The triggering of Article 50 this week will finally kick-off the formal process of Brexit. In two years’ time, unless the 27 EU states agree an extension, we will leave the EU. Regardless of whether you supported Leave or Remain, Brexit creates both opportunities and risks for the UK economy and society. Our new research, based on workshops and interviews with over 90 experts and policy-makers, highlights some of the key issues facing government as it embarks on this unprecedented step. We identified opportunities and risks in the negotiation process and across four main policy areas: industry and trade, labour markets, social and environmental outcomes, and devolution and civil society.
In the process of negotiation experts identified as a risk that government is divided by two rival ideological positions, a libertarian perspective and a more pragmatic, interventionist approach which could lead to incoherence. They also suggested that the Civil Service could be overwhelmed by the task. However, some did argue that the government might benefit from a relatively united negotiating position, and that it was an opportunity to have a fundamental rethink about the type of economy and society we want.
In industry and trade, risks identified include: a fall in business investment, a loss of trade, little fiscal room to cushion any downturn and that the industrial strategy is inadequate. However, it was seen that there would be potential to strike new trade deals that focus on emerging technologies or new areas of comparative advantage. Some believed that agriculture and manufacturing might ultimately be better off outside the policy frameworks of the EU.
In labour markets, experts felt there were risks of sudden and problematic skills shortages, a potential ‘race to the bottom’ in employment protections, and an emerging two-tier economy. Sectors such as healthcare, agriculture and universities might be particularly affected. However, post-Brexit, some argued that there would be opportunities to “level up” our labour market, towards higher skills and productivity. There might also be an opportunity to review employment regulations in some areas such as self-employment.
In social and environmental outcomes, stakeholders felt that even if we retained regulations after the Great Repeal Act, that we might lack the institutions to effectively enforce them, leading to worse outcomes. It was also felt that due to the sheer legislative burden of Brexit that we might simply copy EU regulations without improving on them. Furthermore, many thought it would get harder to tackle cross-border environmental problems such as pollution. On the other hand, it was felt that leaving the Common Agricultural Policy could be highly beneficial in terms of lower food prices and a better approach to land management. New trade deals could also be struck which give a higher priority to environmental outcomes.
On devolution and civil society, experts saw elevated risks of intensified conflict with Scotland over EU membership and independence, and that the withdrawal of Structural Funds could hit Wales, Scotland, Northern Ireland and some northern regions particularly hard. However, it was felt that post-Brexit there was an opportunity to re-think how regional funds are allocated. There might also be an increased opportunity for civil society and third sector organisations to build new coalitions to influence the process.
As the government embarks on what will be a hugely complex and uncertain process, this report provides a roadmap for the government to help avoid the pitfalls and maximise the potential rewards.