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The British Chambers of Commerce (BCC) warned last week that the real economic reckoning of Brexit will come in 2017 when the UK’s withdrawal from the European Union (EU) begins in earnest.
The British economy has been chugging along dutifully since this summer’s referendum on EU membership. The BCC acknowledged this, noting that UK firms’ “business as usual” approach has kept the economy steady “for now”.
The BCC’s caveat is referring what it predicts will be insipid economic growth of 1.1% next year (the lowest since 2008’s doldrums). The devaluation of the Sterling, it predicted, will damage consumer confidence through higher inflation and the benefits of a weaker pound has been “overstated”.
Despite the BCC’s fears, the business as usual approach it referenced has manifested on the UK Business Forums. “We have to be optimistic otherwise we will fail,” wrote Brennerz. “We need to forget about debating Brexit and focus on what, as individuals, we think will work for us considering the implications Brexit may have.”
Pish_Pash was even more pragmatic: “There’s no new news here, access to the single market is not possible, let’s crack on with it.” But, he added, the BCC’s warning might be much ado about nothing as Brexit was being “watered down by the day”.
Others predicted Brexit would not even come to pass. “The people with the influence (ie big business) will lobby to keep as many of the existing agreements in place,” said Fisicx. “Free trade is essential for our exports. And you only get free trade if you agree to open borders and the free movement of workers.
“By the time the government gets round to actually doing anything the PR machines will have smoothed the way for a mini Brexit. The people with the money are ones with the power - they don't want out so it's not going to happen.”
The question of free trade agreements (FTAs) have also popped up on the forum. In case of Brexit, The UK will need to renegotiate its trading relationship with the EU. This will likely take the form of a FTA, much like Canada’s recent landmark deal.
“Canada was granted a free trade agreement and of course no free movement of people - in October. Surely we can have the same,” Brennerz wondered. But as Scott-Copywriter noted, it’s not quite that simple.
Namely, the Canadian trade deal (known as CETA) took seven years and was very nearly derailed by the Belgian region of Wallonia. Every deal of this nature must be approved by every single EU member.
Brexit hasn’t really inspired good will on the continent; any British trade deal will likely be more adversarial than CETA’s negotiations. Britain will likely lose all the FTAs it’s a party to via its membership of the single market. These will need to be renegotiated, too.
“The fact [CETA took] this long really speaks for itself,” wrote Scott-Copywriter. “If it was completely free trade like the single market from both sides, you wouldn't even need to negotiate anything. It would take about a day.
“Even CETA, or any other FTA in the world, does not come close to the business and trade freedom offered by single market membership. It's significantly better than nothing, but still significantly far from what the single market can offer.”
The seven years that CETA took is actually swift by EU standards. India’s FTA, for example, has gotten hopelessly trapped in the EU’s bureaucratic jungle.
Dwelling on other FTAs won’t be much help, however, as any potential UK deal will be an FTA in reverse. The UK’s negotiations will be about which trade barriers to erect, not which ones to tear down. How that will go, no one can really tell.
Atmosbob has one suggestion which, he explained, has always pulled him through lean times. “In my experience as a small business nothing beats tightening one’s own belt, spending less on oneself and putting as much cashflow back into the business as possible,” he wrote.
“Compared to the perceived wisdom of borrowing more to stay afloat my tactic has won many times. It is surprising how many of my competitors have fallen by the wayside in tough years because they continued to buy themselves new cars, expensive holidays etc.”