See How Much UK Has to Pay Europe Despite Brexit
The UK referendum held 23rd June 2016 resulted in a ‘leave’ consensus that was given a nod by almost 52percent of the UK voters. Despite the vote to leave the EU by a majority of the citizens, there are costs that need to be settled by the United Kingdom for the move.
When the vote to leave the EU was muted by the ‘Brexit Gang’, there was widespread apprehension that the likes of David Cameron spearheaded. Despite the pessimism, British citizens voted to leave the EU.
The major concerns included:
· The fear of housing prices going south.
· A spike in unemployment numbers
· Spending contraction
An immediate effect of the Brexit vote was the slump in the pound exchange rate and this has remained at a level never seen in recent years. The pound lost 15 percent of its value against the dollar and 10 percent against the European common currency, the Euro.
While the impact on the British economy hasn’t come close to the calamitous predictions so far, the immediate reactions point to French gains in terms of banking jobs.
London has been the financial capital of the EU but all that might change in no time. While up to four of the big global banks are staying put in London, HSBC will relocate 1,000 jobs or more to Paris in the coming months.
A Mixed Grill
The fall in the value of the pound sterling has made British exports relatively cheaper overseas. This has led to more UK exports in the short term as trade enquiries have so far suggested. On the flip side. Other exports destined for EU destinations might have to be routed from plants sited in the EU.
The impact on inflation has been minimal thus far with the peak at just about 2.6 percent but overall employment has seen no spike yet. The unemployment rate has however remained on the low at 4.8 percent as at June 2017.
The terms of the Brexit move was estimated at more than $100 billion as at December 2016 but this sounds rather unrealistic. Other estimates have pegged the expected cost to be about $50 billion. The British share of the EU budget as at 2016 was 65 billion euros and this might serve as a benchmark.
Conservatively, the cost of exiting the EU could top the bandied $100 billion mark when the complete picture is taken into consideration. When the framers of the EU agreement drafted the Lisbon Treaty, they made a room for possible exit by signatories and this is contained in Article 50 of the EU Treaty.
A Long-Drawn Journey
There are outstanding bills that the UK has to settle before it finally exits the EU and this is certain. These bills cover such expenditure items as EU staff pension as well as relocation cost for EU agencies that are presently domiciled in London.
The commitments will likely be spread over a number of years since in real terms; they won’t all crystallize at the moment. As both parties iron out the exit terms in the coming months, it will become obvious what the real cost will look like. Just remember that a divorce can be messy!
Gb Obasogie is the Guest Writer for this Article and he lives in Johannesburg, South Africa.