Following the UK’s decision to leave the EU, there are more questions than ever over what this means for the British people. In a time of confusion and fear, concrete answers are hard to come by.
Peter Burgess, Managing Director of Retail Human Resources (RHR), answers some key questions on what the Brexit will mean for those of us who work in retail. Peter started his career in retail management at the age of 18 and spent ten years with Russell & Bromley before launching RHR in 1988. He is a Fellow of the Institute of Personnel and Development and holds an MBA from the London Business School.
If you have any concerns or questions for Peter, please leave a comment below.
Q: I am an EU immigrant and I have only been here one year working as a sales assistant. Will I have to leave the UK?
A: Absolutely not. There has never been any questions of those EU immigrants already located here having to return.
Q: Does this mean that there will be no immigrants from the EU?
A: Again, absolutely not. In fact in my view nothing will change whether we are in or out. All that will change is we will in fact be entitled to restrict it if we want to. During 2015, 330,000 immigrants came into the UK, half of which were from outside the EU. The Government already had the right to restrict this but didn’t because the immigration is essential for the functioning of our economy. If all immigration stopped, the economy would be in permanent recession.
Q: Canada has got a free trade agreement with the EU, so surely we will get the same. Why is there such a fuss and worry?
A: Firstly, it took Canada seven years to negotiate that deal. But it is extremely likely that the UK will get the same deal if not better. What we will *not* get is access to the single market, which is worth so much more.
Q: What is the difference between a free trade agreement and the single market?
A: Free trade means that no tariffs are placed on either side. The single market means that those within it can trade in each other’s countries without any of the formalities of, say, setting up a local company. All the rules, say on health and safety, consumer rights etc., are all the same. When they are different, there is a cost.
Furthermore, it is easy for countries to place conditions on the sale of certain goods that can prejudice those who are not part of the single market. Indeed the job of the European Court of Justice (ECJ) is to enforce the rules and ensure that countries within the single market don’t try to set up artificial barriers.
Q: Is it possible that the UK could negotiate access to the single market without being a member state?
A: Yes – Norway and Sweden both have this. But, they have to pay substantial sums into the EU for this privilege and they do not get a chance to shape the rules.
Q: Is it true that we spend more with the EU than they do with us?
A: Yes it is.
Q: So, surely it is the case that they will negotiate a good deal with us?
A: Yes they will. But they will not and cannot give us a better deal on the outside than we had on the inside, for this would inevitably lead to the disintegration of the EU itself. Why would the member states give us a better deal than they have themselves?
Q: So are there any advantages of coming out of the EU?
A: There are four principle suggested advantages put forward by the Leave campaign:
• By far the politically most potent is the control of immigration. I would say however that this has been misrepresented. Having control doesn’t necessarily mean that control will be exercised. As said earlier, it was not exercised on non-EU immigration which is far more controversial.
• We will regain control of our laws. However, this is not true. What most of us regard as our laws is the criminal law. That is those things rules that govern our day to day lives like, how fast you can drive, through to what sentence a mugger gets in court. The EU has no control over this part of our law at all. The only aspect of our law making that they influence is where it affects trade or the community as a whole. There are a few environmental issues that are perhaps irritating, but in the main we have always opted out of legal provisions we don’t like.
• We will be free to enter into agreements with other countries on our own, whereas currently we can only do this through the EU. This is true. You have to ask yourself who would have most weight, however – the largest market in the world, (the EU) at 500 million people, or Britain on its own at 65 million.
• We will be free from EU bureaucracy…Although we won’t. If we sign up to a trade deal, we will have to follow the rules. It would be fair to say these rules will probably be less intrusive.
Q: How long will it take to formally leave?
A: No one knows because no one has left before. A minimum for two years after the Government has serviced notice to leave. However it will take a decade to unravel the way we are so integrated with the EU and that won’t be cheap.
Q: How will this affect the retail industry?
A: It seems very likely at this point that there will be a recession and that will affect everyone. Also, with a very weak pound it will mean that buying goods from abroad will be much more expensive. This will be slightly offset by the influx of more tourists as we will be relatively cheap to visit compared to other countries.
Q: What will happen when I travel abroad?
A: In the near future, there will be no travel restrictions but with a weak pound it will be much more expensive. Typically, expect to pay between 20% and 30% more for your foreign holidays and everything when you get there will be the same % again more expensive.
Q: What will happen to all the money we pay into the EU that we don’t get back?
A: This is roughly £8 billion per year. Given that the recession will cost the treasury at least £40bn in lost tax revenues this will be swallowed up for the next four years. Since just about every economist on the planet expects the UK economy to grow more slowly, we will never recover this sum. In any event, it is likely that the EU will insist we still pay something in return for free trade or access to the market.