Brexit: Challenges for the UK Workers and Economy

08.04.2021 in Economics Essays
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The procedure related to the exit of the United Kingdom from the European Union (Brexit) has become one of the most important events in the modern history. It has provoked an ambiguous reaction and announced serious changes in the international politics. The effect of this process on the life of ordinary citizens of the UK is not yet clear, but the analysts and research institutes predict economic cataclysms, the exacerbation of confrontations between the powers, and a decrease in the well-being of the population in general. Despite such pessimistic assessment and predictions, processes and consequences of Brexit can be viewed from different angles. However, those related to the workers of the UK can be considered among the most significant once as this group of the population has a direct effect on the prosperity of the UK. Therefore, it is necessary to review the challenges that this group of people and the economy of the state have to face due to the announcement of the withdrawal of their UK from the EU.

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Naturally, the event of such scale and significance as Brexit is bound to bring negative consequences to its initiator, the UK. Of course, those who are campaigning for the withdrawal of the country from the EU argue that such activity will allow it to become freer and richer (MacShane 2015). In particular, after Brexit, the UK is expected to establish an exclusive agreement with the EU, which will provide it with all the benefits of the free trade without the todays costs of membership in the Union. Similar agreements will also be signed with other countries from all over the world; consequently, the UK is expected to benefit immensely from the abolition of burdensome European regulations (Coles 2016). However, in reality, Brexit is likely to place a considerable burden on the economy of the state. Ambiguities and surprises of a protracted withdrawal will cause a decline at the level of investment and growth rates. By separating from the EU, Britain is going to face a reduction in the foreign trade, foreign investment, and migration. In turn, these factors will negatively affect the competition, productivity growth, and standards of living (Passlack 2016). The independence from the Union will also deprive the UK of the opportunity to influence the future European reforms, which are specifically related to the formation of the common market of services (Price 2016). All these factors are likely to have a negative impact on the UKs economy, thus, its citizens.

In such a manner, the future of the UK does not seem to be associated with the financial well-being and stability, with the uncertainty that stems from such forecasts that affect all the layers of the countrys population, including workers. The situation of the latter is particularly dire due to the emergence of the following challenges as a result of the announcement of Brexit. First of all, the withdrawal from the EU is likely to cause a shallow recession, which will bring the lowered business activity with it (Klauders 2016). As a result, the commercial organizations in the UK are going to suffer from the reduced profitability; many of them will be forced to optimize their expenditures in order to stay in business. In many cases, this goal is achieved through the implementation of radical measures, including downsizing that means firing employees with the view to reducing variable costs of the enterprise. According to experts of Credit Suisse, the price of Brexit for the UK is around 500,000 jobs; it means that the unemployment rate can reach 6% (Armstrong 2017). As a result, a considerable share of the UK workers will have to consider searching for the new vacancies as they cannot be sure that the aforementioned measures will not affect them. Against the background of the growing unemployment rate, this task is likely to become difficult due to the increased competition in the countrys labor market. In turn, these people are likely to remain unemployed for a relatively long period of time; it does not contribute to their value as professionals. Moreover, this economic challenge is accompanied by social difficulties, which are going to exacerbate problems to be encountered by the UK workers.

The first of those is related to the fact that Brexit is bound to affect the relationship between the EU and the UK, specifically in the social area. In particular, around 200,000 citizens of the EU may lose their rights as a result of the UKs withdrawal from the Union, specifically due to the potential differences in the legislation (Morphet 2017). This statement is particularly true for certain groups of migrants living in the UK as they may be deprived of the guaranteed protection. The most vulnerable ones are 120,000 job seekers in the UK that are the EU citizens, as well, and around 50,000 people that are sent to work in the UK by the EU countries. The uncertainty will also affect those who work part time in the UK while also being employed in any other EU country (Maidment 2017). The same can be said about the scientists from the EU, with these people accounting for about 15% of the academic community in the UK (Morphet 2017). In other words, the announcement of Brexit has jeopardized the social protection of a considerable part of the UK workers. As a result, they will be incapable of predicting the outcomes of the withdrawal; thus, they will be challenged to develop the best possible courses of actions in such situation (Foster 2017). The latter is likely to presuppose the relocation to another country of the EU; yet, it is another radical measure. However, it should be noted that the UK government takes measures in order to avoid such a scenario for ensuring that the rights of the described social groups are protected (Maidment 2017). However, the efficiency of this activity can be assessed only in the long-term perspective, especially when taking into account the changes that may occur in the field of foreign relations.

