introduction · immigration is a anxious political issue in the great britain both because of the...

Emirates International School Jumeirah Model United Nations 2016

Forum : The United Nations Economic and Social Council

Issue : Measures to recuperate the British economy and culture; Post Brexit Student Officer : Sarthak Ghoshal Position : Deputy

Introduction

For the first time in generations, there is a member of state leaving the European Union. In Britain, the Conservative government, led by Ex-Prime Minister David Cameron, was committed to holding a position in the European Union. The impact of the Brexit will depend on the new relationship established between the EU and the UK. Leaving the EU is a sizeable step for any member state to take. The decision taken is in many ways a ethnic, diplomatic and social one, but it is also one which carries economic repercussions.

Research Report | of 20

https://woodfordfunds.com/economic-impact-brexit-report/




The United Kingdom’s decision to leave the European Union, or ‘Brexit’, has lead to much controversial debate. The magnitude of economic costs and benefits cannot be known with certainty before the UK gets its foreign affairs in order. As a result, a range of estimates has given differing scales of the impacts.

The impact of Brexit is more severe in the UK especially in the trade and investment sector. Regulatory bifurcations would increase over time, this will thus reduce trade volumes and attractiveness of the UK for investment. This will have various impacts on trading in the UK and severe impacts on European businesses. A brief summary of effects of Brexit on the UK economy The Centre for Economic Performance at the London School of Economics has calculated that, if Britain joins the European Free Trade Association it will reduce British gross domestic product (GDP) by at least 2.2% in its optimistic framework, and between 6.3% and 9.5% in its gloomy one.

The Confederation of British Industry believes that the net profit to the United Kingdom’s economy from the single market policy is somewhere in the region of 4 to 5% of Britain’s GDP, or between £62bn and £78bn per year.






Other studies paint a more mixed picture. By contrast, if the United Kingdom follows a course of economic openness, Britain will outperform the EU. In that case, Brexit could boost at least 1.6% of their national income by 2030. The cost of British membership to the European Union is 1.75% of its GDP, Brexit would eliminate this cost.

Key Words

Eurozone

The economic region formed by countries of the European Union that have embraced euro as their official currency. There are 19 countries in the Eurozone which are officially using euro as their currency.

BREXIT Refers to the phenomenon of the United Kingdom leaving the Eurozone. Brexit is a combination of the words ‘British’ and ‘Exit’. OVERSEAS COUNTRIES AND TERRITORIES (OCT)

Refers to the countries or the territories affiliated to the Eurozone, but not part of the European Union.

INTERNATIONAL MONETARY FUND (IMF)

is an international organisation working to enrich global monetary cooperation, secure financial stability, expedite international trade, stimulate high employment and sustainable economic growth and reduce poverty around the globe. History

An exit clause was introduced in the Treaty of Lisbon for members who were inclined to withdraw from the EU under TEU Article 50, a Member State would notify the European Council of its intention to exit the Union and a withdrawal agreement would be



https://en.wikipedia.org/wiki/Treaty_of_Lisbon

https://en.wikipedia.org/wiki/European_Council

https://en.wikipedia.org/wiki/European_Council




negotiated between the party willing to leave the European Union (Member State) and the European union. The policies of the European Union would not be applicable to the country from the date of the agreement or within two years of the notification unless the country and the union unanimously agree to postpone the date. The agreement is to be approved by the Council, acting by qualified majority, after obtaining the consent of the European Parliament.

Former parties of the European Union have refused on personal choice to associate themselves with the EU to strengthen their sovereignty during the initial post independence period while later progressively initiating their active diplomatic relations with the EU. Most of these territories were not classed as part of the EU, but were at most associated with OCT status and European union policies and regulations were generally not in force in these countries.

Algeria

French Algeria was a part of the European Communities since it wasn't even a legal colony, but an important part of France. As Algeria gained independence in 1962 it left the European Communities.

