With a little more than a month until the Brexit deadline, and without a British exit plan in place, the world has its eyes set on Britain, the European Union, and how this whole situation is going to play out come march 29th. Britain is historic for maintaining the largest banking sector in Europe, home to banks such as HSBC and Standard Chartered, which influence over 5 trillion pounds. Since Britain announced Brexit in 2014 nearly 1 trillion pounds have flowed from the banking headquarters in the UK to other countries in the EU for the purpose of spreading the risk if the worst should happen post Brexit. This accounts for nearly 10% of total assets in Britain’s banking sector transitioning out of domestic nations and into EU categorized territories. This leakage of the pound from Britain has made dramatic impact on the historically overvalued pound, which depreciated nearly 20% since 2014. This means that import into the UK are considerably more expensive, at a time when the prospect of a no-deal outcome could enhance tariffs and inefficiency of foreign trade, worsening the problem. The UK is experiencing a legitimate scare over imports such as dairy, and auto, which rely heavily on EU trade deals to reduce the enormously high tariffs established by the World Trade Organization upon countries that aren’t in the EU, or have no official trade agreements with other countries. These goods cold become potentially unattainable if the UK leave the EU with no deal in place, since they will fall immediately under this global law. If Britain can come up with a plan before march 29th then they could potentially have some time to set up trade deals before WTO law kicks in, but they have only made official deals with 6 of nearly 70 countries.
Britain is comprised of the home nations: Scotland, Wales, Northern Ireland, and England. These nations rely heavily on uninterrupted trade between borders, especially through the Irish sea and north channel that encompass Northern Ireland and the rest of the UK. When the UK voted to leave the EU they jeopardize this situation, and failure to establish an exit plan during their transition period out of the EU has resulted in high domestic tension, especially in Northern Ireland, where their southern border is shared with Ireland, and has a violent history of political separation driven by deep rooted religious (sectarian) conflict that began in the early 16th century when Henry the VIII displaced northern Irish Catholics with his Irish protestants. The region has been war torn for the latter part of the 20th century.
Na Trioblóidí or the “The Troubles” first began during a campaign to end discrimination against the Irish Catholic and fundamentally nationalist minority by the unionist protestant government. With a death toll of over 3500 the conflict officially ended on “Good Friday” in 1998 when a fragile peace was drafted up that encouraged open borders between the two nations, and free trade that has lasted for nearly 20 years. If Britain leave the EU with no plan in place, then they will take northern Ireland with them, leaving the EU no choice but to establish a hard border between northern Ireland and Ireland, potentially inciting violence similar to that of the late 20th century. Since the main way northern Ireland and Ireland trade is by truck and ferry a sea border will likely be established as well as on northern Ireland’s southern border, significantly slowing the process of trade, and jeopardizing the fragile peace that free trade has brought. Time isn’t the only variable that will increase friction at the border, global tariffs that did not apply to goods before when Britain were in the EU will now be in place, along with custom checks at every checkpoint, establishing the physical border the represents the sectarian conflict that plagued the region for centuries. While Britain did nothing to acknowledge the danger of this situation, their is a potential backdrop plan that would allow trade to continue as it was pre-Brexit between the Irish nations until a suitable solution is found that doesn’t cripple the region. Despite the clear need for a border solution a UK exit from the single market with the customs union on the other – are fundamentally incompatible. Keep a close eye on the UK this next month, the decision to remain or leave could mean both violence and economic depreciation that could ripple across the world.