Current situation of Brexit: Hard Brexit yes or no?

As we all know, divorces are never easy and more so when the parties involved have different interests. In these situations, reaching an agreement is even more difficult and complicated. There will be Hard Brexit or Soft Brexit?

And why do we tell you this?

As we are all currently aware, the United Kingdom is divorcing the European Union in that famous process called Brexit. This essentially means that the United Kingdom intends to leave the European Union bloc, of which it has been a part of since 1973.

Surely, we have all heard to an extent, different information on this subject that has dominated traditional media. Brexit has been on front pages on newspapers, the prime times of the main tv programs around the world, providing the latest news on the progress or setbacks in the negotiation of an agreement.  In the United Kingdom, the Brexit negotiations have covered all the covers, including sports newspapers, and is that the conversations, opinions and debates on Brexit in the United Kingdom are “the dish of every day.” 

At Blue Consulting we have explained what would a no-deal mean for companies? And for you? We have also commented on the initiative by the Maltese government towards British citizens. And we’ve also told you about Theresa May’s resignation.


Hard Brexit or soft Brexit ?
Map – Hard Brexit or Soft Brexit


But let’s recap the situation so far.

Following a referendum held on 23 June 2016, in which 51.9 per cent of the voters supported leaving the European Union. The UK Government invoked Article 50 of the Treaty on European Union, initiating a two-year process that was due to conclude with the departure of the United Kingdom on 29 March 2019. 

The European Union and the United Kingdom, led by former Prime Minister Theresa May, managed to negotiate an agreement after more than two years. However, it was blocked when the agreement reached by both parties came to the British parliament. Repeatedly, the document was rejected, which forced Theresa May to resign from her post as Prime Minister.

That period was extended in the first term until 12 April 2019. Currently, a second extension is in force, which will expire on 31 October, 2019. 

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Suspension of Parliament by Boris Johnson

Currently, Boris Johnson is the British Prime Minister and both the PM and the Brexiters within his conservative party are betting on a hard Brexit at any cost. That is, with or without an agreement, Boris Johnson intends for the United Kingdom to leave the European Union on the 31 October of this year, according to him, honouring the referendum. Thus, respecting the majority that on 23 June 2016, voted in favour of leaving the community block.

That is why a Brexit with or without agreement is more likely than ever. In this regard, it should be noted that many institutions and economists reject a Brexit without an agreement as this would harm the European Union and especially the economy of the United Kingdom.

As the date of 31 October approaches the tension increases and evidence of this was the action carried out by Boris Johnson on 28 August 2019. On that date, Boris Johnson asked Queen Elizabeth II to suspend parliamentknown as prorogued. However, it should be noted that the Queen, while technically able to refuse as she is head of the British State and therefore, all actions being carried out are in her namethe position is symbolicThe decision unleashed the fury of all political parties, from conservatives to liberals.

Thousands of people took to the streets to protest that decision. Contrary to what one might think, this action is a right that the British Prime Minister has to mark the beginning of a period of governance and thus present his plan of government. Logically, this situation would not have so much opposed to such an extent by the population if it were not for the current context. 

And it should be said and noted at this point, that the question of the suspension of the parliament implies that Boris Johnson could have more room for manoeuvreThis is a result of the fact that he would not have to answer to parliament during that time and most importantly reduce the time MPs will have to introduce a legislation preventing a no deal Brexit.

Thousands of people took to the streets to protest that decision - Hard Brexit or soft Brexit
Thousands of people took to the streets to protest that decision – Hard Brexit or soft Brexit


What are some of the posterior implications of a Hard Brexit?

For example, what will happen to the commercial situation and imports / exports of the United Kingdom? And with the free movement of people? 

Suppose that the United Kingdom on 31 October abruptly decides to leave the European Union. At the same time, it also ceases to be a member of so many other institutions of the European Union that govern a multitude of fields as diverse as medicine control, agriculture, copyright, trademarks and much more. The separation would occur without knowing how the relationship between both parties will be and, therefore, between the institutions of the Union and the United Kingdom itself, which would be autonomous and independent as of November 2019. 

In addition, the payment that the United Kingdom must make to the European Union for the financial obligations undertaken while a member, more commonly known as the “divorce bill” would also be on the air. A debt that could subsequently affect the development of bilateral relations between both parties. 

