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How Will a Brexit Affect Overseas Trade?

Nobody here in the UK can fail to be aware of the coming referendum which takes place this week on Thursday, 23rd June.  It’s our opportunity, as a population, to vote on whether or not Britain should remain in the European Union and if a NO vote is returned, it’s likely to have far reaching repercussion for all of us here in the UK.  The effects of a Brexit are likely to be seen in all walks of life – it may change the way in which we work, the way we shop, the very way in which we live.  The UK has been part of the European Community since 1973 and the last national referendum on Britain’s membership took place back in 1975 under Harold Wilson’s government.  This resulted I 66% of the electorate voting to remain in the European Community.

In 1987 the Single European Act was signed and this created an internal market, an area without borders in which the free movement of goods and people, services and capital was made possible.  It’s difficult to imagine or remember what life was like back then – the days when there was a limit on the amount of cash you could take when travelling overseas.  A time when the UK had no reciprocal arrangements in place for our citizen’s to receive health care if they needed it whilst on holiday. 

Since those days, the world of finance has changed irrevocably – we no longer use cash in the way in which we used to.  We all use cards, either to access cash from ATMs or to buy goods and services.  We’ve become used to this way of life and we enjoy the benefits of free movement in Europe.  So many businesses here in the UK now trade overseas thanks, to a large degree, to the internet.  We enjoy the same protection on our purchases that we would if we were buying goods here in the UK?  What would happen if Britain were no longer a member of the European Community?  Would it be as easy as it is now to both buy and sell goods and services in other European countries?

Economists are predicting that in the event of a Brexit, unless a Free Trade Agreement is secured during the exit negotiations, they expect the UK economy to be in recession by 2019, with significant drops in GDP and sterling.  This will hamper business turnovers and profit margins for all businesses here in the UK, whether they trade overseas or not.  In the event that a new trade deal is agreed with the European Community following a Brexit, we’re still likely to see a challenging environment for businesses, with higher financing costs and a reduction in both imports and exports.  If no deal is agreed, then UK export losses could be as high as £30 billion by 2019.