Home » Brexit Winners And Losers – Which One Are You?

Brexit Winners And Losers – Which One Are You?

The Brexit, or the British exit, from the European Union was decided by the result of a referendum held on June 23rd, 2016. Approximately 52 to 48 percent of the votes were in favour of Brexit. Long-time critics of the EU welcomed the outcome of the referendum, even as shockwaves rippled through the global economy. The pound witnessed its lowest low since 1985 and the prime minister, David Cameron, resigned. A new prime minister, Theresa May, assumed office.There will be two years of exit talks before the UK is officially removed from the EU. Following the results, there was a call for another Scottish independence referendum since most Scots voted to retain membership of the EU. There have been similar calls from Ireland, demanding a referendum to unite Ireland with the British territory of Northern Ireland. Spain too has demanded joint control of the UK overseas territory of Gibraltar.

Brexit’s impact on the economy

The Brexit result has affected the entire global economy. UK stocks dropped to their lowest since the financial crisis, and the pound’s value has dropped dramatically, even as emergency measures are underway to tackle the tumultuous economic climate. Once Britain leaves the EU, there will have to be new trade agreements with other countries, which could lead to considerable economic uncertainty. The Bank of England has rolled out an interest rate cut and also taken other steps to protect against recession. Those in favour of Brexit maintain that since the UK is an important importer of goods and services, the EU countries will benefit from keeping up trade with the UK. However, there is a looming worry that if Britain is out of the EU market, overseas countries may no longer see an advantage in investing in Britain and may also move their headquarters elsewhere.

The effect on immigration

There is some uncertainty about how Brexit will affect British expats living and working in EU countries. Some of the major locations for British expats include Germany, Spain, France and Ireland, among others. The pro-Brexit camp maintains that Britain will now be able to regain control over its borders, thus restricting immigration and improving security since the free movement of people from Europe will come to a halt. This can help in alleviating the strain on Britain’s public amenities such as schools and healthcare. They also believe that Britain can introduce a points system to regulate immigration and also tackle skill shortages in the country. Restrictions on immigration could translate to more jobs for Brits, as well as those who decide to stay on in Britain. On the other hand, adherents of the Remain campaign are of the opinion that the referendum’s outcome will adversely impact Britain’s economy, as the free movement of people from Europe plays an important role.

How will Brexit affect expats?

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The rights of the nearly 1.3 million British nationals living and working in different countries of the European Union may change once the UK puts article 50 of the Lisbon Treaty in effect. This article states how a member state can decide to withdraw from the EU. As part of the union, British expats have the freedom of movement and have the right to live and purchase property in any EU country. Upon exit, if British expats retain the right to live and work abroad, it is possible that some EU member states can apply the rule that overseas nationals can be hired only if no suitable local candidate is available.

To avoid such issues, expats may decide to apply for a EU passport. Expats whose parents or grandparents are citizens of another member state are eligible for citizenship of that country. Younger expats working in other countries may also be eligible for nationality of those countries, as promised by some EU leaders. Expats who have been living and working in a country for more than five years and are fluent in the language will find it easier to obtain a EU passport.

There is a significant number of British expat retirees living in EU member countries such as France, Italy and Spain. These retirees depend on their pensions, which are connected to the currency rate. With the pound dropping to a new low, pensions may be affected too. Even though the pound has recovered since, there is a worry that it may fluctuate again in future. Pensions of those living in EU member states increase yearly with living costs. Depending on how the Brexit agreement pans out, pensions may continue to increase in this manner, or may be stuck at the current level. If they are kept static, it is possible for expats to lose up to £50,000 over a course of 20 years.

The winners

Brexit may spell good news for British expats living in countries outside the EU. This has largely to do with the pound’s changing value. Following the referendum, countries with which the UK has close ties saw an increase in requests for employment. Many owning UK-based assets also realized that market uncertainty has caused losses in their personal wealth. British expats in the UAE, nearly 150,000 of them, also stand to benefit from the Brexit. In fact, there have already been reports of an increase in remittances to UK banks from the UAE, as the falling pound meant that funds could be transferred back home at more affordable rates. The fluctuating currency could also create opportunities for buying property in the UK and receiving higher yields.