Greenland

Greenland primarily voted against joining the european community when Denmark joined in 1973, however Denmark voted to join and Greenland, as a part of Denmark, joined too. When Greenland gained independence in 1979, it held a new referendum and voted to leave the EEC and finally left the EEC in 1985. It still remains part of the EU treaties through association of Overseas Countries and Territories with the EU. the Greenland Treaty was a special treaty signed in 1984 to allow its withdrawal.

Saint Barthélemy Saint-Martin and Saint-Barthélemy in 2007 seceded from Guadeloupe (overseas department of France and OMR of the EU) and have become overseas collectivities of France, however at a similar time remained OMRs of the European Union. Later, the electoral representatives of the island of Saint-Barthélemy expressed a need to "obtain a EU standing which might be higher suited to its standing under domestic law, significantly given its remoteness from the ground, its tiny insular economy for the most part dedicated to touristy and subject to difficulties in getting supplies that hamper the appliance of some European Union standards." France, considering this need,



https://en.wikipedia.org/wiki/Treaties_of_the_European_Union

https://en.wikipedia.org/wiki/Voting_in_the_Council_of_the_European_Union

https://en.wikipedia.org/wiki/European_Parliament

https://en.wikipedia.org/wiki/Special_Member_State_territories_and_the_European_Union%23Former_special_territories

https://en.wikipedia.org/wiki/EC_law

https://en.wikipedia.org/wiki/European_Communities

https://en.wikipedia.org/wiki/France

https://en.wikipedia.org/wiki/Algerian_War

https://en.wikipedia.org/wiki/Denmark

https://en.wikipedia.org/wiki/Greenlandic_European_Economic_Community_membership_referendum,_1982

https://en.wikipedia.org/wiki/Overseas_Countries_and_Territories

https://en.wikipedia.org/wiki/Greenland_Treaty




requested at the Council to vary the standing of Saint Barthélemy to an OCT to the EU. The standing modification came into impact on 1st January 2012 GREECE

The Greece sovereign debt crisis was dominating the headlines for a substantial period of time. The debt crisis was a direct implication of chronological mistakes on behalf of the government and the external forces. Greece was on the verge of leaving the European Union, however, financial bailouts were sanctioned by the troika, The IMF and various countries and ‘GREXIT’ was avoided.

Key Issues Immigration

Immigration is a anxious political issue in the Great Britain both because of the benefits and costs are not allocated evenly and as perceptions have become detached with reality, partly due to malicious media coverage.

It is possible that immigration policy may not change significantly after Brexit. Whether the UK gains any powers to restrict immigration from Europe will depend on its future relationship with the European Union. UK may have to maintain free movement of labour between the United Kingdom and the union if it wants to retain full access to the single market, However, it is doubtful that Britain would agree with such a deal, concerns about migration is probably one of the main reasons for a vote to leave. Furthermore, if European Union migrants already living in the UK find out that it would be hard to get back in if they leave, they might stay longer than they had anticipated. This would lead to increase in immigration and a fall in emigration.

If Britain was outside the single market, net migration from European Union countries would most certainly fall reducing the growth rate of the British labour force (though the extent of the fall would obviously depend on the new arrangements put in place). This may lead to upward pressure on inflation and prices, advantageous to some workers but to the detriment of some employers.






Most importantly, the government will gain the ability to draft different migration policies, with criteria probably set according to professions and people skills, rather than where they come from. Hence, the quality of migrant labour could rise, boosting Britain’s economy and plugging labour shortages in specific sectors.

The Brexit would free Britain from various EU restrictive regulations such agency workers directive. Therefore, migration policies are not the only way in which Brexit would impact the labour market.

Trade and the manufacturing industry

The impact on Britain trade with Europe will depend on the connection between the united kingdom and the EU after BREXIT. The prices are going to be borne by customers as well as businesses. EU membership is estimated to have boosted British merchandise trade with different member states by 5.5 percent, which is equal to 130bn pounds. The single market provides opportunities for economies of scale, competition and innovation, that enhance productivity and which might be impossible to duplicate through trade outside Europe. There's a robust relationship between exporting and productivity, the production growth for Britain exporters was 1.3%, compared to zero.8% for non-exporters.