The problem mentioned above is primarily related to the cooperation between the British and European companies, with many of the former having to reorganize their activities. Currently, more than 5,000 commercial organizations of the UK operate by using around 300,000 permits to conduct business in other EU countries (Stonehem 2016). The announcement of Brexit has jeopardized the situation; it means that many British enterprises will have to focus on the local market instead of the foreign one, especially in the case the new permit is difficult to obtain. In turn, such measure can lead to numerous layoffs in organizations that were forced to change the primary direction of their business activity; this process is usually associated with either increased expenditures or reduced income (Rose 2016). Thus, their employees will also have to consider searching for new jobs, potentially in the countries, with which they used to work before. However, given the fact that they are likely to be a disadvantage in comparison to local job seekers, it is possible to expect this task to be rather challenging.

The points provided above can be supported by the recent data on the migration from the UK. In particular, by 2017, the number of the British citizens that applied for French citizenship has increased by 254% (Samuel 2017). The change has been particularly drastic in the course of the last two years, in other words, directly after the announcement of Brexit, from 385 people in 2015 to 1,363 people in 2016; it is a record figure. It is reported that this trend remains relatively low, given the number of Britons living in France, which is estimated at about 400,000 people. However, starting from January 2017, the number of the UK citizens wishing to obtain French citizenship has increased dramatically. This fact indicates that the figures for the current year may be much higher. At the same time, an increase in the number of requests in France has not yet reached the proportions of neighboring Germany, in which the growth amounts to 361% (Samuel 2017). Thus, one can assume that the uncertainty and problems associated with Brexit have made the UK workers migrate to more stable countries. Also, these events have reduced the quantity and quality of the workforce in their home state and have had a considerable impact on its economy. However, the list of challenges imposed by the withdrawal is yet to end since s the UK, but the funding the process of severing well-established economic and political ties always comes at a price.

In this regard, the price is related to another social issue that is faced by the employees the insurance. It is established that the UK citizens visit the EU countries 42 million times a year (Nunn 2017). Currently, an individual requires only an EU insurance card for such visits. However, after Brexit, the latter may become invalid for such purposes; in other words, the travel to the states of the EU will require some additional documentation to be presented by citizens of the UK (Morphet 2017). Against this background, business trips may become more complex and force workers to deal with lengthy bureaucratic procedures, change their plans, and even cancel some of the planned tasks. This change is particularly important to agents and mediators, whose professional occupation is often related to the establishment of the agreements with the foreign partners, as their work is likely to become hindered with the upcoming rules and regulations that govern the relationships between the UK and the EU. In the light of these facts, it is possible to expect the emergence of yet another issue that is related to the announcement of Brexit, which stems from the change in foreign relations of the UK.

The mentioned problem affects around 4,000 UK workers that receive their salaries and pensions from the EU. Currently, European institutions within the UK employ around 1,800 people from England, Wales, Scotland, and Northern Ireland. In addition, the EU pays pensions to at least 2,000 British citizens (Passlack 2016). Due to the announcement of the withdrawal, the future of these social groups becomes unclear, meaning that the possibility of them losing their income after the event is quite high. Of course, one may argue that the number of people affected by this problem is not significant, especially at the scale of a country like the UK, but the funding that is required to sustain those is quite considerable and reaches 7 billion (Stonehem 2016). As it was mentioned before, the withdrawal from the Union is likely to put a strain on the economy of the UK, meaning that the required financial resources may be difficult to procure and allocate. In such a manner, the mentioned social groups are facing the challenges that relate to the preservation of their wages and pensions in the long-term perspective. The task is quite problematic due to the uncertainty that is brought by Brexit.

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Brexit has become a significant event in the political, social, and economic life of the EU; it brought numerous negative consequences for its initiator. Many such problems are going to have a direct effect on the category of the population that defines the well-being of the country, namely, the workforce. The announcement of the withdrawal has jeopardized the future of these people; many of them are at risk of losing their jobs due to the weakened business activity in the country and the potentially upcoming layoffs. Moreover, the legal and social protection of foreign job seekers and workers employed by the UK is also questionable. As a result, numerous citizens of the country apply for the citizenship in the EU member states, specifically the ones that are close to the UK in terms of the economic development (for example, France and Germany). This way, they try to mitigate the risks imposed by Brexit. Moreover, given the fact that the procedure of withdrawal is to be a lengthy one due to the presence of numerous agreements between the UK and the EU, one can assume that the workers of the UK are likely to experience its social and economic consequences, both the described and the new ones that will emerge in the long-term perspective.

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