(Editor’s note: This post has been updated as British Prime Minister Theresa May is facing new pressure to walk away from deadlocked Brexit negotiations with European Union officials.)
In June 2016, Britain voted to leave the European Union after a small group of nationalists sold British voters a simple message: Brexit will be a quick and easy return to greatness.
If there’s a lesson here for all nations, it’s the power of simple populist messaging combined with the appeal of demagoguery.
In this case, former United Kingdom Independence Party leader Nigel Farage, current Foreign Secretary Boris Johnson and Michael Gove, now UK’s agriculture secretary, made promises no one could keep, from leaving Brexit diverting 350 million pounds per week to the National Health Service instead of the EU to new and better trade agreements negotiated with individual EU countries via the World Trade Organization.
Quotes such as “easiest negotiations in human history,” “Britain holds all the cards” and “take back our country” tripped off the tongues of Eurosceptics, who described a brave new world of rainbows and unicorns.
Unfortunately, Prime Minister Theresa May’s Conservative government has proven to be incompetent at bargaining from a position of weakness.
Instead of improving its relationship with the EU, after 16 months and five rounds of negotiations, even May has conceded the UK might be headed for a no-deal Brexit.
And that, as our Nina Avramovic put it all those months ago in her prescient post “Dear Brits; This is what it’s like to be a non-EU citizen,” means living in a whole new world of uncertainty, with limitations on travel, work and education.
On Sunday, labor and conservative leaders vowed to stop a no-deal Brexit, agreeing that leaving the EU with no relationship would be the worst-case scenario.
That still comes down to the May government’s negotiations with the EU, over which parliament has no direct control. The Guardian quoted Transport Secretary Chris Grayling as saying parliament would “have no mechanism” to keep the UK in the EU for longer than 30 March 2019. That’s when Britain’s EU membership automatically expires if no deal is reached.
British expat groups across Europe are nervously monitoring the negotiation deadlock.
“After the fifth round there has been no progress on fundamentals – free movement for UK citizens in the EU – and no real move on ‘settled status’ for EU citizens in the UK or on the scope of economic rights and professional qualifications,” noted Jane Golding, chairwoman of the British in Europe coalition.
If you’re an expat – especially a British expat – what does the UK’s inability to reach an agreement with the EU mean?
Here’s how we think a no-deal Brexit will affect expats in Europe:
• Let’s start with what could happen, but probably won’t.
No deal could mean British expats who’ve lived for years in Spain, France and other countries would be forced to return home. Unless … unless countries with heavy expat populations such as France and Spain extend retroactive long-term residence visas effective 30 March 2019. The expats in France we consulted believe their financial and civic contributions, especially in rural France, make that highly likely.
In what appears to be a move toward a quid pro quo, May stated Wednesday she would send an email to 100,000 EU citizens assuring those in the UK legally that they will be allowed to stay after Brexit, according to the Guardian.
EU officials had criticized May’s negotiators for not making progress on citizens’ rights. But no deal at all could return both the EU and the UK to hardline immigration positions and – worst-case scenario – theoretically lead to one of the largest forced migrations in Europe’s history.
• If there is no agreement and UK officials decide to expel EU citizens, Romania, Bulgaria, Poland and other countries in Eastern Europe and the Balkans would staunch their brain drains.
The Guardian reported last week that the number of Romanians and Bulgarians in the UK rose 80 percent between 2014 and 2016: to 413,000 last year from 230,000, according to the Office for National Statistics.
Now, Bulgaria, Romania, and Poland need those people back as their own economies expand at a pace far faster than the UK.
(We can see you wondering, so we’ll tell you: There are a grand total of about 6,200 British citizens living in Romania and Bulgaria.)
• If you’re an expat in, say, Frankfurt or other financial centers, get ready for housing costs to skyrocket. Or settle for living in villages, towns, and cities within driving/train distance such as Darmstadt and Wiesbaden outside Frankfurt.
Multinational banks and financial houses based in London, focused as they are on objective economic forecasting, were the first to figure out Brexit isn’t going to end well. Unswayed by nationalism or emotion, they started planning on the first day for a worst-case scenario that would end “passporting” rights for cross-border money transfers and the arcane market transactions to happen without regulatory “friction.”
Right now, top execs at large corporations – including those at British-based multinationals – are starting to doubt the UK can get a deal. If they decide to wait it out, a no-deal Brexit could conceivably cut their access to the world’s largest trading bloc while forcing them to scramble to find a new home at the last minute and spend millions of extra dollars/pounds/euros to do it.
So you can look forward to an unending series of announcements about these companies heading for the Continent.
This scenario will be repeated around Europe from Amsterdam to Paris as multinationals leave the UK to protect access to 500 million customers in the EU as opposed to 60 million in the UK.
Bloomberg just reported that so far, Morgan Stanley, Citigroup, Standard Chartered and Nomura banks/financial groups have announced they’re moving their EU headquarters – along with thousands of well-paid executives and employees – to Frankfurt from London.
Goldman Sachs Group Inc. and UBS Group AG will likely follow suit. JP Morgan Chase and HSBC Holdings are headed for Paris, while Barclays Bank chose Dublin.
So, Brexit pushing so many people into Frankfurt, Paris, Berlin, Amsterdam and Luxembourg will put pressure on housing markets in innovation centers, many of which already are seeing residential rents and sales skyrocket, not to mention the cost of office space.
• Conversely, finding a job in Europe could become much easier for non-EU talent from the United States, India, Mexico and other countries.
Britain has been, compared to Sweden, Germany and the Netherlands, a walled garden even though it has the No. 1 tech and startup scene in Europe.
With banks, car manufacturers such as Ford, and advanced manufacturing leaving the UK, expect an increase in opportunities in the EU, where highly skilled internationals are welcome. The down side is, this will put even more pressure on countries such as Sweden and Finland, where labor shortages are becoming critical.
• Great Britain might once again become the isolated island for which Brexiteers are so nostalgic.
Travel rules would be suspended, as Chancellor of the Exchequer Philip Hammond noted last week that without a deal at least six months before the March 2019 deadline, planes could literally stop flying between London’s gigantic airports and Europe.
• The expats who remain in the UK could look forward to empty shelves in stores.
Why? Because the UK imports twice as much food as it exports.
The irony, of course, is that you can almost swim from the coast of England to the Netherlands, which is the No. 2 food exporter in the world. How badly does the Netherlands need the UK? Try, not at all if that means tariffs. There are still 27 countries in the EU. And Britain still has to import food from somewhere.
Do we think all of this will happen? It depends.
Brexit is a divorce and as we’ve said many times, divorces are always bitter. And despite what the Brexiteers claimed, the UK has very little leverage. Other than finance and Rolls Royce jet engines, Britain doesn’t do anything – build cars like Germany, create ultra-high-tech like the Netherlands or excel in aircraft manufacturing like France – better than any other country.
If a new government came in, that might change the tenor of the talks with EU officials. Or it could even lead – best-case scenario – to the UK rethinking the wisdom of continuing down a road that leads straight over the White Cliffs of Dover.
But you have to wonder if the relationship between the UK and the EU can ever be repaired under any circumstances.