In the wake of the EU referendum vote last summer, certain facts remained unclear as a new world order took shape. One thing that was undeniable was the fact that disgruntled, former Labour voters in the North of England had carried the day for the Leave Campaign, which the metropolitan electorate flew the flag for Remain.
There are sure to be notable exceptions, of course, but it was the former mining towns of the North that made the biggest contribution to the Leave vote. It is therefore something of a tragic irony that many of these voters and business-owners in the North may well be the first to suffer the fall-out from Brexit, with negotiations between the UK and the EU set to start this month.
The Single Market Issue: A Potential Nightmare for Small Businesses
The issue here is the fact that the Leave campaign based their rhetoric on the topic of immigration, creating a sense in some towns that an influx of migrants had limited job opportunities for British nationals. It was along these lines that the Leave Campaign was fought, and coupled with misinformation and a lack of genuine debate it had a considerable impact in the minds of Northern residents whose towns were besieged by high unemployment.
Interestingly, the issue of single market was scarcely discussed during the referendum, with many business-owners assuming that any future EU deal would include some form of access to the Union and its member states. This is why so many Northern-based business-owners and Leave voters have showcased their regret since the referendum, as Theresa May’s government has vowed to pursue a hard Brexit and sever all ties with the EU in order to appease a handful of extreme voter views.
This is the final straw for some firms, who have already bore the brunt of Brexit’s initial impact. Brokerage firm Oanda chartered the steady devaluation of the pound of the last year, for example, as it has traded in an increasingly narrow range while increasing the cost of imports incrementally. Now the UK’s small businesses (and particularly those in the North) are faced with the prospect of significant tariff hikes between the UK and the EU, despite the fact that the single market currently accounts for a staggering 43% of British exports.
The Last Word
As if this was not enough, firms in the North will also lose access to competitively priced and skilled labour over time. The UK’s self-destructive desire to segregate itself from the EU will bring an end to the freedom of movement between the Europe’s and Britain’s borders, which will in turn increase the typical small businesses cost base. When considered altogether, these factors could certainly create a restricted small business climate that will pay the price for the UK’s decision to isolate itself in a global marketplace.
Of course, hardcore Brexiters will reassure us that the situation will improve once we have parted ways with the EU and forged new, progressive deals with the U.S. and Commonwealth nations. Such deals are far from assured, however, particularly as Britain has little leverage in the current market and will forced to deal with the increasingly protectionist outlook that is prevailing in the Western world.
This may ultimately mean that the UK falls victim to the same mind-set that triggered Brexit in the first place, while those who voted for it may well be the ones to pay the ultimate price.