leaders must navigate a landscape fraught with risks—missteps now could lead to severe consequences in the long run.

Yet, this moment of uncertainty also holds opportunities. The UK could, if it manages its post-Brexit economy well, position itself as a global hub for trade, finance, and technology. Freed from the EU’s regulatory framework, it could seek to negotiate its own trade deals and position itself as an advocate for a free-market economy. Indeed, some proponents of Brexit argue that it represents an opportunity to unleash the full potential of the British economy. There is much to be said for the idea that greater autonomy over economic policies could lead to more dynamic growth, particularly if the UK pursues policies that encourage innovation and entrepreneurship.

However, the question remains: will the UK’s economy thrive in this new world, or will it face economic stagnation akin to the malaise that has plagued other European nations in recent years? Here, we might draw a comparison to Charles Dickens’ A Tale of Two Cities—a novel set during the French Revolution, in which two opposing forces, hope and despair, play out against the backdrop of societal upheaval. The UK’s post-Brexit economy will similarly be shaped by competing forces: the optimism of those who believe in the transformative power of Brexit, and the pessimism of those who fear that it will lead to long-term economic damage.

Trade: The Lifeblood of a Global Economy

One of the most significant challenges Brexit poses is its potential impact on trade. As a member of the EU, the UK enjoyed access to a single market of over 500 million people. Leaving the EU means that the UK will no longer benefit from the frictionless movement of goods, services, and people within the bloc. Instead, it must negotiate its own trade agreements with the EU and other nations, which could prove to be a lengthy and contentious process.

The notion of trade as the lifeblood of a nation brings to mind the words of John Milton, who, in Paradise Lost, speaks of the ‘mighty question’ that determines mankind’s fate. In the case of Brexit, that ‘mighty question’ is whether the UK can negotiate favourable trade terms with its former partners. The outcome of this question will have far-reaching consequences for the UK economy. If successful, it could result in new growth opportunities for businesses, particularly in sectors such as technology, agriculture, and manufacturing. But if the UK fails to strike advantageous deals, the result could be trade barriers, higher tariffs, and reduced access to key markets.

It is important to note that the UK’s economy is not entirely dependent on the EU. Over the years, the UK has developed strong trade relationships with countries outside the EU, particularly in North America and Asia. The ability to forge new, free trade agreements with these nations could help offset any losses in trade with the EU. Yet, the immediate impact of Brexit on trade should not be underestimated. The shift away from the EU’s single market is likely to create friction in the short term, particularly for industries that rely heavily on cross-border trade.

The Labour Market: Navigating Change

Another area where Brexit’s impact will be keenly felt is in the labour market. A significant number of workers in the UK come from EU member states, particularly in industries such as agriculture, construction, and healthcare. The end of freedom of movement between the UK and the EU could result in labour shortages in some sectors, particularly in the event of stricter immigration policies.

The notion of labour as a transient force that can be both a boon and a burden is explored in George Orwell’s The Road to Wigan Pier. Orwell’s examination of the industrial working class in northern England highlights the ways in which social and economic forces can shape the lives of ordinary people. In the post-Brexit world, the UK’s labour market may face a similar struggle: will it be able to attract the necessary talent to fill gaps in key industries, or will the labour force become fragmented and divided? The answer to this question will depend largely on the UK’s approach to immigration policy and its ability to manage the transition to a new economic order.

The Long-Term Outlook: A Brave New World or a Cautionary Tale?

As the UK steps into its post-Brexit future, the long-term economic outlook remains uncertain. Much like the characters in Macbeth, who are driven by ambition and the pursuit of power, the UK must now contend with the consequences of its own decisions. Whether this will be a story of redemption, as in The Tempest, or a tragedy of ambition gone awry, as in Macbeth, is yet to be seen.

In the end, the true impact of Brexit on the UK economy will depend on how well the nation adapts to its new reality. It is possible that the UK will emerge stronger, more prosperous, and more independent. But it is equally possible that the challenges of leaving the EU will prove too great, and the economy will face a long, hard struggle. As the UK moves forward, one thing is certain: the story of Brexit is far from over. Whether it is a tale of triumph or tragedy remains to be seen.