After the Brexit party, a monumental hangover
As dawn broke on Friday 24 June 2016, it became clear that the UK electorate had made a historic decision to bring to an end its 43 years of EU membership. The much discussed ‘Brexit’ would finally become a reality. While the 52%/48% decision to leave the EU is on the face of it clear, the overall result masks a very divided United Kingdom. While Wales and England voted to leave the EU, London, Northern Ireland and most notably Scotland, all voted to remain within the EU – Scotland by a margin of almost 25%.
What all of this means for our clients is hard to say. There will be economic and political consequences and these are bound to impact upon all businesses and individuals in the UK and those who do business with them. The break-up of the UK is now a very real possibility, with the Scottish National Party indicating that it will seek a second referendum on independence for Scotland and a very real sense of dread in Ireland that border controls will once again feature on what will become the EU’s western-most land border dividing the island of Ireland. The consolation for citizens of Northern Ireland being that, whatever their political and cultural allegiances, the Good Friday Agreement means that they shall all be entitled to an Irish passport – and already post offices throughout Northern Ireland are reporting an insatiable demand for Irish passport application forms.
The consequences for the UK shipping industry and the UK ship registry are also very unclear at this time. There is a concern that the attractiveness of the UK flag for both commercial and leisure vessels may be undermined. More broadly, the UK Chamber of Shipping, which was neutral as to the Brexit debate, has highlighted some of the many issues that now urgently need consideration.
For many commentators, for the UK to turn its back on the EU and assume that it can go it alone outside of one of the most successful trading and political alliances ever conceived, notwithstanding the EU’s shortcomings, represents one of the most monumental acts of political and economic folly. For those who advocated Brexit, the decision represents the apogee of their campaign to ‘take back control’ and eschew the institutions and alliances of a European Union conceived partly out of a desire never again to see Europe descend into the nightmare played out in the wars of 1914-1918 and 1939-1945. The Brexiteers will have enjoyed the party, but the hangover may last for generations and, ultimately, it may well spell the end of the United Kingdom as we know it. How supremely ironic that would be in relation to a Brexit campaign that was steeped in supposed patriotic fervour.
How the decision on Brexit is made real by the UK government remains to be seen, however it is hard at the present moment to see any significant ‘opportunities’ offered by Brexit. Some have pointed to the greater competitiveness for UK shipyards and boatyards offered by a weaker pound or, depending on Britain’s eventual relationship alongside the customs territory of the EU post-Brexit, the possibility of the UK becoming a destination of choice for those wishing to export their yachts and aircraft out of the EU. That said, on the first point above, while a weaker pound will be seen as attractive to Euro or Dollar spending customers, it will also make it significantly more expensive for UK-based businesses to buy in raw materials and services from overseas. There is little point in being more competitive due to a devalued currency unless all of one’s products and services are sourced and priced in that currency – something that in today’s globalised economy is a rarity. Come what may, as the new reality dawns and the UK formulates its plan of action we intend to keep you posted as regards developments pertinent to our sector. Interesting times ahead.
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