Brexit: The multi-faceted implications

SADC offers a ready proposition for staking out win-win agreements with the southern-most part of Africa, for instance. Zimbabwe, notwithstanding the diplomatic tiffs of yesteryear makes for a very good trading partner.

THE exit of Britain (Brexit) from the European Union leaves the EU somewhat weaker as an economic union.

I will interrogate the possible reasons for the Vote Leave in this instalment.

First, the Britons, in voting Leave, appeared to have conceptually voted against massive immigration, policy imposition by Brussels as well as demeaned sovereignty, among other cogent reasons.
Brexit: The multi-faceted implications
The implications of an economic union on the free movement of people in search of employment ideally works where the levels of development of member states is largely uniform, among a few other feasible statuses.

This homogeneity in development would render the movement in human capital in search of specific concentrations of specific labour demands balance out across member states. When you have a situation like the one prevailing in the EU where you have the likes of Greece and Poland staked on one side and the likes of the United Kingdom on the other end, then you are likely going to witness a massive influx of people in search of rewarding job offers in the latter country than the converse in the former countries.

Now, the UK, as the fifth largest economic powerhouse of the world, was as a EU member compelled to absorb as many Romanians and Polish, among others with little happening (as far as the average voting Briton was concerned) by way of emigration into the rest of the other 27 countries which made up the EU.

Boris Johnson

The EU would have worked in the UK’s favour had there been policies on immigration caps on member states. But that would have gone against the dictates of an economic union wouldn’t it!

The ease of mastery of the English language in comparison with other languages like French which, for starters assigns gender attributes on anything and everything as part of the language and German which is not so easy to learn, made it much easier for would-be emigrants to target the United Kingdom as their destination of choice.

Second, when each country continues to maintain productive autonomy to a great extent, then with free movement of personnel, we are bound to have factor rewards being the anchor upon which factors derive their mobility.

If the UK had continued to offer higher pound sterling wage rates when compared to the Euro wage rate offered by other EU member states, there would be massive labour mobility into the UK as factors of production moved in search of the highest reward.

Granted for the majority of Britons who had lived all their lives in Britain, enjoying the privileged lifestyles their isolationist policy had earned them, the sudden influx into their country of a labour force, which was not only willing, but happy to take wages that were way below the average wage rate demanded by Britons for similar work, that meant industrialists could now rationally and hence economically opt for Polish labour, for example which was cheaper.

The industrialists did not hesitate to favour Polish labour ahead of British labour as not only was that a rational move, but the move also curtailed the cost of production which was a must-do under an economic union as the markets were opened up to other players within the EU.

The opening up of markets means price competitiveness becomes the key to success. Cost cutting became the principal modus operandi if success was to be achieved in that scenario.

Therefore, the motto among industrialists appeared to have become: Out with expensive British labour in with cheap Polish labour (with Polish here representing all the other lesser developed members of the EU)!

As the Britons gradually paved way for the Polish and rest of the block member states’ residents who were keen on settling in the UK, the British unemployment or sub-employment figures rose. With that came drops in the standards of living for Britons.

All this was happening in the Britons’ backyards. One frustrating fact of life is to witness foreigners living large in your country especially when it appears as if the foreigners got their wealth from muscling you out of what one thinks is their sovereign entitlement.

Many a war has been fought over this cause.

Britons felt hard done by the outcome of the economic union. Hence, when they got the opportunity to bolt out they did! Yes, many may proffer all sorts of theories on the failure by the team fronted by David Cameron to convince the country to vote Remain and some may say Boris Johnson’s team Leave did a more thorough campaign, without taking anything from the latter, or slighting the former, at the end of the day, the average Briton voted after considering the effects of their choice as they affected them mainly as individuals.

I remember during my stay in the UK during the life of Britain’s membership of the EU, a number of British friends, in conversations would lament the continued influx of foreigners and what that meant as far as changing the fabric of their British society. Let’s face it, each society has its values, norms and beliefs which may not necessarily be the same as those held by others with whom borders are shared. Just as Zimbabweans generally place significant value on people’s lives which cannot be said for some countries that Zimbabwe shares borders with, likewise that applies with Europeans.

Third, the continued attrition of the sovereignty of the British state as it gave way to Brussels’ determined legislation always made the Britons feel like they were handing over their sovereignty to unelected bureaucrats at Brussels.

That is one sure way of making a people feel disgruntled. People always want to feel that they are masters of their own destinies. This is regardless of whether they are indeed masters of their own destinies or are just made to believe and appear as if they are masters of such destinies! When Cameron appeared to be keen on handing over that master-ship to Brussels, the electorate felt as though they were giving way too much to foreigners with no commensurate benefit in return.

Fourth, granted the union had a number of issues that almost always culminated in the need for bailing out of member states, those that felt they would not need financial bail outs in the foreseeable future felt like they were being abused by their not so prudent counterparts.

It is always the case that whenever those who are prudent are called upon to bail out those who may not have been quite prudent, the former always feel discontent to do so especially when they feel the latter had been wasteful and imprudent.

