The contrast between abundant London and the decaying rural areas was the trigger that perforated Britain’s EU membership, for better — or worse
There are very few times in nation’s history when citizens may choose their destiny.
That choice was exactly what the United Kingdom needed to make at the European Union Referendum on June 23. Commonly referred to as Brexit, citizens were asked if the United Kingdom should remain, or leave the world’s largest economy. When the votes were counted, 51.9 per cent of the United Kingdom chose to leave, while 48.1 per cent wanted to remain.
At first look, we see a nation divided. A closer examination reveals a battle between low-growth, frustrated rural areas and a prosperous, modern London.
As a global financial capital, London depends on the financial industry, real estate and the international community for economic development. Inclusion within the European Union system is critical to these industries. From voters’ perspective, it was clear that the citizens of London understood this relationship and overwhelmingly sought to remain within the European Union. A strong 60 per cent of Londoners voted to remain while at the heart of the financial world, the city of London, an unmistakable 75.3 per cent of voters wished to keep the EU bond.
To contrast the growth and prosperity of London, we see rural areas which have been slow to recover from the 2008 financial crisis and the recession that followed. Many jobs which expired in 2008 have not returned, and in the minds of many rural citizens inclusion within the European Union has only slowed this recovery. For these rural dwellers, the EU referendum was an opportunity to vent pent-up frustration over the opportunities and influence of London, regardless of the potential economic fallout.
Global financial markets reacted swiftly and negatively to the Brexit vote. The day following the landmark referendum saw the British pound drop 11 per cent against the US dollar and the FTSE 250 stock exchange move 23 per cent lower. Both stock and currency markets have been slow to recover as traders and institutions try to grasp the consequences of a Leave vote.
The short-term market impact was painful, but the full effects of Brexit may not be felt for years to come.
Smaller, regional banks have announced plans to leave the UK by Christmas with larger banks following in early 2017. The biggest reason? The notion of ‘passporting rights’ which has allowed UK-based banks to provide services to European Union members, unimpeded, as a member of the single market. Following Brexit, there will be significant hurdles for banks seeking to provide these services to individuals and businesses within the European Union.
The financial service industry is certainly not the only sector which will be impacted.
In 2015, 44 per cent of UK exports of goods and services went to EU nations. While it is easy to look at the impact on banks, what will be the impact on a manufacturing sector which relies heavily on trade with Europe? As the UK leaves the European Union, new trade deals will need to be negotiated. These trade negotiations could take months, possibly years, and trade will be constrained as a new balance is found. In addition to the time required, many European Union nations are bitter over the Leave vote — intending to drive a hard bargain as the UK looks to access the European economy.
What does all of this mean for young people? The facts, figures and emotions of the situation can be overwhelming. Put simply, this means more job seekers competing for a smaller number of employment opportunities.
One thing is certain though, Brexit is the BIG call for help from the rest of the country which we shouldn’t ignore.