by Nina White
There’s a scene in recent dystopian television drama Years and Years where an American investment bank collapses, triggering a banking crisis overnight. This causes widespread damage throughout society, leaving a family homeless and causing hundreds of people to lose their jobs and hard-earned cash. This is reminiscent of the Financial Crash 2008, which in my opinion, could be repeated if we endure a no-deal Brexit.
The international banking crisis was triggered by the collapse of the American investment bank, Lehman Brothers, as clients withdrew their money from their accounts in fear that the bank may cease to operate. In July, the BBC reported that the Office for Budget Responsibility (OBR) predicted that Brexit may trigger another recession, as uncertainty surrounding a no-deal scenario, as well as a reduction in consumer confidence, might deter investment in UK-based companies.
Despite doing everything in their power to leave the EU by 31st October, the government has admitted that any form of Brexit will impact trade to a large extent. According to ‘Operation Yellowhammer’, there will be a significant delay to the import and export of goods, largely impacting business services, and it is predicted that there will be a 4% increase in tariffs. In the case of a no-deal Brexit, we would no longer be in the single market and customs union, meaning that there will be increased border checks at Dover, leading to increased delays and severely impacting cross-border trade.
Until we have a withdrawal agreement in place and more of an idea of how things will change post-Brexit, there is a lot of uncertainty surrounding this situation. There is no country that hasn’t got a trade agreement with its closest neighbours; the single market is an asset to any business in an era of globalisation. Who would not want to benefit from being able to trade freely with zero tariffs imposed on goods, where a product imported from one member state is legal and can be sold across another 27?
As a leading contributor to our country’s Gross Domestic Product, a multinational company facing liquidation, such as Thomas Cook, will have a significant impact on the economy if multiplied. This is not to say that Brexit is to blame for the collapse of Thomas Cook, but due to the negative impact it will have on trade, this situation provides some perspective to how businesses could be affected.
A business acts as a source; a source of income, a supplier of food or medicine, a service provider i.e. transport and logistics. If disrupted, this will have a severe impact on the day to day running of society, so imagine how the economy will be affected if multiple large companies collapse due to the consequences of a no-deal Brexit. But rather than acting as the backbone of society, many businesses might have to resort to government and public funds to bail them out if they collapse, and employees who have lost their jobs as a result may need to rely on the state.