Some EU member states, like Poland and the Baltics, are looking forward to their migrant workers leaving the UK and returning home, resulting in a sort of reverse ‘brain drain’. Hungary too has witnessed labour scarcities, especially in the fields of IT and healthcare, as many of its professionals working in these areas have migrated to the UK, mainly London. The assurances expressed by leaders of some of these countries can help to alleviate some of the fears of job uncertainty for European expats currently employed in Britain. Statistics indicate that the number of migrant workers in Britain shot up from 224,000 to 2.15 million last year. In fact, this was one of the causes taken up by Vote Leave, an organization that campaigned for a ‘Leave’ vote in the United Kingdom European Union membership referendum, as a way to crack down on immigration.

But even before new immigration laws come into effect, migrants in the UK could be leaving for home due to predictions of a mild recession. Britain may or may not curb the inflow of migrants or direct its migrant workers to return home, but it is likely that these workers may already be seeking employment in other EU member countries. Eastern European nations stand to gain from Brexit as manufacturing could shift to their shores.

Brexit benefits

Since Britain would no longer have to invest in the EU budget, it would experience an immediate cost saving to the tune of approximately £8.5bn. An exit from the EU could help Britain establish its independence once again and position itself as an important part of the international community.

Immigration was another important consideration in the lead up to the Brexit, and in its aftermath. Immigration from Eastern Europe did contribute to Britain’s economic development. The problem area where divergent views arose was in its political acceptability. There were also doubts as to how much immigration Britain can handle before it becomes economically counterproductive. A Brexit may enable Britain to set up a policy with public support that would ensure that immigration remains sustainable, safe and practical.

Britain’s exit from the EU could also mean that it will be better able to trade with other countries. The UK can also take back control of some of its industries such as fishing and steel, which were in a sense compromised when Britain became part of the EU. Britain could nationalize or extend additional support to the parts of the country engaged in these industries. These were once prosperous regions, and with the right policies, they can steadily develop once again over the next few years. The UK can move beyond the Common Agricultural Policy and regain its autonomy in trading with world markets, resulting in more efficient imports. This, in turn, could translate into lower inflation and greater purchasing power for its citizens.

The losers

On account of the Brexit, British expats may feel that their home country is becoming closed off from the globalized world; a world of which they themselves are a part. The considerable British expat community in Spain may also be affected adversely as there could be a drop in Spanish real estate values.

UK nationals living and working in the EU will have their pension and healthcare rights safe as long as Britain is a member of the EU. Britain’s EU membership also allows them to reside, seek employment and buy real estate in Europe, as well as claim social security benefits. All of this could change upon the UK’s exit. There is likely to be a renegotiation of these rights and benefits. In addition, this could be done for each country, leading to a long-drawn out process filled with uncertainty. Currently, British expats with a European health insurance card are eligible for free NHS treatment. This also applies to British expats living in the EU and receiving pensions from the UK. Upon exit, it is possible that these groups of people may have to pay for healthcare or obtain private health insurance.

EU membership accords certain other benefits to nationals of member states. One such benefit is reduced university fees across the EU, a benefit that UK nationals could lose due to the Brexit. This can restrict further opportunities for them. UK citizens in Europe also have access to free emergency healthcare through the European health insurance card (EHIC). The Brexit will release countries like Spain from the obligation to continue this practice. British expats may have to pay more for healthcare while residing in EU member states and may also have to forgo certain benefits. But most EU leaders have maintained that the rights of British expats will be preserved, at least for the next couple of years.

Currently there is a reciprocal arrangement in place whereby the British government pays EU countries for the treatment of its pensioners, while it receives payments from other countries for the healthcare of their citizens living in the UK. Therefore, there is some speculation that healthcare may not be affected by a Brexit. However, since the EU is meant to embody the principles of free movement of people, goods and services, there is some doubt that an exit would cause British citizens to lose their right to free movement, and also to work and carry out business within Europe, which is the largest global market.

A Brexit may add to travel woes too. Travelling could involve higher costs, and may also become more cumbersome, as British nationals may have to navigate a maze of paperwork and permits. This could also affect business in the EU region. It has led to quite a few British expats contemplating dual citizenship, so that they can continue to have their rights as UK nationals, while also remaining a part of the EU.

The diminished value of the pound sterling which occurred in the aftermath of the Brexit has led to many British expats and pensioners living in Europe taking a hit in their incomes and benefits, which has in turn led to changes in their lifestyles. Many are even considering returning home. This has led to a fall in property values in the places where they live. London’s property rates have also seen a decline, a trend that could adversely affect the passive income of British nationals who have their funds invested in real estate. Business investments have also suffered, resulting in diminished returns for expats who have invested in the stock market.

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