The Btchcoin Guide to Brexit

Written by Erin Fiell and edited by Claire Halley Robbins

Contributor Erin Fiell breaks down Brexit for our first ever ‘101 – Stuff You Should Know’, which is our series of guides to important topics in personal finance and global economics.

So what exactly is Brexit?

‘Brexit’ is a catchy moniker that refers to the political referendum held in the United Kingdom in June 2016, which the British population voted to recede from the European Union. It was a veeery marginal victory for ‘leave’ voters, with 52% in favour across the UK.

However, the voting results get a whole lot more complex when taking a closer look at the ballots on a country-to-country basis. A whopping 62% of Scotland and 56% of Northern Ireland voted to remain in the EU. England and Wales both edged on the side of EU independence, with a ‘leave’ vote of 53% and 52% respectively.

The disparity between the results from each UK country has led to palpable political tension in Westminster, confusion over new border policies between Ireland and Northern Ireland, and even cries for a second Scottish independence referendum. Britain is due to withdraw entirely from the EU in March of 2019.

Who hurt you Britain? Why did you want to leave?

No single event cemented the outcome of the Brexit referendum – in fact, it was widely speculated that the country would overwhelmingly vote to remain in the EU. So what exactly happened?

Among other factors, economics played an undeniably huge part. Many ‘leave’ voters were unhappy with Europe’s current economic status – primarily, its rising unemployment rate and the financial hardships faced by many EU countries following the global financial crisis in 2008. For these voters, leaving the EU was the only true solution to salvage Britain’s future economic viability on the world stage.

That being said, what many of these voters might not have understood before casting their ballets is that exiting the EU means potentially also leaving the EU single market, a system in place that ensure the free transfer of goods, services, capital and labour in throughout the EU. In essence, leaving the single market will almost certainly spells out economic disaster for Britain.

Perhaps the biggest driver that lead to Brexit was the widespread hostility towards the rising number of immigrants settling in the UK, and their desire to regain their sovereignty as an independent nation separate from the rest of Europe. The general thought amongst these voters was that remaining a part of the EU diminishes their authority, and the only solution to reclaim that independence was to leave. The surge in nationalism felt across the UK left ‘leave’ voters wanting to ‘Make Britain Great Again’.

What the heck can Britain do to prepare for this thing?

For Britain, the goal is now to draft a deal with the EU that leaves them in the best possible economic situation after Brexit.

Negotiations have been ongoing since July 2017 following the resignation of former PM David Cameron, and the subsequent election of new Conservative leader Theresa May. Discussions at EU HQ in Brussels have centered primarily around Britain’s status in the EU’s single market and customs union, future trade agreements with Europe, and the future residency status of the millions of EU citizens settled in the UK.

Put simply, there are two possible Brexit outcomes: a ‘hard Brexit’ which would see Britain withdraw entirely from the single market and customs union, and a ‘soft Brexit’, where Britain would remain in the single market and/or the customs union. There are many supporters of a harder Brexit that would guarantee more sovereignty and control for Britain, however, with no trade agreement with Europe, many fear that this scenario could spell out economic disaster for Britain.

Nearly every Brexit deal May has proposed has been unanimously rejected by EU officials, and she has subsequently been the target of brutal criticism from her own party, her opposition, and pretty much everyone else on the continent. Even Scottish First Minister Nicola Sturgeon so eloquently stated that May’s handling of Brexit talks has been ‘shambolic, chaotic, and utterly incompetent’. Ouch.

As negotiations stagnate, it’s beginning to look like Britain is headed for a no-deal, hard Brexit – however, this is all speculation until May produces a plan in the coming months to appease both sides of the deal. That’s a big ‘if’.

What does this mean for Canada and the rest of the world?

Are Britons likely to flock to Canada in hoards the way it was speculated Americans would after the election of the 45th? Unlikely. Will this have implications on trade, immigration and international policy agreements between Canada and our coloniser? Almost definitely.

With Britain potentially headed for a no-deal Brexit, the rest of the world is scrambling – even the IMF is sh*tting it, calling it ‘one of the biggest financial risks facing the global economy’.

Fortunately, Brexit’s impact on Canada will be minimal. The terms and conditions of the Canada-UK trade relationship are likely to remain quite similar. That’s good news, considering that we export approximately $16 billion in goods to the UK every year – 60.6% of which are metals and minerals. The UK is our third largest trading partner – right behind the US and China.

Brexit also poses a unique opportunity for Canada to pursue a modern trade agreement with Britain. Prime Minister Justin Trudeau has stated his openness in working with the UK on a brand-new, ‘more impactful’ trade deal, which will likely be built from Canada’s Comprehensive Economic Trade Agreement, which is our deal with the EU.

Until then, Btchcoin will keep you updated on Brexit in our biweekly newsletters. And if you’re having a rough week, just remember, at least you’re not Theresa May.

image.jpg