The main differences between Hard Brexit and Soft Brexit concern the terms of trade. In a Hard Brexit, the UK would be leaving the single market & the customs union, resulting in increased bureaucratic checks on goods. In a Soft Brexit, the UK would continue to be part of the single market but would have fewer rules governing its borders.
Leaving the customs union would mean increased bureaucratic checks on goods
The UK would have to deal with an increased number of customs checks as a result of Brexit, which would mean a more costly process for business. According to the Food and Drink Federation, a trade association representing food importers, this would have a negative impact on high street retailers. According to the organisation, UK companies would need to negotiate new deals with the EU and its assoicated member states, which would differ from the current arrangements.
Britain’s trade with EFTA countries and Turkey accounts for 6.2% of the total UK external trade, making it difficult to agree on a new trade deal with these countries. As a result, any such agreement would have to be renegotiated extensively. Moreover, EFTA members would have to accept the EU’s regulatory and customs regime and would have to join the Single Market through the EEA agreement or other bilateral agreements. Furthermore, the UK’s trade with Turkey would be affected because Turkey turns out to be in a partial customs union with the EU.
The UK could also have joined the European Economic Area, which includes Iceland, Norway and Lichtenstein. That would have given them attainment to the EU single market for most goods and services, although it would not have included agriculture. The EU has no customs union with non-EEA countries, meaning that the United Kingdom would need to sign trade deals with these countries.
Leaving the single market would mean leaving the single market
There’s a common misconception that leaving the EU would mean leaving the single market. The real stands out that the vast majority of British businesses do not sell to the EU. That said, many businesses would benefit from more flexibility. Many EU workers already have rights to remain in the UK after leaving.
The single market is a complex system involving numerous rules and regulations. It helps consumers and businesses trade freely with each other and supports 500 million consumers and 21 million SMEs. In addition, it accounts for 70 percent of the EU’s economic activity. Without unified rules and regulations, a country cannot remain in a single market.
In addition to reducing the UK’s international competitiveness, a decision to leave the Single Market would damage the UK economy for decades to come and lead to tens of thousands of job losses. Leaving the Single Market would also limit the UK’s ability to provide services to European consumers. Moreover, it would restrict the UK’s ability to trade with businesses in the Single Market.
Theresa May’s government is in favour of a hard Brexit
The firmness to push for a hard Brexit has caused confusion in London and the rest of Europe. Theresa May’s government, which once saw itself as the champion of Brexiteers, is now under fire. After failing to win a parliamentary majority in the last election, May has faced a difficult situation. She is now at the mercy of pro-European MPs and backbenchers who are opposed to her plans for Brexit.
When Theresa May was elected Prime Minister in 2017, she received an unwelcome mandate. She was determined to make changes to the UK’s EU relationship, but she was faced with a radically divided cabinet and party. This divided government has made the negotiations difficult.
May’s decision to call a snap election to win a stronger majority in the parliament was a clear mistake. She was unable to deliver on her campaign promises. Her party was unable to offer any solution to the Brexit crisis. The result was a defeat for May and her government. While some of her miscalculations were outside her control, others were her own fault. Her decisions have weakened her credibility and diminished her authority.
Impact of a hard Brexit on inward FDI
While most of the debate on BREXIT focuses on the loss of real GNI and GDP, the impact on inward FDI is also important. Recent Office for Budget Responsibility (OBR) revisions suggest that the UK could lose around 30% of its investment in the coming years. That would mean that UK output would shrink by around 5% by 2020, and the UK’s share of foreign ownership would decrease to 17%.
The EU’s single market has been a major driver of FDI. By establishing a single market across Europe, it has created a large, unified market. This would attract market-seeking FDI from outside the EU, which would benefit from its domestic market size. This effect would likely be much greater than the effect of free trade agreements or the EU’s other free trade agreements.
Although, the impact of a hard Brexit on inward EFDA is far less clear. While there are a range of potential outcomes, a hard Brexit will have a significant negative impact on inward FDI. In contrast, softer Brexits are likely to have minimal effects on FDI, but will have major impacts on certain sectors and regions.