Op-Ed: How Brexit Will Affect the UK’s Economy, Automotive Industry, and Families
What happens next after the UK's surprising vote to leave the European Union?
Last night, I went to bed a citizen of Europe. This morning, I woke up to find out that this privilege has been stripped from me and my fellow Brits by a people who, thanks to overt scare tactics and misinformation, voted the United Kingdom out of the European Union.
As a citizen of the EU, I was able to live and study in Belgium for three years, where I met my now-husband. My dad was able to work in Brussels, where he met his now-wife. Without the EU, I wouldn’t have met my husband, had my daughter, met my stepmother, or got to know a whole host of friends from different cultures and backgrounds who taught me more than they will ever know. I wouldn’t be living in the US (which is scarily heading down the same right-wing path thanks to the rise of shape-shifting lizard Donald Trump). I wouldn’t have been able to travel as easily, and I wouldn’t have had many of the experiences that have shaped who I am today. I would be a different person. And now, thanks to this vote, my daughter’s future has been affected, as she probably won’t have the opportunities I had as an EU citizen.
But Britain’s membership in the EU wasn’t just good for my family in this way. The city of Liverpool, home to my mother and many of my family members, has benefited from €2 billion in grants and funding over the years, which have helped revitalize the city and make it a destination for tourists and businesses from around the world. Prior to EU funding, Liverpool was not the kind of place you’d want to visit. It was run-down, dilapidated, and was one of the poorest cities in Europe. Rather than letting it go down the pan, the EU stepped in and helped rebuild Liverpool, crowning it the European Capital of Culture in 2008. No one is sure what Brexit will mean for the city, but it’s safe to assume the EU funding will end before Liverpool has reached its full potential.
At this time, no one is really sure what that will mean for the world’s fifth-largest economy long-term, but Reuters reports that the pound has already fallen 10% against the dollar—a low that hasn’t been seen since 1985—and British banks lost a whopping $100 billion as the stock market reacted to the so-called Brexit.
What About the Automotive Industry?
Several automakers are already pretty ticked at the Leave campaign, which was using several of their logos in its propaganda materials to demonstrate that the automakers would keep their UK-based manufacturing plants if Brexit happened. Nissan even threatened to sue the Leave campaign for unauthorized use of its badge.
After yesterday’s votes were counted and the result was announced, a number of automakers with plants in the UK (which include BMW, GM, Ford, Aston Martin, Jaguar Land Rover, Nissan, Toyota, and Honda) came together to call for a tariff-free trade deal between the UK and the EU. As a member of the European Union, the UK enjoyed such a deal on its imports and exports to and from EU member countries, which made manufacturing cars in the UK much more affordable. Now, though, this will no longer be the case, and automakers will be subject to tariffs and levies that could reach 10% on their British-built cars.
Most automakers have already made statements that nothing will change immediately with their UK operations, according to Automotive News. BMW stated, “We cannot say what this means for our UK operations until those future regulatory and legislative arrangements are agreed,” while Ford and GM’s Opel reiterated the importance for Britain to stay part of the European Economic Area, which allows the free movement of goods and people within Europe (non-EU members Switzerland, Norway, and Iceland currently enjoy this benefit). Not only that, but the UK will now have to negotiate trade accords with countries around the world now that its EU-based trade accords are no longer valid.
What this all boils down to is that the UK is facing a time of great uncertainty. No one can say exactly what will happen to the economy now, though various economists polled by Reuters agreed that the UK was likely to fall into recession within the next year. And if that happens, who knows how these automakers will feel about keeping their production facilities within the UK. Their own exit from Britain would cost what CNNMoney reports as 800,000 jobs and $22.6 billion from its economy.
Inaccuracies in the Campaign
The Leave campaign has already admitted that it lied on its buses about the amount of money sent to the EU each week. “We send the EU £350 million a week; let’s fund out NHS instead,” claimed the buses. Now, the far-right leader of the anti-EU UK Independence Party (or Ukip) Nigel Farage is speaking out that this is inaccurate, telling ITV’s Good Morning Britain, “No I can’t [guarantee that the money would go to the NHS], and I would never have made that claim. That was one of the mistakes that I think the Leave campaign made.” This £350 million also doesn’t take into account the numerous rebates and grants paid to the UK by the EU for regional development, agriculture, and more, according to The Independent.
— Süddeutsche Zeitung (@SZ) June 24, 2016
What’s more, the Leave campaign was fueled by what many called flat-out racism, borne in part by the ongoing Syrian refugee crisis and the rise of Daesh in the Middle East. As the world becomes a scarier place thanks to religious extremists, it seems like many people in multiple countries are moving further and further to the right; some calling for stops on immigration altogether.
There’s no telling what will happen to the UK’s automotive industry, or any other industry, at this point. The Brexit vote opens the door for a long and messy “divorce” between the UK and the EU that will likely take years. That divorce looks likely to hurt Britain’s economy and send the country into a recession, which will cause many investors to take their money elsewhere.
On a personal level, I am shocked, dismayed, and ashamed of my country today. I can only hope I don’t have to say the same thing about the US on November 8th.
Catherine Hiles is a native Brit living and working in Dayton, Ohio. Cat has written about a variety of subjects, including finance, cars, and parenting. She is a frequent contributor to Dayton Mom Collective, The Penny Hoarder, and her own personal blog.
Cat lives with her husband, Ben; and their two kids, Rose and Liam. She counts running, reading, and cooking among her hobbies. See more articles by Cat.