The UK: A Post-Brexit Trading Hub
Almost three months ago, the United Kingdom made the controversial decision to exit the European Union. The doomsayers were quick to pour forth their warnings: that the value of the pound would be decimated; that the UK housing market would be destroyed; that the economy would be left in ruins.
And yet, the fallout seems slow to reveal itself. In the immediate aftermath, forex trading saw the pound drop to a 31-year low, but then it stabilized. The housing market has reported little in the way of negative effects, and the economy appears to be thriving.
Indeed, with a new prime minister at the helm, and a solid position as the world’s fifth largest economy, it appears that the promises made by the leave campaigners, of a bright future as an independent trading hub, may yet come to pass.
The Situation as It Stands
Before we can look ahead, however, it’s important to consider where Britain stands at the current time. According to data provided by Harvard University’s Atlas of Economic Complexity, the U.K.’s largest export partner is the United States, which accounts for 11 percent of the nation’s export total. Germany is a close second, receiving 10 percent of exports, with Switzerland purchasing an additional eight percent. These three are closely followed by the Netherlands, France, and China, which account for seven percent, six percent, and six percent respectively.
It is not only the country’s major export partners that come from around the globe, but also its strongest import allies. Indeed, although 15 percent of UK imports trace back to Germany, nine percent come from China and the U.S., while a further eight percent originate from the Netherlands.
This trading interplay between the UK and its European counterparts should not be dismissed, however. Yes, it has partners from around the globe, but Europe is still important, and this is not a one-sided relationship.
In fact, around seven percent of Germany’s exports are paid for by British purchasers, amounting to around $95 billion of goods. According to many experts, this substantial sum means that the country should be seen as being as important to its European trading partners as they are to it.
Indeed, many argue that the UK is less reliant on their eurozone partners than the other way around, due to their strong trading relations with countries like the U.S., an alliance which is worth around $100 billion annually.
Looking to the Future
With this information in mind, it is not inconceivable that Britain could thrive outside of the European Union, and many important global figures have shown themselves in favor of fostering the relations needed to cement such a future.
Barack Obama, although exiting his own role as a world leader, made many conciliatory noises regarding trade negotiations with the UK, words that carry merit because of his status. Presidential candidate Donald Trump was enthused by the idea of Brexit, and made it clear that he welcomed future trade between the two countries.
Australian prime minister Malcolm Turnbull has been notably ebullient at the prospect too, commenting that he would be keen to negotiate a new and prosperous post-Brexit deal between the two nations. Indeed, claims that preliminary discussions have taken place have been numerous, with neither Australia nor Britain having dispelled them.
The picture this presents is an interesting one; a country that has the capacity, and seemingly the will, to be independent, and a number of other nations with a strong incentive to help it. The building blocks for a post-Brexit trading hub are all in place, but do those in charge of the United Kingdom have the talent required to cement them? Time alone will tell; for now, we wait with bated breath to see.
Rosa Taylor is a Freelance content writer of international finance news, focusing on trading strategies, international trade, and politics.