Post-Brexit outcomes that cut back trade or increase the price of trade between the united kingdom and also the remainder of Europe are going to be damaging for each side. The United Kingdom accounts for only 1 sixth of the EU economy. ten percent of EU exports area unit to the united kingdom. However, the imbalance in the trade relationship is specified the united kingdom is a very important supply of demand for the remainder of the EU. The UK’s deficit with the remainder of the EU has grown well in recent years and was €66bn in 2013, the equivalent of 0.6% of the GDP of the EU countries.

The UK exported over $30bn of mining and chemical merchandise and over $20bn within the transport, telecom, and wholesale and retail sectors into international offer chains. the EU’s single market is more than a trade agreement without tariffs. The merchandise will move freely as a result of all members adhering to common restrictive needs and technical standards. additionally, the single market provides for the free movement of services, capital and labor

Britain can remain a part of the single market by turning into a member of the European Union Economic Area. Norway, Iceland and Leicester are outside the EU, however within the European Economic space.






Meanwhile Switzerland is a member of the European Union Free trade Association, have established free trade relations with the EU and have access to the single market through a series of bilateral agreements. The option of remaining within the European Economic space looks like an undesirable one after the event of Brexit. the entire purpose of leaving the EU would be to achieve further freedoms that in this case wouldn't be attainable.

Assuming Britain doesn't stay within the single market,even though the UK manage to barter a trade agreement, exporters would face extra prices while marketing into the EU. These would also incur further prices like, clearing customs and also administrative prices. They may also face different non-tariff barriers and quotas. The approximate tariff that could be imposed by the European Union under most-favoured nation rules is 4, however this varies across sectors. The food and drink product sectors will be hardest hit. Additionally, the automotive business would suffer from a high increase in tariff and customs

In recent years, UK’s export growth has risen at an substantial rate. Non-EU countries are infatuated towards the British economy as London is HQ to some of the top companies and the London stock exchange is one of the most active stocks exchanges in the world






Foreign direct investment

The UK is that the largest recipient of FDI within the EU. Brexit may cut back the attractiveness of the united kingdom as a entry to Europe. Brexit may conjointly result in a discount in investment from the remainder of the EU, that is that the biggest supply of FDI within the United Kingdom. It will become tougher to draw in company HQs. The success of the united kingdom in attracting FDI,projects and jobs creates opportunities and risks for different EU countries after the united kingdom leaves the EU. whether or not they will seize the chance depends on however they answer the loss of Britain's aggressiveness that Brexit would seemingly represent. Firms and investors in several non-European Union countries are victimised Britain as a entry to Europe, benefitting from the zero-tariff surroundings and free movement of labour and capital. consequently, the main worry here looks to be that, the UK’s foreign direct investment inflows would dry up and parent firms might even close-up look and move production or offices elsewhere. additionally, knowing that foreign multinationals tend to be productivity-enhancing, bringing with them new technologies and management practices, a desiccation of this investment into Britain might be damaging for the country’s long-run potential. A poll of British corporations suggests the impact of Brexit are going to be damaging not solely to FDI, but also to the investment intentions of Great Britain corporations, with a higher negative than a positive impact. The united






kingdom has to focus on access to the European market to remain a serious world destination for investment.

Many giant European corporates are heavily invested with within the Britain and therefore the industrial logic for this investment can be plagued by Brexit. the price of adjustment for European corporates can be goodish. The united kingdom might get to be viewed with additional sharpness for investment by undercutting the EU on taxation and therefore the business setting. the United Kingdom has several benefits that might be unaffected by Brexit equivalent to language, lightweight regulation and deep capital markets. Even so, the United Kingdom might struggle to draw in new investment following the Brexit. alternative locations within the EU are seeming to be additionally enticing for marginal investment selections.






