There have been changes of momentous proportions that has affected the country both politically and economically since the 23rd of June 2016, which was the day the course of UK’s history was changed by the British voters. The UK Economy has a lot of uncertainty in present times and uncertainty is the greatest enemy of a prosperous economy.
It is not right to think that all seems well in the business world because the rebound of FTSE-100 has occurred. The growing belief that Article 50 (the mechanism to trigger the UK leaving the EU) will not be triggered for many months by the Prime Minister is part of the reason for the recovery. Therefore as the country decides to take a short view of such events, it is going to be business as usual.
The FTSE-250 which is the next biggest listed UK companies below the leading index is still 5% below the level it reached on the day of the referendum, therefore it is still struggling. These companies are under a lot of pressure due to consumer spending down and they are more exposed to the happenings of the UK market.
The director of the Centre for Economic Performance at the London School of Economics, John Van Reenan stated that “An individual get a rabbit-in-the-headlights phenomenon”, this is when businesses who are uncertain about the future don’t want to make new investments or new decisions. The instant effect would be the lowering of hiring and investment activity, this could result to an instantaneous slowdown of growth.
A jobseeker, Sarah Lewis who is searching for work in the IT sector also stated that since the vote occurred the amount of recruitment emails she has received has dropped; “Businesses are not just hiring at the moment” A survey of 1000 members of the Institute of Directors (IoD) occurred and it was discovered that one-fourth of these members planned to freeze recruitment and the claim that jobs were going to be cut was stated by 5% of these members.
The threat of recession is considered real especially as soon as Article 50 is triggered and this is in accordance with many reports.
As the economy is dealing with the economic shock of Brexit vote, Chancellor George Osborne publicly chose to waive his plan to run an absolute budget surplus by 2019/2020. He quoted that the “UK must be realistic about achieving a surplus by the end of the decade”.
It was also reported by the Independent that the economy might possibly enter another recessions because the economy is expected to rapidly slow down and this could take a hit on the tax revenues and in the absence of additional spending cuts and tax rises it would also make it difficult for the Government to hit surplus within four years.
The ability to work in the UK for EU citizens remain unchanged, at least for the time being. The situation will continue even after Article 50 has been triggered because while the negotiations to exit the EU is taking place, the UK will remain in the EU for two years.
Although a lot of uncertainty still remains. The EU is highly relied on by industries such as construction and agriculture for labour to meet demand. UK and the rapidly growing technology sector are also known to depend on their fair share of talented and highly educated EU nationals in order to add value to their work force. There are also the EU citizen workers that are employed in large numbers- In the long term, what will happen to their ability to remain in the country?
At the moment, no one really knows the answers to every question relating to Brexit. It will prove very difficult for employers to recruit labour from EU if there is an introduction of the Australian-style points system, especially if the minimum salary requirement is £35,000 for indefinite leave to remain that is applied to non-EU migrants is also applied to EU migrants. However, if non-EU nationals are not able to pay the required minimum salary to maintain themselves for more than five years, the above mentioned requirements makes it difficult for UK employers to justify their investment in training the non-EU nationals.
It has been clearly noted that the position for the next Prime Minister is being battled for by both Theresa May and Michael Gove. On the subject of immigration, both of them are not considered warm and fuzzy but the question is: who could be described as more liberal of the two?
It was portrayed by the Home Secretary that the benefits of mass migration is ‘close to zero’. Her stands on immigration was made very clear when posters of the words ‘Go Home’ was printed on advertising vans by the Home Office. When Teresa May claimed that mass migration was threatening UK’s cohesion, the posters reflected her hard line on taking Syrian refugees and her last speech at the Tory party conference which sent a “chilling and bitter” message. In Britain’s withdrawal from the European Convention on Human Rights, Teresa May is known as their strongest supporter in this decision process.
He is widely considered to be the brains behind leave. Of all the official leave campaign leaders, he is known to have played the immigration card the hardest by indicating that it would be a “direct and serious threat” to the public services in the UK if Turkey (who experts agree are unlikely to join the EU in our lifetime) becomes a member of the EU.
EU national employees who are eligible for British citizenship need to be encouraged by their employers to apply for it as soon as possible. On the other hand, enquires should also be made about Permanent Residence Cards. The employers are protecting their organisation’s investment in the talent and skills of their workforce by cementing the residence status for EU workers’.
A lot of uncertainty will prevail for a long time in regards to whatever happens to the leadership of the Tory party, not to make mention of the opposition which has also collapsed under Brexit and this will not help the economy or businesses in the economy. A time will come when our grandchildren will ask us the question “what were you thinking?”