When leaving the European Union under a no deal Brexit, the United Kingdom also leaves the customs union and the single market. These are agreements that make trade between the Member States much easier, more fluid and without as many administrative procedures as with other countries that are external to the European Union. 

In this way, in case of a hard Brexit, there would be no commercial agreement between both parties. This implies that as of 1 November, the rules of the World Trade Organization would begin to govern. That would mean that British products that are intended to be sold to any State of the European Union will have to pay tariffs and, therefore, would be more expensive and possibly less attractive in the Community market.

Conversely, it should be noted that administrative procedures for goods from EU countries to enter the United Kingdom could be delayed 24h / 48h, which in the beginning could cause shortages due to the delay. This includes both essential products, such as food and medicine, or general consumer products. 

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Without an agreement, the European Union would apply import tariffs in accordance with the rules of the World Trade Organization, 10% for passenger vehicles and up to 22% in the case of commercial vehicles. It is also important to note that the same will happen in reverse. The difference between the two cases is that, in the case of the European Union, it has more suppliers – with free circulation within its community market -, which does not depend so much on foreign trade as the United Kingdom.

One of the clearest examples would be the import of raw materials, many of which come from southern Europe. Or for example, in the United Kingdom, it is estimated that 30% to 40% of the food consumed by its population comes from the European Union. Circumstances that will lead to an increase in the price of products due to tariffs that will directly affect the purchasing power of citizens and that will also imply a rise in the price of their exports to the Union, which reduces their attractiveness. 

Supporters of the hard Brexit believe that these circumstances will entail a process of adaptation and acceptance for a few months until the situation is assimilated. They also admit that there will be a negative impact on the economy which may in some way limit and contain the United KingdomHowever, they make the argument that after the period of transition and adaptation, supporters of Brexit argue that they will have greater freedom to negotiate their own agreements on their own. trade with other countries and major powers such as the United States, Canada or China.

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What would happen to a Soft Brexit

And in this sense, another advantage of belonging to the European Union is the free movement of goods and people.  This implies, in the first case, that the goods that circulate within the European Union do not pay any tax or tariff if they come from a member country.  A circumstance that facilitates and strengthens trade within the community block.  

On the other hand, as we have already pointed out, in the event of a hard Brexit happening, the free movement of people between both parties will also cease to exist. This implies that, right now, there is a lot of uncertainty between the more than 3 million European citizens living in the United Kingdom and the more than 1 million British residents in the rest of the Union.

Remain in EU
Remain in EU


Today, the procedures or documents necessary to regularisthe residence of both groups in the respective territories are not yet known. For its part, it should be said that the United Kingdom has already begun to regularise the more than 3 million European citizens residing in its territory. 

The free movement of both people and merchandise is possibly one of the most complicated points to deal with mainly due to the geography of the United Kingdom. The main debate of these last weeks and even months, focuses on the border or lack of thereof, that separates the Republic of Ireland – a member of the European Union – and Northern Ireland – part of the United Kingdom. Currently, between both territories there is the free movement of people and goods. However, it is on this border where the greatest doubts arise.

In the case of a hard Brexit, that border should become controlled. Therefore, a border between the Republic of Ireland and Northern Ireland should be put in place to ensure that products and people do not cross from one place to another, without controls or tariffs. However, a border between the two territories would involve reliving the ghosts of the past conflict, between unionists and nationalists, which lasted 3 decades.

And it is that one of the pillars that founded the peace between the two Irelands was precisely the elimination of any barrier or border between both territories. To date, few solutions have been presented to solve this key issue which has presented such a stumbling block in the negotiations. 

Map - Irish border with Northern Ireland - Hard Brexit or soft Brexit
Map – Irish border with Northern Ireland



Finally, by way of conclusion, it can be noted that both parties have admitted to being prepared to deal with a hard Brexit. In preparation, Boris Johnson’s Government has already invested about 8 billion dollars in preparations, which implies for example a greater hiring of customs personnel, ensuring that there is no shortage of medicines or food products and, roughly. In doing this, prepare for the impact or destabilisation it may have to the British economy. We will see what this Brexit holds for us, hard brexit or soft Brexit.

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