The Global Economic Impact of Brexit
Intrepid travellers ventured through blistering deserts and snow-capped mountains for just the chance to garner invaluable goods from lands of legend. A path known through the ages as the Silk Road. Although intercontinental trade formally began during the Han Dynasty, ruling from 206 B.C. to 22 A.D., the route dates even further back. From the linking of China to Constantinople, to branching throughout the subcontinents of India, Northern Africa and the Middle-East. The Silk Road is the first instance of not only goods and services, but culture, religion and ideology traversing immense distances. And China’s Belt and Road Initiative (BRI), formerly the One Belt One Road Initiative, connecting a further 65+ countries containing 62% of the world’s population continues the archaic trade route’s legacy.
However, as the world modernised and travel evolved, issues arose - how does one maintain logistical organisation over what seemed incomprehensible distances? During the 16th century, a British man - John Flamsteed concocted a means of converting solar time to mean time. Thereafter, he was appointed as the first Astronomer Royal, taking up residence in the new Royal Observatory in Greenwich. Hence the name Greenwich Mean Time. Albeit, it was the 5th astronomer Royal, Nevil Maskelyne, who lead the adoption of Greenwich Mean Time.
Even so, up until the mid-19th century there was no national or international standard times. During the expansion of railway and communication systems into far-off regions like China, the need for international time keeping was paramount, requiring the introduction of the single standard time across all networks. With British and Chinese trade mired in history, from the First Opium Wars to the independence of Hong Kong, BRI conceives another era of economic integration between the two global powers.
The silk road’s foundation in modern trade routes is only further entrenched by the BRI. The maritime, road, rail and even energy infrastructure costs within the realms of $2 trillion, ultimately improving trade, financial, infrastructure and even trade policy integration.
With China generating links from the archaic backbone of the Silk Road through BRI, and political ties that are more strained than ever before; it seems counterintuitive to cut political ties with the world’s single largest trading bloc, inadvertently harming Britain’s economy. The real impact hits the consumer - Britain maintains a net trade deficit, ascertaining 45% of its imports from Europe. Whilst Britain’s exit deal is still uncertain, the rising living costs are already ostentatious. UCL dictates Brexit has led to higher energy prices, rising on average £75 per person. EY has recorded a national decrease in property value of 0.7%, mainly due to transaction levels of residential property in London and the South-West of England grounding to a stand-still. If Brexit does come to fruition under the current deal, property value is projected to decrease by a further 5%. Not to mention the detrimental economic knock-on effect Britain will endure due to the continued inevitable connection with their biggest trade partner – the European Union. The EU is set for a dramatic decade or two after their second largest economy leaves the state.
Once Brexit finally concludes, the UK regains sovereignty to delve into negotiations without foreign intervention. However, global political criticism is at an all-time high - coinciding the US-China trade war, Brexit and several other political conflicts, political uncertainty is riff. By engaging with China and BRI in the face of refrained transparency from the East, the UK risks losing its “special relationship” with the US. China ultimately must confer clarity onto foreign stakeholders to assure the legitimacy and continued sustainability of BRI, otherwise the UK may deviate from the opportunity.
Only recently has the US imposed sanctions onto Europe over the EU and China generating a unique global payments system enabling Iranian companies to continue trading, despite the US’ sanctions. With the US initiating protectionist policies, the UK shouldn’t refrain from global opportunities.
Venturing out to distant lands through age old trading routes will be a fundamental requisite for Britain. Though much has changed since the days of the British Empire with China and Britain’s views on work place ethics and patent protection adherence far from the same school of thought.
Brexit decisions will not dissipate once the now parliamentary circus show concludes. No, this is only the start for Britain as they forge new alliances from old, limping along the path of physiotherapy to regain strength in an ever-changing global environment.
