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Blame it on the Brexit!

With Brexit still dominating the news on almost a daily basis, Mayor of London, Sadiq Khan has added his voice recently, warning that a hard Brexit could result in a “lost decade of lower growth”.  Khan says that a no deal outcome in which the UK departs the European Union customs union and single market is likely to cost our country half a million jobs and a massive £50 billion in lost investment by 2030.

Sadiq Khan’s warning comes as a result of the revelations from research he commissioned from consultant analysts, Cambridge Econometrics.  As a result, Khan is calling on the government to change its strategy in future talks with Brussels on Brexit, claiming that the new analysis clearly shows why the government should alter its approach and negotiate a deal that allows the UK to remain in both the single market and the customs union. 

The research carried out by Cambridge Econometrics  models five possible scenarios for leaving the EU which range from a near status-quo situation to leaving ton World Trade Organisation (WTO) terms without any transition agreement.  The report concludes that while every Brexit outcome would damage the UK economy, “the harder the Brexit, the more severe the economic damage could be”.

The Mayor of London was a strong voice in support of the Remain Campaign and has continued to argue vigorously for the UK to remain in the EU’s single market and customs union or, alternatively,  for London to be granted its own deal, particularly on maintaining rules on banking and financial services.  Since the Brexit vote in June 2016, we’ve seen Brexit dominating the news on an almost daily basis.  However, negotiations are still underway and we have no clear picture on what Brexit will be like as politicians in the UK and Europe struggle to come to agreements, leaving the whole country in limbo at present and facing an uncertain future.

The damage began not long after the vote was returned with sterling suffering a sharp drop against the dollar as the first results were announced on the night of the Referendum.  Business leaders have been criticising the government for its failure to publish a long delayed paper on the future of the financial services industry after Brexit.  Financial services are likely to be the most challenging elements of the Brexit negotiations.  Despite all efforts, the Pound has yet to regain its former position, leaving it worth little more than the Euro right now.  Banks in London are busy setting up new hubs in European countries and have warned that they may need to shift more staff and operations than they need without more clarity on what type of new trading deal the UK will negotiate with the European Union.

Another depressing development is the European Commission has officially warned that agencies which currently provide CE marking safety certificates on products of all types may not have their work recognised after March 2018 unless an agreement is reached.  This could result in the loss of jobs at more than 200 agencies across the UK, including the British Standards Institute and Lloyds Register.