Many economists in the UK warned voters of the outcome of the country’s exit from the European Union (EU), but most of them did not take into consideration the political and economic turmoil that it would cause to the country and the EU, in general. According to the current Treaty of the European Union (TEU), a country that is a member of the Union can withdraw if it wants in contrast to the previous constitution where it was politically and legally impossible for a country to leave the EU.
According to Article 48 TEU, a country can exit from the Union through a vote leave. Under this article, the governments of member states should unanimously agree to the withdrawal of a member state from the Union. Article 54 of the Vienna Convention states that a country can leave the Union if its parties unanimously agree with the rest of the parties of the member states. Finally, Article 50 TEU states that any member state may decide to leave the Union in accordance with its own constitutional requirements.
David Cameron, Former Prime Minister, had negotiated a deal with the EU, according to which, the UK has a special status in the Union because it is not in the Eurozone. The country had been guaranteed that it would not face any discrimination based on its position on the map. The city of London also had access to the European single market without any restrictions. However, since the UK is leaving the Union, the exclusive deal that the prime minister had worked on will be revoked. Therefore, it is not possible for the country to stop free movement and, at the same time, remain in the single market (Giles, 2016).
There will be new trade relationships between the UK and other countries in Europe. In particular, new tariffs on exports from the UK to other countries and free trade among countries such as Canada will no longer apply to the UK. Countries in the EU contribute to the Union's budget, and since the UK is leaving, it will cease to have an obligation of participating, and the amount that the UK provides will remain in the country for other purposes. However, farmers in the UK will no longer benefit from the money that they used to receive, which is estimated to be around 2 billion pounds (Gosden, 2016).
The city of London has had some of the best workers from across the EU. Almost 11% of its employees come from various parts of Europe. However, due to the decision to withdraw from the Union, the city is going to be less popular, which will make London unattractive for any expatriates aiming to work there. With the exit of the UK from the EU, most banks in the city of London will have to raise their interest rates for loans to deal with the high level of inflation. Before Brexit, big businesses could move their products, money, and people around the world. Thus, most companies and organizations did not want the UK to exit from the Union. Experts have estimated that more than 1000 jobs will be moved to Paris as a result of the withdrawal (Arnold, 2016).
General Influence of Brexit on the Country
Immigration into the UK will be limited, as the country will allow only skilled workers to migrate. As a result, unskilled workers will not be permitted into the country. However, there are more than 2 million Britain workers in other nations. Therefore, if the UK refuses to accept immigrants, other EU countries where British workers are based may retaliate, which can result in deportations.
Establishing a business or an organization in London will be more difficult because of the negative factors that surround the country’s exit from the EU. Financial institutions such as banks will have a hard time adjusting to the system because the increased bank rates will discourage foreigners from investing from in such institutions. The denial of free trade between countries will also decrease income in the UK.
According to Gosden (2016), Brexit may be not beneficial for UK farmers. As mentioned earlier, farming will be affected in such a way that farmers in the country will no longer receive funds from the EU. This means that the billions of pounds that they used to receive from the EU budget will not be channeled to them anymore. Trade barriers imposed on the export of farm produce will be a major adverse consequence for farmers. The cost of labor in the UK will also increase because of the limited movement of people into and out of the country.
David Cameron was against Brexit, and when he lost, he resigned as the Prime Minister of the UK, which has led to the change in the regime in the country. Theresa May, his successor, has already faced opposition with some of the leaders calling for her resignation. The unrest has created a sense of political instability, and some experts in the UK are claiming that there is no political leadership in the country. There has been also a split in the House of Commons, which has led to the destabilization of the political establishment.
Impact on Opening a Business
The country and its capital are known for a low cost of a business start-up. However, after the UK leaves the EU, starting a viable and productive business will need a thorough analysis before making any attempts because of the uncertain environment. Having a business plan of the company will help one to have a sense of direction. The economy has to be monitored carefully because of the latest high rate of inflation. One should also seek advice from professionals and business people. Planning wisely and cautiously is recommended because the future of the country is not as predictable as it was before due to the collapse of the pound. Consequently, the situation in the country can be described as "tragedy" (Rohac, 2016).
Furthermore, crucial factors such as the deportation of immigrants have led to the increase in labor cost. With the current political unrest, it would be advisable to delay starting a business because of the insecurities involved. Some major corporations are currently opting to move their business out of the UK to neighboring countries such as France (Arnold, 2016). Acquiring a business license is also a major factor in starting the business, and the process of obtaining may undergo changes.
Due to the high rate of inflation in the UK, there has been an increase in taxation to save the pound, which is losing value as a result of the UK’s decision to leave the EU. Because of the uncertainty of the political situation in the country, businesses are prone to be directly affected. They are not going to gain as much profit as they did before because the country will no longer trade freely with other nations in the Eurozone. Brexit has also led to changes in regulations of opening a business, especially in London, because the government wants to monitor the situation until the economy returns to normal.
Emirati Restaurant in London
Although the mayor of London once praised investors who were opening restaurants in the city, the situation in the country has changed ever since the decision to exit from the EU. Having a foreign exotic restaurant in the city makes London diverse in terms of culture. For example, Al Fanar Restaurant & Café, which is based in Dubai and Abu Dhabi, would be a sensational place in London (Schulte-Peevrs & Walker, 2015). However, due to the political issues in the country and the rate of inflation, most residents of London will try to minimize their spending rate. Furthermore, obtaining a work permit in the city will be hectic, and chefs will not be able to get into the city. Consequently, the cost of labor will increase and cause problems in the future. The increased tax rates in the country would mean that regulations, such as the credit card swipe fees, could affect the restaurant. The cost of living in the country will change with an increase in the price of commodities that are crucial to the restaurant. The increase in imports and exports will also adversely affect the restaurant business. Finally, an increase in tariffs will cause an increase in prices of goods and services.
The UK’s decision to exit from the EU has brought more harm than good to the country. There may be advantages such as not spending billions of pounds a year on membership fees and taking full control of the country’s borders. However, having a limited number of people obtaining work permits will lead to the loss of both skilled and unskilled labor that is vital for the growth of the economy. The UK will have to prove to the world that it made the right decision to leave the EU; otherwise, its economy will be adversely affected. Consequently, it is not advisable to open a new business in London because of the insecurities involved.