To see how integrated a region can become, one need look no further than to Europe to see what it takes to break one apart. Currently, the UK is scheduled to leave the European Union at the end of this month, October 2019. The departure date has already been slipped twice because politicians found separation more complex than they had imagined. Yet politicians are not the only ones dealing with this complexity. A March 2019 Post article described how businesses are scrambling to prepare for BREXIT.
Businesses have been hard-hit by the uncertainty of BREXIT. Few understand how trade between the EU and UK will work after separation. In an attempt to figure it out, companies have spent hundreds of millions on contingency planning. The British auto industry has been particularly hard hit: some companies have laid off workers, idled production, or delayed expansion. Small businesses, which typically don’t have the resources to stockpile supplies, are especially vulnerable.
While some of these effects may be temporary—going away after the split has been made and a new paradigm has settled in—other effects are at least quasi-permanent. Cross-channel just-in-time supply chains will likely be less lean, more costly, and less responsive. Some firms will move production to the continent to get around tariffs. The financial industry has already moved an estimated $1 trillion in assets from London to other European cities. Some foreign firms have already moved their European headquarters to the continent to ensure continued favorable trade status and tax benefits: Bank of America moved its European headquarters from London to Dublin.
These problems reveal just how integrated this region has become—and this is just the business sector. There are undoubtedly similar complexities in the public, not-for-profit, and academia sectors as well. What grew together slowly over decades is not severed easily in months.
References:
Washington Post, “Businesses find Brexit uncertainty maddening,” 10 March 2019, A14.
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