Brexit. What will happen now?

I’m sure I wasn’t the only one sitting up to watch the results of the EU referendum being unravelled last night, slowly watching the leave campaign edge ahead but still not facing the reality that we would actually leave the European Union. Looking at the breakdown of the results, younger generations tended to vote to remain in the EU whilst it was the older generations who voted to leave. Whilst I know this is a generalisation it does seem a little unfair that older generations get to vote on our future, we have now lost access to live and work in all EU countries freely, severely limiting our opportunities.


Nevertheless, what an eventful day it has been, David Cameron has resigned, Mark Carney has pledged to take measures to ensure the financial sector remains stable, willing to provide an extra £250 billion to banks if they run short on reserves. Nicola Sturgeon has said another Scottish independence referendum is on the table. Nigel Farage has already gone back on promises.

Watching the results coming in live from different constituencies last night saw Sterling fluctuate largely with it. This highlights the uncertainty in the British economy as no one really knows what will happen now. It was expected that Sterling would depreciate with a Brexit vote and that’s just what happened, the GBP depreciated to a 30 year low, a lot due to speculators making money though I imagine.

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As seen, the drop off was due to the Brexit decision, but due to Carney’s and the Bank of England’s speech, Sterling began to recover once again, however it might be a while before it gets back to where it once was. The stock markets have been crashing all day, worldwide. Stock exchanges in Europe have suffered worse than the UK, still waiting to see the effect on the NYSE when it opens.

Before the referendum I said there would be a recession if we were to leave the EU, this is still to be seen, however I believe that the economy will be able to cope better than expected due to the Bank of England and Treasury response, although the UK inevitably has some tough times ahead.

In my previous blog post I mentioned the Leave campaigns false promises. Almost instantly UKIP’s Farage proved me right. On ITV’s This Morning programme he said he can’t guarantee the NHS will benefit from the £350m saved from EU membership. Just one promise that the leave campaign can no longer claim to be true. I hope promises of free trade deals with the EU will not be broken. The UK could be in a very difficult situation in the coming years.

With David Cameron’s resignation there is now big talk about who will be the next Prime Minister. I think Boris Johnson or Theresa May must be the front runners to lead the Conservative Party. Boris made a political move to back the Leave campaign knowing he would be in a favourable position to lead if there were a Brexit. May, on the other hand, kept convenient quiet throughout the campaigns but has the experience in the cabinet to be a great leader. It will be an interesting race. Regardless of who wins, they will have a large task on their hands to ensure the future of Britain remains bright. There is the need to make new trade deals, ensure the financial sector (Britain’s largest industry) remains strong, ensure the NHS is secure and improved as well keeping all other promises made during the leave campaign.

Now we have voted to leave the EU, I fear for the future of the EU and the free movement of people, goods and services. Many great leaders have worked so hard to make this single market and a greater union for the greater good of all countries. However now the UK has left I fear we may ‘open the floodgates’ for many other countries to now want to leave, restricting the ability for the single market to work. If this were to happen, the future for Europe as a whole could be very dark.

The unity of Europe isn’t the only worry. The UK itself is at risk of being split up with remain votes being dominant in Scotland and in Northern Ireland. This could bring a desire to campaign for independence referendums. I predict Scotland will become independent within the next few years since it is unfair to take them out of Europe when Brexit votes came mostly from England and Wales.

I hope I’m wrong about the future of the UK and Europe. However, it may turn out that the UK may bite back at the many people who voted leave as a rebellion against big institutions and the government or voted for the false promises from the leave side. Yesterday was a once in a lifetime decision and now the population be forced to suffer.

The EU Referendum, media coverage and should we stay or should we go?


Todays BBC headline reads ‘’David Beckham backs EU Remain vote’’, this is typical of the type of journalism that surrounds this debate, with less on the reasons for either side of the argument but more on the people who back the remain or leave campaigns. While I don’t doubt such celebrity endorsements can be used effectively by each sides campaign I worry that such articles will convince the British people to vote either way for the wrong reasons. Additionally, YouGov conducted research on how people thought fictional characters might vote in the EU referendum and all I can think is ‘who cares?’.

The campaigns have become too focused on people, but not ‘the people’ who matter, us. It is our everyday lives that will be effected by the result of the referendum so it is important that come Thursday 23 June you go out to vote for what you believe. This is a once in a lifetime vote. In this post I will discuss the important matters to give you a guide of what could happen if we vote each way. Personally I will be voting to remain in the EU, but on either side there is uncertainty of what the outcome will be.

National Sovereignty. The leave campaign claim that the UK gets bossed around by Brussel’s, however since 1999 the UK has been on the winning side of decisions 2466 compared to being outvoted just 56 times (just 2.27% of decisions). Although some UK laws are made in Brussels and other member states can force through laws against the UK’s wishes, this is rarely the case. Even so, Britain retains a veto in many important areas and additionally Cameron’s EU deal allows national parliaments to block EU legislation.

Immigration. As mentioned in a previous post, most peoples concerns over immigration are shown to be wrong as in total EU migration helps to benefit the UK economy. However, as I am from the East Midlands I understand many concerns as I have seen first hand ghettos forming within this country, driving out many UK natives as they are being ‘overrun’. Nevertheless, I believe the free movement of people within the EU and being part of this would be better for the UK.

Trade. Currently, as a member of the EU we can trade freely with other member states, with around half of the UK’s overseas trade with Europe. If we were to leave the EU, it is likely this trade would reduce, causing some firms to struggle and the likely result is higher unemployment. The leave campaign points to other countries which trade freely with the EU without being a member state, for example the Swiss model. However, such a transformation for the UK not guaranteed as trade deals cannot be made overnight and there are many risks that high EU trade barriers could become a problem for UK export industries. Not forgetting likely higher prices for imported goods, reducing overall consumer welfare. So there is too much uncertainty for trade if we were to leave for my liking.

