Brexit threat and the potential impact on the job market

Employment and Social Affairs
Just few days to go until the British referendum on the so-called “Brexit” will decide the future of Great Britain in the EU. The country is sharply divided but, as regard to employment, what would be the consequences if the UK left the EU?

Just few days to go until the British referendum on the so-called “Brexit” will decide the future of Great Britain in the EU. The country is divided, with the Prime Minister David Cameron supporting the campaign to keep London in the EU. For this reason, during the past months he has been focused on negotiating reforms with the EU aimed at preventing the Brexit scenario; these efforts could be envisaged in a special treatment for Great Britain in the EU that has existed since London adhesion to the European Economic Community (ECC) in 1973. Thus, it could be said that a Europe à la carte has been strictly linked to Great Britain’s presence in the EU and demonstrates the mutual benefit for both London and the EU Member States retained in some key aspect of the European project.

But, as regard to employment, it is not immediately clear what would be the consequences of the UK leaving the Union. Recently, George Osborne, Chancellor of the Exchequer – Britain’s Minister of Finance  –said that Great Britain leaving the European Union would kill off  “tens of thousands” in the financial services industry, quoting government’s Treasury analysis over the potential impact a Brexit would have on the country and added that it would also affect 285,000 jobs in the sector that have business links in Europe.

Years of uncertainty for the UK in case of a Brexit

A pro-Brexit outcome will result in years of uncertainty and could enhance the risk that this scenario will hurt the economies of both Great Britain and the European Union. According to the British newspaper The Guardian, the industries most likely to be affected by Brexit are financial services, tourism and car manufacturing. While economists say the two British industries most likely to be scaled back if UK left the EU are the automotive industry and financial services, leading to a loss of up to 950,000 jobs.

The sectors that are likely to be affected the most by London leaving the EU would be in the service sectors that trade with the EU and sectors that benefit from the free movement of labour. In this regard we can say that work is one of the main reasons given for immigration from the EU, with almost 70 per cent of EU immigrants providing it as their main reason to come to the UK over the last years.4

Especially for what concerns the job market, a potential Brexit would inevitably bring serious consequences especially for EU migrants, as it is the case of an estimated 1 million Polish people or the 200,000 Hungarians in Great Britain. At present, British citizens can easily move to another EU country, as well as citizens of EU countries are equally free to move to the UK.

All this would inevitably change; also as regard to British citizens living in a EU member state, the worst case scenario see people having to satisfy more restrictive rules on getting a work permit, setting up a business, studying and bringing family members to join them in EU member states.

The reasons of the pro-Brexit side

As for the reasons of the pro-Brexit, the most common reason to defend this choice is that the EU does not help to protect key strategic UK businesses; Great Britain could be affected by Europe’s too slow pace of growth; the fact that the EU is a huge entity, with many conflicting aims while Britain alone could become a magnet for investment.

Furthermore if the “leave” camp won the Great Britain referendum on 23 June, also the EU will become smaller and weaker both in economic and geopolitical terms. And the EU’s share in the global financial market, where the City of London plays a key role, could suffer big losses.  More than 284.000 new jobs would be created if the UK were “liberated from the shackles” of the EU legislation, pro “Brexit” leader Boris Johnson has claimed recently. Former London mayor cited figures from Vote Leave, an organisation that campaigns for Britain to leave the European Union, suggesting that the EU’s inability to secure trade deals with the US, Japan, India, and other trading partners in South America and Asia have cost to Great Britain almost 300.000 jobs more.

In any case if the outcome of this historical referendum is not so predictable, it could be highlighted that a “Brexit” scenario seems to have no way back. Since Great Britain joined the ECC in 1973, many positive outcomes have been reached both for London and for the EU. A special treatment for London in the EU is the best strategy to solve the problem leading to a lasting recalibration of the relationship between the UK and the EU, but without an historical “Brexit” that will probably isolate Great Britain and damage the whole Europe.

Valerio Palombaro

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