Financial services

Brexit might impact on the placement, liquidity and price’s of monetary services in Europe if the EU undermines London’s competitive position. This may lead to rise in expenses for businesses and households across Europe. With established blessings and agglomeration the united kingdom includes a sturdy competitive edge that will be arduous to dislodge. However, existing EU laws would make it more durable for London to serve European markets, significantly for retail merchandise and in monetary unit mercantilism.

The UK is that the leader in euro-denominated wholesale banking, however Eurozone countries and establishments wish this activity to manoeuvre to the Eurozone and be overseen by the ECB. This is able to be way more doubtless following Brexit, because the United Kingdom of Great Britain and Northern Ireland would not be protected by ECJ social control of single market rules. The united kingdom may additionally suffer a price for being absent from future liberalising initiatives adoring Capital Markets Unions, that might open up new markets in areas concerning securitisation and lined bonds.

The most seeming benefactors within the EU are Paris, Frankfurt, capital of Dublin and the Irish capital. However they cannot replicate the long benefits of the London ‘ecosystem’ supporting monetary services, as well as accomplished workers, legal services and market infrastructure. Competition between them borne out of recent barriers to trade with London would be tumultuous and expensive. Businesses in






Europe would lose thanks to higher charges, poorer merchandise and fewer liquidity. European corporates would have to adhere a lot of inconvenient expenses to lift capital in London, that presently provides a one-stop search.

There is a great probability that the city would still prosper if the uk left the European Union. London’s pre-eminent position as a worldwide money centre predates the one market. London possesses inherent benefits, as well as Britain’s system, land language, a convenient geographical zone absolutely placed between the operating hours of Asia and New York, openness to immigrants, an outsized pool of skilful labour and an important mass of experience in support services corresponding to accounting and law. even though exports to Europe did suffer, these losses may be offset over the future by the bigger opportunities to spice up trade with Non-European Union countries. Brexit would free the uk from the foundations of the EU’s Common industrial Policy, that prevents it from negotiating bilateral trade deals with different countries

Major Parties Involved

IRELAND






Ireland is one of the only member state to share a land border with the UK and is the most profoundly connected with the UK in terms of migration, FDI, trade, culture and language. Ireland exported €5.8bn of services and €14.8bn of goods to Britain in 2014, which is almost 12% of its GDP and substantially higher than any other member state. However, Ireland is also one of the 7 EU countries which has a trade deficit with the UK, importing €9.1bn in services and €22.3bn in goods. The investment relationship is both deep and broad, with Irish firms earning over €800m and having over €13bn invested in the UK, corresponding to almost 0.5% of its GDP. Irish investment in the UK is, however, small compared to UK investment in Ireland, which was almost at €51.2bn or the equivalent of nearly 30% of Irish GDP. Financial links are intermediating, with a history of banks operating in both countries, including Ulster Bank, which has 111 branches in the Republic of Ireland. many hedge, private equity funds and banks operate out of Dublin with close links to London. Brexit will create liquidation, but will also lead to opportunities for some firms. The UK and Ireland have homogenous approaches to economic policy, making them natural confederate.

GERMANY

The German trade surplus with the UK is equivalent to 1% of its GDP which is over €28bn. German manufacturers alone exported €67.5bn to the UK or 2.4% of GDP. But Germany is also a significant exporter of services, particularly business services, which amounted to over €4.1bn. 40% of German investment in the UK is in the transportation and storage sector, accounting for 58% of total EU investment in this sector in 2013. BMW alone has more than €1bn invested, producing both BMW and MINI cars in the UK, and is continuing to invest more in what is the company’s fourth largest market. German firms E.ON and RWE own two of the big-six British utility firms. BASF has ten UK manufacturing sites. In total German firms have €68bn invested, behind only the Netherlands and France, and earning €8.5bn or 0.3% of German GDP in 2013. Most large German banks have substantial operations in London. Deutsche Bank employs 9,000 staff but has set up a group to consider moving some of its British operations to Germany if the UK leaves the EU.Germany and Britain are often but not always aligned in EU policy debates. However, the absence of the UK would be felt in Berlin as Britain often acts as a counter-weight to France allowing Germany to act decisively in many policy debates.

