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Brexit – The End of Free Movement?

28 June 2016

Brexit – The End of Free Movement?
After the UK voted to separate from the EU in the June 24th referendum, with a vote in favor of separation of 51.9%, people are questioning what will happen to current migration and free movement of this Northwestern European nation. The decision is known as Brexit, a combination of the words “Britain” and “Exit” to refer to the British withdrawal from the European Union.
 
One of the main reasons Britain voted to separate from the EU after four decades of union is that it has been experiencing mass migration, with over 600,000 foreign nationals settling in the country in 2015 alone. Despite the low birth rate of Britain’s native people, the population has continued to grow at an alarming rate: from 57 million in 1990 to 65 million in 2015. Had this trend continued, it is estimated that Britain’s population would exceed 70 million within the next 10 years, with half of that growth being attributed to immigrants.
 
Migration from within the EU makes up almost half of non-UK immigrants to the country and no one currently knows what relationship the UK will have with the EU in the future. It is possible that the UK would continue to accept a free movement agreement with the EU just like Norway and Switzerland have established. If this were the case, the UK separation would have limited impact on the country’s migration. The alternative is that the separation leads to the end of free movement which would mean that EU citizens who want to live or work in the UK would face the same admission requirements as non-EU citizens. Similarly, UK citizens wanting to move to EU countries would face the same immigration rules as other non-EU immigrants.
 
If the latter scenario were to occur, i.e. the end of free movement, EU citizens who wanted to immigrate to the UK would be required to apply and qualify for work or other immigration program to be allowed permanent settlement. These immigration rules would make it difficult for EU citizens to live and work in the UK. EU citizens would face the same immigration rules as non-EU citizens and would need to meet the skill, education, and income requirements of the particular immigration program they are applying for.
 
EU nationals currently living in the UK make up over 6% of the workforce and one camp believes that they may be allowed to stay with a grandfathered status even after Brexit negotiations are finalized. Unfortunately, the opposing camp is adamant that leaving the EU means a forfeit of the rights offered by being a member. These include rights to live, work, study, run a business, as well as the right to public services such as health care, to name a few. Foreign nationals currently in the EU may be required to obtain new documentary evidence to prove their right to remain, as a passport will likely no longer be sufficient.
 
People should be relieved to know that the process to leave the EU takes at least two years, and very little change will likely be implemented during that initial period. Therefore, during the first two years of negotiations, free movement should still apply, however, this is still unclear. In an attempt to prevent immigration in large numbers, the UK might restrict free movement earlier than the planned exit.
 
UK nationals currently living in another EU country may be worried that the privileges they currently enjoy outside of the UK may be taken away now that Britain is going to leave the EU. In theory, British expats could lose their status to live and work abroad if the settlement between the UK and EU does not include freedom of movement. Other countries in the EU that have several thousands of UK citizens in their workforce may not be too quick to force all UK citizens out of their countries as this will likely negatively affect their economies. British expats will also likely require new paperwork for their right to remain in other European Union countries.
 
How Brexit will affect British economy is also a big debate. The British pound is already suffering the consequences of the vote to leave and its value is falling on foreign exchange markets. The devaluation of the pound could lead to inflation and as a result, force the Bank of England to increase interest rates to counteract the inflation. Investors may be pulling their money out of the UK in fear that Brexit will negatively impact the economy. Other investors may see this as an opportunity to invest in the UK when the country’s at its lowest, in the hopes that markets will rise again. Businesses will likely start to move money out of the UK, scale back plans, or completely liquidate, due to the uncertainties about the UK economy’s future performance after 2018 (after Brexit).
 
World financial markets also took a hit after the confirmed and shocking outcome of the UK referendum. The impact of the vote will have on Arab states of the Gulf will be limited to the short term, hitting financial markets and currencies. Long term, there are said to be no consequences to the GCC markets. Some short term effects predicted for the UK include a real estate crash, an exchange rate crash, and a huge drop in exports given that over half of the UK’s exports currently go to the EU. The UK has to now embark on at least two years of uncertainty and renegotiations. Its place in the global economy must be re-established. 
 
As for the UK’s Tier 1 investor and entrepreneur programs, they will for the time being remain unchanged. Whether foreign investors will still enjoy the benefit of visa-free travel across the EU is yet to be determined depending on the final agreement settled between the UK and the EU. Long-term effects of Brexit are unknown, and the unknown causes serious doubt for foreign nationals interested in investing and migrating to the UK.
 
The Prime Minister of UK, David Cameron, announced his resignation after the referendum last Friday as well. He did not support the vote to leave and chose not to continue leading the country for this reason. Only the future will tell what’s in store for Britain. And the future right now, is unsettling.
 
For more information about UK’s Tier 1 investor and entrepreneur programs, please click here.

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