Post Brexit Consequences

After the shock Brexit vote in the UK, what next for the world? Read on to see some of the issues emerging from the fog of huge uncertainty that our robot has identified as important. Use our full forecast to see all the consequences unfold as they happen over the coming months or contact us to prepare a full and customised briefing on how Brexit will affect your organisation.

Athena’s forecast (robot generated from verbatim forecasts)

Start year: 2016
Likely Tipping point: 2019
Likely End year: 2030
Likely Impact $: Trillions
Likelihood of a Brexit: 45%
Regions affected: Mostly Europe
Most affected issues: Economy, Trade, Democracy, Sovereignty, Finance, Regulations, Growth, Environment, Law, Science

 

What is changing?

  • EU companies will now demand that their cloud vendors move data out of the UK and into EU data centers to comply with the EU GDPR. The UK will technically be free to abandon the GDPR after leaving the EU.
  • A potential Brexit could lead many large organisations to choose Ireland as a data centre base.
  • The UK used existing national laws and regulations to implement the EU’s ICT Directive so there is no reason why the freedoms UK companies have gained to export military equipment to EU member states will be taken away post-Brexit.
  • A UK departure from the EU will have absolutely no impact on the EPC and the existing European patent system.
  • Leaving the EU will bring new VAT compliance burdens and costs that will add to the competitive disadvantages for UK businesses trading with the EU compared to their EU competitors.
  • Brexit will have major implications on the future landscape of the EU and the $575 billion in annual trade between the U.K. and the EU.
  • Continued market uncertainty will see a definite decrease in exports of South African commodities to the UK as markets adjust to news of the exit.
  • Kenya is equally concerned that trade with the UK will be disrupted because agreements made under the auspices of the EU will have to be renegotiated.
  • Sooner or later the EU will have to make decisions about TTIP once the UK and its next prime minister define its trade relationship with the EU and rest of the world.
  • Dealing separately with the UK and the EU could allow Beijing to reach agreements that might have previously been blocked by the need for Britain and Europe to agree.
  • UK companies wishing to export to the EU will need to comply with both UK domestic legislation and EU rules.

Science

  • The impact of a Brexit on science and innovation in both the UK and in the EU will depend heavily on the post-withdrawal relationship between the UK and the EU.

Economics

  • With the U.K.’s exit, there will likely be an erosion in business confidence and price increases which will impact the U.K., Western Europe and worldwide IT spending.
  • The negative effect from lower economic growth will outweigh the fiscal savings from the UK no longer having to contribute to the EU budget and adding the UK had one of the largest budget deficits amongadvanced economies.
  • There’s a real fear that increased unemployment in the UK and all the uncertainty could push Britain into a recession.

Politics

  • Expect the EU to provide generous benefits to Scotland if it chooses to take its independence as part of the EU.
  • Scotland will have a strong campaign to leave the UK and stay with the EU.
  • The EU leaders will be willing to impose a high cost on England to avoid the much higher cost of a sequential breakdown of the EU.
  • Many overlook the fact that any new agreement will have to be approved by all 27 EU Member States and the European Parliament.

Challenges

  • Leaving the EU at a time when the UK is in need of skills will be a huge blow to UK businesses.
  • Leaving the EU will lessen the UK’s influence on EU laws that may still have an impact on the UK.
  • Leaving the EU will create significant challenges for universities.
  • Some environmentalists worry that Britain’s departure from the EU will result in the watering down of environmental and climate policy.
  • Brexit will discourage foreign investors who use the UK as a manufacturing base for the rest of Europe- particularly car makers.
  • The UK will have to negotiate new terms for its fisheries with the EU and with other countries in whose waters they are currently fishing.
  • The UK will have no avenues to influence EU policies in the field of export controls.
  • Even though all sides are emphasizing the need for co-operation in many EU capitals there will be little appetite for doing the UK any favors.
  • The loss of British influence inside the EU will impact on Washington’s carefully constructed policy of trying to isolate Russia.
  • The UK will struggle to maintain its defense spending.
  • Fintech firms will see their status as financial institutions recognised across the EU and EEA under threat.
  • Restrictions and border controls will likely be reintroduced at the point of final U.K. exit from the EU.
  • Many multinational firms who set up in London as their EU headquarters could be looking at a move to the continent.

Implications

  • Leaving the EU could put the Whisky industry’s £1 billion pounds worth of exports and the 40,000 jobs that it supports at risk.
  • Britain could see the departure of automotive plants from its shores if manufacturers cease to enjoy the benefits of tariff free trade with the EU.
  • The UK could change its mind before withdrawal from the EU and decide to stay in after all.
  • There are worries leaving the EU could make it easier to weaken employment rights set out by the EU.
  • The vote by the United Kingdom to leave the EU could boost populist and nationalist sentiment in several EU countries.
  • An additional 1,700 British businesses could become insolvent by 2019 should the UK leave the EUwithout a Free Trade Agreement (FTA).
  • The UK will probably be permitted regulatory equivalence once EU exit occurs.
  • Prices in the UK could rise as a result of the UK leaving the EU.

Questions

What do you think is going to happen with Brexit?
Do you think that Brexit would create a domino effect in the EU?
Would a Brexit leave the UK stronger or weaker?

DRIVERS

(explore the themes arising from these forecasts)
uk | eu | company | government | decision | market | state | eu citizen | directive | growth | bank | exit | business | vote | consumer

Sentiment Brexit: Despite all the column inches written in the past ten days, global sentiment towards Brexit has only slightly turned negative since the UK vote. Obviously its early days so we will watch and report on this if and when major change in feeling is detected.

Learn more

Find more sources and resources on Shaping Tomorrow , some of which were used in this Trend Alert, or ask us for our ready-made and free, in-depth PowerPoint report or more detailed GIST briefing on this or any other topic of interest to you.

Also, click here to find out how ShapingTomorrow can help your organization rapidly assess and respond to these and other key issues affecting your business.

Ask us to show you how you can produce similar, private Alerts for your stakeholders on topics of interest to you.

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