Posted July 05, 2016 Ashley Chadwick
In the wake of the Brexit vote one of the main areas of uncertainty surrounds the status of EU nationals living and working in the UK. There are many unknowns about what may happen to them and similarly what will happen to UK nationals living and working in the EU. Such is the concern, that a number of bodies including; the British chamber of commerce, the confederation of business industry and the federation of small businesses, wrote an open letter to get the government to urgently address this issue. They also stated concern over the delay in deciding on Heathrow’s new runway and how it could be a symptom of future infrastructure delays.
The status of EU nationals is becoming a contentious point in parliament and is playing a role in the Conservative leadership battle. Government is off the position that it will not guarantee the rights of EU nationals to remain in the UK, without a reciprocal deal from the EU for British nationals. Andrea Leadsom, who is running for leadership and has received the backing of Boris Johnson, has called to guarantee the rights of EU nationals and that they shouldn’t be used as bargaining chips in Brexit negotiations. A sentiment echoed by her rival Stephen Crabb.
It is critical that business and people are able to make plans for their future. Whilst it seems highly likely that all EU nationals currently working in Britain will be fine to remain, there is still a chance for remaining here to be made more difficult for them. This would discourage businesses from hiring skilled foreign workers and discourage said workers looking for jobs here, this could lead to a slowdown in growth due to uncertainty. This potentially slowdown could also be caused by delays in infrastructure investment, such as the lack of a Heathrow expansion or delays to the HS2 railway. Crabb has also been vocal in his push for a Heathrow expansion. Explaining that expanding airport capacity would be needed to cater for the new trade links that will be established in the wake of Brexit.
Clarity on these matters is needed to help stave off what could turn into a recession caused by Brexit. Standard and Poor’s calculate that Brexit will knock off half of Britain’s potential growth in the coming two years, as well as 0.8% off of EU GDP. This is based on us remaining in the single market for the next two years and the Bank of England cutting rates to 0 and a resumption of QE, as Mark Carney has alluded to. The current consensus sees growth falling to just 0.4% next year, narrowly avoiding another recession. So anything the Government can do to provide clarity and remove uncertainty could help prevent a slide into recession.