Brexit- Part 1: Crises that Britain may find tough to fight with!

Enamul Hafiz Latifee writes,

(N.B.: This is the first node of the tree called "Brexit: Time for the new Britain to pave wise". In this Part 1, short-mid-long run economic and societal crises have been identified and it is believed once the problems are wisely located, it will be easy to rip these apart and move forward.)

"Every problem has in it the seeds of its own solution. If you don't have any problems, you don't get any seeds." ~  Norman Vincent Peale, American minister and author (most notably of The Power of Positive Thinking) and a progenitor of "positive thinking" (May 31, 1898- December 24, 1993)

I congratulate the #Britishers for taking a very brave decision to leave the European Union (EU) by making #Brexit one of the most successful campaigns driven by nationalism in the history of human kind.
Well, #BBC has dug out 8 reasons (http://goo.gl/vTsRhf) why and for which matters/issues people of the United Kingdom (UK) voted to leave but not to remain in EU anymore.
I see it as the rise of a very positive and strong nationalism, which is perhaps very necessary for the own nourishment. But, there are- wider ranges of threats that may perplex the New Britain's future journey starting from now.

To avoid those unwanted circumstances, Britain's upcoming leaders should be very concerned about the matters/issues mentioned below and must have to take the remedial plus accommodating plans and conjoined steps for sustaining the Britain, however these are-

Short-mid-long run Economic volatility may come into play

1. Under the rules and regulations of EU, UK got completely unconditional access to export their products and services other EU-Countries and vice versa, that is why, UK and EU were very highly depended on each other. To fetch the trade statistics, I see, firstly, UK's average import of last 3 years from EU was 54.28% (e..g, calculated from the ITC Trade Map's data) comparing to UK's total import from the World, surely afterward, within 2 years (i.e., Under article 50 of the Treaty on European Union, Britain has two years to arrange new deals with EU member states) this scenario may change completely as if UK and EU, both have very strong probability to impose fresh import tariff on each other, which will heavily restrict the import of goods and services by UK from EU nations. If both go for imposing non-tariff barriers on each other, then the situation will turn more bad. 

There is a chance that, it will increase the price level over the years next, as if, specially in case of goods, UK will have to import it from far destinations by incurring additional shipping costs and times.

Secondly, UK's average export of last 3 years to the EU had share of 44.65% in total export. For the similar reasons, as UK will be no longer in the custom union- EU, that will encourage other EU nations either to refrain from sourcing products and services from UK or to source homogeneous/substitute products from elsewhere. In today's world, as if, every nation is under a highly integrated value chain, then if EU nations cut down their imports from UK- surely, it will shatter down the export earnings of UK and will create unemployment in massive.

2. A country'short-long run business and economic growth depends on how other countries are seeing her to operate business in or make a deal with, in short, business confidence does matter. In spite of the fact that UK is still in EU and will take some years to be out of EU's all rules and regulations, most of the short run indicators went negative immediately after the victory of Leave EU, i.e., firstly, London blue-chip index fell 7% in early trading to just over 5,800 points but ended the day (24 June, 2016) 3.15% lower at 6,138; secondly, Pound Sterling fell down by 8% and 6% against of US Dollar and EU Euro which in turn caused Gold price to jump up by 5% to its highest level in more than three years at US$1,322 an ounce as country-investors started losing confidence in Pound Sterling and found Gold to be substitute to it. Further more, this depreciation in Pound Sterling will surely generate inflation, causing- cut down consumers' pocket and savings more, negative the company profit and bank real interest rate; thirdly, the FTSE 250, which mostly comprises companies that trade in the UK, shed 7.2% to close at 16,088 points. Moreover, UK banks were also hit hard, with Lloyds closing 21% lower, Royal Bank of Scotland fell 18.8% and Barclays shed 17.7%.; fourthly, UK government bond yields hit a new record low, with 10-year yields down more than 30 basis points to 1.018%, according to Reuters data. In addition, two-year yields fell more than 20 basis points to their lowest levels since mid-2013, at 0.233% (http://goo.gl/f4RTpZ). Fifthly, Moody's Investors Service on 24 June, 2016 had changed the outlook on the UK's long term issuer and debt ratings to negative from stable- both ratings are affirmed at Aa1 (https://goo.gl/wu8RBK). In sixth, approximately 1.3 million Britons live and work in Europe. Many British expats own property in Europe and the likelihood is that they'll be able to continue to do so, but the main issue to be aware of is a potential change in inheritance and tax laws. Of course, if the Pound Sterling remains weak many expats may use the opportunity to re-enter the British property market. But, working in the EU could become more difficult for UK expats if host countries ask them to comply with more restrictive rules when it comes to permits and setting up businesses. They may lose their automatic right to work within the EU area and be asked to apply for Blue Cards. This things may narrow down the opportunity of exporting high-skilled manpower to EU from Britain causing remittances to fall just after few years though it is expected to rise right now, however, restrictive rules will squeeze the business opportunities indicating that profit generation by expats in EU nations will come into decline (http://goo.gl/PHCRRa).

For this six-folded reasons, international investors will may withdraw existing investments from Britain, and new foreign investors will may not investment in Britain further, as if, in addition, prior to the decision of leaving EU, to any foreign investor while investing in Britain mean that a very easy access to other EU countries which will get unwanted trade restrictions on those companies operating or to wish to operate in Britain, however, it will cause the companies not to employ skilled staffs sourced from entire EU, which may hurt their any other interest too.

Well, it should be noted down, there are few issues that unite UK economists but Brexit is one of them: they overwhelmingly believe leaving the EU is bad for the country’s economic prospects. In the Financial Time’s annual poll of more than 100 leading thinkers, not one thought a vote for Brexit would enhance UK growth in 2016 (http://goo.gl/diTvW9). 

Apart from this, the societal consequences following the Brexit will may turn into the below mentioned ways, 

1. (Writing is on the process)

Find more on/related to Brexit,

1. Source Tax at 0.7%: After Brexit, is it enough to cut for Bangladeshi exporters?
2. After the Brexit, will you pay more or less?