The benefits of speaking with one “stronger” voice and negotiating trade terms and agreements as a block with outsiders appears not to offer sufficient appeasement to those who felt that, as a stand-alone country, Britain could negotiate more favourable trade terms with her trading partners without being constrained by the need to comply with what would have been agreed upon by the bloc.

Whenever you incorporate others in negotiations, greater compromises will have to be made for there to be agreements. At times, if not most frequently, the negotiated outcome is not the most optimal for those who individually could have negotiated for and on behalf of their singular selves.

Britons may also have felt the concessions they were giving within the EU may not have been the best for their own individual case. They wanted that power back to negotiate as a country, terms of trade that favoured Britain and for Britons first!

Fifth, the fact that a significant number of opinion polls are saying the young largely voted Remain and the older folks voted Exit may not be taken as indicative of what really transpired without a proper voting split analysis.

Remember, these polls largely failed to predict the outcome of the vote. What could have happened is that those who were most affected by the massive immigration socially and financially may have voted Leave regardless of their age grouping.

The implications of Brexit can be looked at politically, economically, legally, as well as socially for the Britons and the rest of the world. Economically, Britain will need to pull out as soon as possible from the bloc. The time frame proposed by Cameron appears to be indicative of a non-committal approach on his part, to say the least. Indications are the EU would want to tighten their machinery against the UK as much as they possibly can as a way of scaring other countries from even contemplating leaving the bloc as the UK has done.

One quickly notices from the speeches of the EU’s president that they want the UK to hasten her leave. Cameron, on the other hand, wants to extend the presence of the UK as much as he could. The delay in the pull-out gives the UK enough legroom to stabilise herself and stake out a part in the global economy with minimal pain.

What Cameron is doing may be viewed as quite politically sound. Delaying the inevitable as much as one can and letting the new Prime Minister, since s/he will be new also to further delay the process as they settle down, politically prolongs the Stay that Cameron was campaigning for.

Economically, the EU will want to be as heavy-handed as it can possibly be so as to bar would-be future leavers from contemplating yet another leave. The bloc would want to appear very robust and would not want the Brexit to disintegrate the union.

Germany and France, which appear to have the greatest clout within the bloc would be loath to give up that strong power they wield in Europe as handed over to them by their current economic positions within the EU.

Britain needs to move very fast in instituting bilateral trade agreements with other countries outside the EU. Even reviving the commonwealth, beyond mere ceremonial significance, is a launch-pad they could spring from. The fact that trade balances are now skewed differently from the past, with the likes of China now playing a significant role as both a market and an exporter, Britain may need to out-compete China in emergent markets, such as Africa.

In Africa, if Britain is willing to negotiate trade agreements as an equal with the African countries and ensure that she avails herself in an unfettered way (removes trade barriers) in line with her expectations for African states then she may likely stake out significant trade agreements with Africa.

Britain’s advantage, in the event that she wants to participate as an equal, lies in the fact that British products are largely perceived as better than some Asian-made products.

In addition, the fact that Anglophone Africa uses English as a medium of communication may well make the case for the reinvigoration of British trade in Africa more potent than China’s case were with the latter language is a tremendous barrier.

Britain needs to make bilateral and multi-lateral trade agreements with non-EU countries and blocs much faster than the timeframe for the real pull-out from the EU.

SADC offers a ready proposition for staking out win-win agreements with the southern-most part of Africa, for instance. Zimbabwe, notwithstanding the diplomatic tiffs of yesteryear makes for a very good trading partner.

I am sure many Britons remember with nostalgia the unadulterated pure taste of Zimbabwean beef straight from Cold Storage Commission!

Britain is best advised to concentrate on trade as she enters into bilateral relations with some of these African countries. As Britain enters into trade agreements with Africa and the rest of the world outside the Eurozone, she may need to hasten her withdrawal from the EU so that she ceases to be bound by the existing EU legal constraints in staking out separate trade agreements.

Since she cannot currently start negotiating outside the dictates of the EU until she has left the bloc she conceptually is prolonging her freedom from the fetters of the EU.

The inevitable must be confronted with calculation, but without further worsening one’s plight through unnecessary delays. The longer the initiation of the processes of invoking Article 50, the more jittery the markets could continue to be and the deeper the effects of the response of the financial markets.

Socially, Britons may need to embrace the new developments that come with the exit from the EU. The reports that are filtering through of alleged xenophobic attacks on largely the Polish does not bode well for Britons both at home and abroad.

Granted Britons like any other nationality are members of the global community and whether in the EU or outside the EU were not then and possibly now at war with any nation, it is not noble nor sane for Britons to start attacking other nationalities.

Exiting the EU must not be read to signify enmity with fellow Europeans or any other citizens. A culture of inclusivity and togetherness in our accomplishments despite our diversity which breeds tolerance and peace will make the UK a respectable country as she sets out to carve new trading agreements with, guess what, citizens of other countries!

Prosper Munyedza, MSc Business Analysis and Finance (University of Leicester), BSc Econ (Hon) (University of Zimbabwe) is a lecturer at a local university. He writes in his personal capacity. None of the views contained therein should by no means be read to imply the views of any of the organisations he is associated with. For feedback email him on:


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