Uncertainty. In this run up to the referendum uncertainty is high. Will we leave? What happens if there is a Brexit? What will the future hold? Simple economics can tell you that uncertainty can lead to a slowing economy through a fall in spending and investment as no one really knows what will happen in the future. Q2 growth in the UK is expected to fall to 0.2% from 0.4% in Q1 due to the uncertainty of the referendum result. If we vote to leave the EU, the future will be uncertain, it is likely that growth will slow further. This link gives an excellent explanation of the possible consequences a Brexit might have.

Therefore, while I have not covered every possible topic up for debate in this referendum, I hope I have provided a clearer understanding as to the reasons why some people want to leave or stay in the EU. The only thing that we know is that the future is uncertain, whether we leave or stay with high political pressure on both sides. In my view, we should stay in the European Union as we gain more from it than we contribute and the future if we leave is uncertain with many promises that will be broken from the leave campaign.

Immigration: Why we should have more, not less.


In the UK, immigration has become an increasingly sensitive issue, with many opposing the free movement of labour within the EU. Many people have negative opinions on immigration, however they do not see the positive effects immigrants have on the economy. Larger immigration flows have positive effects fiscally, on the labour market and on total factor productivity and growth, therefore skilled immigration should be encouraged by governments.

The Roy model shows how immigrants choose to migrate, shown in the figure. In the UK, there are high returns to skills so immigrants tend to be positively selected, for example on average immigrants have 1.1 more years of schooling than natives (Bell, 1997). Therefore, migrants from the EU on average are more highly skilled than UK natives, providing the basis for positive immigration effects.


One criticism of large numbers of immigrants is the negative effect on wages, however it has been convincingly shown that there are small effects on the relative wages of natives (Card, 2009). Similarly, following the Mariel boatlift natural experiment in 1980, despite a 7% increase in the local population (mostly unskilled), there was no effect on the wages or employment outcomes of natives and there was little effect on the outcomes for other immigrants since industries were able to absorb the migrants (Card, 1990). Therefore, this suggests the immigration surplus is small, however for skilled migrants this immigrant surplus is larger due to production complementarities between skilled labour and capital (Borjas, 1995). Therefore, although immigration may lower the wages of skilled workers, this is more beneficial to firms and may help to reduce inequality (Card, 2009). Further, Goldin suggests that immigrants are complementary to native workers, making notable contributions to innovations, increasing wages in the long term.

Moreover, the immigration surplus benefits consumers as a 10% increase in immigration reduces the cost of immigrant-intensive services such as gardening by 2% (Cortes, 2008). Further consumer benefits come as an increase in skilled labour from the Soviet Union was showed to reduce consumer prices since these workers have higher elasticities and lower search costs (Lach, 2007).

In Exceptional People, Goldin points out that people dislike sharing with people ‘unlike’ themselves, therefore they dislike immigrants benefit shopping. However, in the UK, immigration has been shown to be beneficial to the economy fiscally. Between 2000-11, migrants from EU-15 paid 64% more in taxes than they received in transfers and benefits. Those from the accession countries contributed around 12% more, this is while the government runs a deficit showing further the positive impact of migrants (Dustmann & Frattini, 2014). Therefore, opinions about migrants not paying their fair share are unconvincing.

However, since governments believe migrants are considered a socioeconomic underclass they do not always realise their potential, for example the UK government restricting EU migrants access to the welfare state for 4 years in a newly negotiated deal with the EU may deter some immigrants away. However, such policies such as the PBS introduced in 2008/10 ensures skilled non-EEA migrants are allowed entry. In a paper for the IEA, Gary Becker suggested making a market for migration through pricing visas in order to only allow entry to those who would gain the most from it and therefore add the most to the UK economy. Such a policy would be more efficient than immigration quotas and would also raise government revenue.

Additionally, improved productivity and growth from immigration shows further benefits. In a paper for the IEA, Portes showed that immigration brings different complementary skills to the country, benefitting long run productivity and growth. For example, innovation. Goldin states 25% of patent applications in the US are from immigrants (who make up just 12% of the population). In the UK, in a study for the National Institute for Economic and Social Research (NIESR), Max Nathan showed immigrants have similar innovative effects. Therefore, in the long term immigration has positive effects on growth through improvements in total factor productivity (Ortega & Peri, 2013).

In conclusion, the effects of immigration are largely positive and rather than aim to reduce immigration in the UK, the government should instead provide greater incentives for skilled workers immigrate.


Works cited

Becker, G. (2011). The Challenge of Immigration: A Radical Solution.

Bell, B. D. (1997). The Performance of Immigrants in the United Kingdom: Evidence from the GHS. The Economic Journal.

Borjas, G. J. (1995). The Economic Benefits from Immigration.

Card, D. (1990). The Impact of the Mariel Boatlift on the Miami Labor Market.

Card, D. (2009). Immigration and Inequality.

Cortes, P. (2008). The Effect of Low-Skilled Immigration on U.S. Prices: Evidence from CPI Data.

Dustmann, C., & Frattini, T. (2014). The Fiscal Effects of Immigration to the UK.

Goldin, I. (2011). Exceptional People.

Lach, S. (2007). Immigration and Prices.

Ortega, F., & Peri, G. (2013). The Effect of Trade and Migration on Income.

Portes, J. (2016). The Economic Case for Migration .