SPAIN






Spanish firms have made some substantial foreign direct investments in the UK. Ferrovial operates four airports including the largest, Heathrow. Iberdrola owns Scottish Power, one of the big-six utility firms in the UK. Santander owns the fifth largest bank in the UK. In 2010 British Airways and Iberia Airlines merged in the form of the International Airlines Group. In total Spanish investment reached €63bn in 2013, with earnings that year of €3.7bn. The stock of Spanish FDI is up from less than €7bn in 2004 almost similar in scale to Germany’s. Spanish exports in 2013 were €14.7bn in goods and €11.1bn in services with a trade surplus of almost €10bn or 0.9% of GDP. Tourism helps explain the large share of services in exports, with travel services revenues of €7bn. Over 12 million British people visit Spain each year, accounting for around one quarter of all foreign visitors.

FRANCE

French exposure to Brexit is largely due to direct investment, finance and trade links. French investment stood at €91.6bn in 2013, second only to the Netherlands. This is equivalent to 4.3% of GDP. French firms are involved in some high profile infrastructure projects, such as EDF Energy’s proposed construction of two new nuclear reactors at Hinkley Point in a £16bn project. Areva, Airbus and Alstom are all among the major French investors. Saint-Gobain alone has more than 17,000 employees in Britain and Ireland. France exported €28.8bn in goods and €14.2 in services in 2013, equivalent to 2% of French GDP. Financial linkages are also relatively strong with loans from banks in the UK totalling €343bn in 2013 or 16% of GDP. BNP Paribas has been operating in the UK for nearly 150 years, has 7,500 employees, with London acting as a major hub for both corporate and retail services.

European Union

Probably the most important card of the deck. The decision made by the EU over the next 2 years will not only have a significant effect on Britain but also rest of the world. EU has always called for unity and was against the idea of BREXIT. It will hopefully try and maintain a good relation with the UK and give UK access to the single market but not with complete privileges, UK might have to pay tariff and other taxes imposed on non EU members unless other bilateral deals are signed. The European Union also has to make sure that the BREXIT does not create a domino effect or influence decisions of other EU countries.






Timeline

DATE EVENT OUTCOME

1957 6 countries sign the Rome treaty

Bilateral decisions and political affiliations

1967 The countries situated in the european region officially form a community to prevail peace

The European community is formed resulting in the formation of a single market

1967 The united kingdom apply to the eurozone

France vetoes against the UK’s application

1969 Uk’s application is finally accepted

Negotiations for UK’s membership to eurozone begin

1st january 1973 Negotiations are finished and britain's membership is confirmed

Britain's officially a part of the european community

1975 Referendum to leave the european union by the labour party

65% voted to stay, hence Uk remains in the european community

1987 Single market act was signed

This was to create a single market; a market with free movement of goods and persons, services and capital.






1991 The single currency act was accepted by the european countries

The europeans decided to follow an unilateral currency throughout the eurozone, except the UK

1993 The european union was formed

European countries participate in the world economy as one economic unit and operates under one official currency, the euro.

