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No-deal Brexit entails opportunities, challenges

Author  :  ZHAO YUAN     Source  :    Chinese Social Sciences Today     2018-09-08

LONDON—The British government published a set of advice to alleviate the potential impacts of a possible nodeal Brexit on people and businesses. On Aug. 23, the government published the first 25 documents. Will the no-deal Brexit be the final option? If so, how will this influence future UK foreign policy and trade policy?

Andrew Gunn, researcher in higher education policy at the University of Leeds, contended that a no-deal Brexit would have numerous ramifications for higher education. For instance, the EU program Erasmus+ requires an agreement to be reached between the EU and the UK if British institutions are to continue participating in the scheme.

This indicates the possibility that UK students would not be able to participate in Erasmus+ after March 2019. This could create difficulties for universities, where programs include work or study placement in Europe as part of the course.

However, more students from the EU come to the UK as compared to the number who go the other way. Therefore, universities in the EU may find a way “to keep that option open after Brexit.” Gunn stressed that there may also be more difficulties for UK researchers to access EU funding.

Chris Rowley, a professor at Kellogg College of the University of Oxford, told CSST that it depends on what is meant by “impact.” Impacts will vary depending on the time range—immediate, short, medium or long. There may be some higher negative impacts in the shorter term but lower over time. “Organizations and systems are currently set up to take maximum advantage of the status quo—EU membership—but forward looking, well-managed organizations with effective leaders who see this as an opportunity to ‘prove their worth’ will come to take advantage of the new environment and context.”

Rowley believed that more open, global trade, especially with the dynamic and growing regions and countries of the world, provides further opportunities. Regarding trade, an increasing proportion will be the kind unaffected by Brexit—the proportion of trade that is with the EU will decline as the rest of the world grows faster. However, EU trade is important to a few countries, most of all Germany. A no-deal Brexit would be costly and damaging to them.

“It depends on what sectors of the economy you are talking about,” said Rowley. “The UK economy is overwhelmingly dominated by services. Among them, financial services are critical, with London a global powerhouse, still ranked first on the commonly used and well-respected Global Financial Centers Index (GFCI). Also, cross-border flows involving emerging markets are likely to grow faster than the EU equivalents in the future.”

The UK has already put in place a scheme allowing European financial services companies to continue to serve UK clients. As Bank of England Governor Mark Carney has said, the UK has a “rock solid solution” to potential disruption to derivative and insurance contracts.

Indeed, the UK frequently has higher sector standards than the rest in the EU. In short, the government’s advice here largely repeats that of the Bank of England and Financial Conduct Authority’s temporary regulatory authorizations for the three years after Brexit.

Moreover, city business contingency plans are already in place, an England-European Central Bank working group is already looking at dealing with cross-border contracts such as derivatives and insurance, and asset managers have been told that delegations—groups registered in the EU but doing the bulk of their business in London—are expected to continue.

 

 

 

(Edited and translated by Shao Yijia )

 

 

 

 

 

 

 

 

Editor: Yu Hui

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