Lawmakers on Tuesday rejected a Brexit agreement that would have safeguarded cross border supply chain and secured tariff-free trade. A Brexit vote loss by 230, is the largest in modern British history. Companies in Britain have been warned of serious consequences of no-deal Brexit. Brexit is likely to happen on 29th March.
The vote of no confidence in the government has opened up a range of outcomes including on-deal, renegotiation of deal, and referendum option. More than 170 business leaders have joined call for a second referendum for Brexit. However, both labor frontbench under Jeremy Corbyn and May have so far dismissed the idea of the second referendum. Corbyn is pushing for a general election, while May plans to speak to senior MPs to find a compromise deal.
The government will now likely enter the cross-party discussion to resolve withdrawal deal impasse in parliament. The vote down can lead to prolonged uncertainty in the UK. Meanwhile, logistics and freight firms are predicting border chaos. Germany’s Chemical and Pharmaceutical Industry Association (VCI) has called for an interim solution to ensure uninterrupted supply of medicines.
Belgium’s Finance Minister has also asked companies in Belgian to plan in advance for customs arrangements that could apply for trade with Britain. Meanwhile, LTO Nederland, that represents farmers and agricultural producers in Dutch, exporting goods of more than 8 billion euros a year has asked the Dutch government to provide a practical solution leading to unhindered trade.
According to the Swissport Group, handling Swiss ground services and cargo, Brexit is likely to tighten Britain’s labor market, which has already witnessed few European Union candidates entering. Moreover, workforce shortage is also driving the labor cost in some parts by nearly 10%.
Businesses together representing more than £100 billion annually contributing to the UK economy have also warned of Britain leaving without any deal can damage the economy. According to the assessment of Bank of England, no Brexit deal exit can lead to a drop in Britain’s national income, with GDP as low as 10.5% over five years and house prices falling 30%.
The slowdown in the UK and EU is expected to lead to economic implications. US is the major EU market for its exports, while the source of imports is China. With pre-existing challenges in EU and China, any new adverse effect may impact growth in EU and China and also impact the global growth.