2002 The Euro was officially introduced as the current of the EU

The use of euro as currency had officially begun in the european nations, except the UK

2011 The EEAS is officially introduced

Its aim to make the EU's external action more coherent and efficient, thereby increasing the European Union's influence in the world

2012 EU is awarded the nobel peace prize

The EU goal of sustaining peace is awarded by a nobel prize

February 2016 PM James Cameron announces a referendum

The Britain's have an opportunity to vote for or against BREXIT






April 15, 2016 Referendum campaign begins

Parties start campaigning for and against BREXIT

JUNE 7, 2016 The official deadline for voting registration

This day marked the deadline for registration to take a stand for and against the BREXIT

JUNE 23 , 2016 Polling day British voters went to cast their vote

JUNE 24, 2016 Result day Declaration of victory for BREXIT

JUNE 24, 2016 Prime minister's resignation Prime Minister James Cameron announces his resignation after losing the BREXIT campaign

Sept 9 , 2016 New Prime minister to be elected

A new Prime Ministers to be elected by the conservative party

Evaluation of Previous Attempts

The United Kingdom is by far the 1st country in the history of the European Union to ever leave. The UK is most likely to avail the Article 50 of the Lisbon Treaty which states, “Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements”.

It can be stated that Greece was the only nation which was on the verge of leaving the EU. The famous GREXIT move was very likely under the past circumstances, however the European union felt the need to call for unity and decided to financially aid Greece out of the sovereign debt crisis.






The BREXIT as feared might lead to a Domino effect, even though the rumours about FREXIT or any other major country leaving the EU is still not confirmed. The European union is trying its level best to remind the european nations about its principle objective to prevail peace via unity.

Possible Solutions The impact of Brexit depends on the negotiations with EU over the next 2 years. Five distinct models that may or may not be used by Britain are stated below. What is most beneficial politically, in terms of policy independence, is also the most damaging economically. This is the Brexit paradox. The most likely models are the Swiss or the FTA-based approaches.

Norwegian- style EEA agreement

The UK gets full access to the single market by joining the European Economic Area, but also has to obey EU rules and regulations with little influence over the trade policies. The UK will still make a considerable contribution to the EU budget and will be unable to impose immigration restrictions. Conclusion: does not confront the UK’s political instability with the EU

Turkish-style customs union

UK adopts many EU product market regulations, which results is avoidance of Internal tariff barriers but sector coverage of the customs union is incomplete. EU external tariffs will be implemented on UK without influence or guaranteed access to third markets. Conclusion: a bad compromise for the UK

FTA-based approach

The UK’s relationship with the EU is itself governed by an FTA and Britain is free to agree FTAs independently. Tariff barriers are highly doubtful, but as with all FTAs the UK will need to trade off depth, which indirectly implies that the UK will have to follow






the common standards and regulation. Conclusion: possible, but it all depends on the negotiations and the final deal.

Swiss-style bilateral accords

The UK and the EU agree on a set of bilateral policies which will govern UK’s access to the single market in specific sections of the economy. The UK will have to follow the standard of regulation in the sectors covered, but can negotiate FTAs separately. Conclusion: possible, but may not be attractive to the EU

MFN-based approach

A disagreement to the common standards and regulation will lead to an expense of facing the EU’s common external tariff, which will damage UK trade with the EU in goods as well as services. Non-tariff barriers may emerge over time. Conclusion: inconsistent with the UK’s liberal approach to trade

It’s very likely that the EU will be open in terms of negotiations over the 2 years to come. As we know the EU needs the UK as much as UK needs the EU and hence allowing them access to the single market is highly likely, this will certain come at a cost such as tariff policies and no custom free trading. But in the long run this historically bold move, if planned precisely and followed religiously will lead to a more happy happy and successful United Kingdom.






Bibliography

“Britain Votes for Brexit: what happens next ?”

http://www.bloomberg.com/news/special-reports/britains-brexit-question

“the optimal economic and legal outcome for the UK’

http://www.economistsforbrexit.co.uk

‘BREXIT, what happens now”

http://www.bbc.com/news/uk-politics-eu-referendum-36420148

“Life after BREXIT”

http://cep.lse.ac.uk/pubs/download/brexit01.pdf

Appendices

“The economic impacts of BREXIT’






http://www.economistsforbrexit.co.uk/

http://www.economistsforbrexit.co.uk/










introduction · immigration is a anxious political issue in the great britain both because of the...

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