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Get ready… this time, it’s real.
After a massive delay, the UK has officially left the European Union (EU). It happened early this year, on 31st January 2020.
There’ll be some effects on business industries. But what does the future hold, and what happens next?
The last recession saw a 3.2% reduction in construction projects alone (perhaps the worst hit industry) between 2009 and 2010.
Nine percent of all .eu domain names could be revoked by the European Scrutiny Committee (ICANN)… With COVID-19 just raising its ugly head, the world is extra sensitive to potential market downturns.
Table of Contents:
How Brexit Will Affect Your E Business ➡️
Effects on web hosting may be the least of your worries. It’s important that any business keeps a general eye in the environment.
Recessions are cyclical. Large-scale economic changes often impact businesses... But - the COVID-19 just having done its merry rounds - politicians and businesses now crave normality and trade. That’s a good positive note to begin this article with.
What Exactly Is the European Union (EU)?
The EU has a long and interesting history with seeds entrenched many centuries back.
But, the organization did not take form until the 20th century.
The European Union is a diplomatic agreement - of economics and politics - between 28 European countries.
After the horrors of World War II, it was decided that open negotiations and trades were the best way to maintain peace on the continent and worldwide.
That comes after many cycles of wars and secret diplomatic alliances made under the table to maintain covert power. Historians generally agree that countries playing one against the other, was a major factor in the World Wars and Cold War arising… In theory, the European Union is an evolution to that violent era.
Why Is Britain Exiting the EU
In theory, the European Union maximally opens up markets and transparency. This makes countries less likely to compete against each other directly, because trade is such a win-win.
An evolved level of capitalism, where countries in the EU are essentially a single country… The EU has its own legislation rules and currency that can be used in many of the membership countries (euros).
The “imposition” of legislation by the EU on Britain was a divisive topic. From topics of immigration; to the decentralization of Britain's financial institutions into Germany, Frankfurt, possibly giving New York an advantage.
For a bit of context, the British pound sterling is the oldest currency that is still being used in the world. Sure, it’s weakened over the years, but it is still a strong currency (stronger than the dollar). Ironically, when the UK voted to leave the European Union in 2016, the currency plummeted on worldwide markets.
Popular Opinion in Britain
17.4 million people voted to leave the EU in a public vote... This was a total of 52% “For” versus 48% “Against.” Overall, the public spoke and this is the reason for Brexit. A feeling of distrust, among the people, could be pointed out as the overarching reason. Many UK citizens - who voted “For” - did not want a Big Daddy governing their country.
Many also felt that immigration was becoming too rapid and uncontrolled, with non-UK EU citizens flooding into UK cities. An argument was put forward that only the supplementary “best and brightest” - those skilled for particular Industries - should be allowed to get permanent residence.
Much controversy exists around the fact that politicians delayed Brexit and some even tried and are trying to dismantle it. This was despite the fact that - technically, by law - they were responsible for enacting the country’s public decision.
Overall, the vote was incredibly split down the middle. Many mainstream forms of media put forward the argument that Brexit was morally wrong, and motivated by the wrong reasons. To this day, talking about Brexit is a sure way to stir up very strong sentiments.
Why Was Brexit Being Delayed?
There's a long and complicated history behind why the Brexit was delayed for such a long time, but it can be summarized it with these three point:
- Almost half of the British people did not want the move to happen. Many thought Brexit was morally wrong
- The country was split politically, also, leading to the need for a Conservative-Liberal parties to join forces
- Fundamentally, there was never a coherent, clear explanation on the meaning of Brexit
In a way of thinking, Brexit is the result of poor, unclear leadership. A sign of the times. The country was unsure on how to proceed, in an era when Britain is arguably on the decline - relative to the significance it used to have on the world stage.
Every level of the country; socially, politically, and culturally, was split down the middle. That sort of ideological tear is not easily resolved without strong leadership
Will Brexit Happen and When?
Good question, though we - technically - left the EU already (from 31 January 2020). There’s a transition period. And, there is still immense uncertainty that surrounds this topic. And there are loopholes that remain viable, regarding legislation; options for backtracking on the 2016 public vote decision.
Note, this is a long process, not an instant overnight transformation. And there has previously been very credible talk of a deal being ratified in Parliament to work out a middle-ground between leaving the EU and something else.
If it does go through, it could mean some new legal terms and conditions for everyone, including web hosts with London-based servers e.g. Siteground.
Even despite the coronavirus pandemic, the current prime minister of the UK, Boris Johnson, recently ruled out any further delays in Brexit... One spokesman said, “In UK law, a request for an extension is not possible.”
Keep in mind that there are no immediate Brexit effects on businesses. We are technically still under EU law, just in a transition period that will end on 31 December, 2020. In terms of how Brexit will affect business, the UK's aim is to recover its economic and political independence, according to the cabinet office minister, Michael Gove. And they aim to do this by the end of the year, while maintaining the best possible trading relations with the EU.
Related Read: Best online trading platforms
Overall Effects of Brexit on the United Kingdom (UK 🇬🇧)
It’s safe to say, the British public - on either side of the debate - are exhausted from constant delays in a final decision on Brexit. Now it's here, businesses are looking towards its implications.
- What areas will be most affected
- What will be business advantages & disadvantages
Governance and Politics
No government’s an island, so they say.
Insofar as the manifesto of the current conservative party, Brexit represents true political and economic independence for the United Kingdom.
Inter-dependence is necessary on the world stage. (North Korea aside).
At the very least, Johnson’s plan for more independence should give Britain maneuverability, in a terrain that seems to be moving towards recession/titanic infighting between China and the US.
In theory, the country will shake off tedious over-regulation bonds, maximizing the number of decisions it can make for itself in how it does trades and organizes its own politics in general.
A side-effect of the Brexit pantomime is that - recent polls suggest - most Scottish people now want to leave the UK… There is still a very tight difference of opinion, but it could possibly be the start of Scottish independence.
Still, many years of accelerated regulations - on membership states, by the EU - may be relaxed. For example, various strict regulations and strict standards have been pointed out for damaging the automobile industry sector. This has also been seen in dwindling German automobile stock values.
Business, Trade and Regulations
In theory, the isle will be insulated from the effects of Eurozone crisis’.
Many of the southern membership states are much poorer than those in the North. By reducing ties to the Euro coin, the UK could recover much of what was lost in the British pound sterling’s value, after its departure from the EU in 2016 in public vote.
That is obviously hard to predict and it may be that, as some predict, the British pound sterling even with the US dollar.
This could be a question of damage control, as the EU economy looks to be facing a great challenge with a slowing economy. Many EU countries, including Germany, were sliding into a recession even before the coronavirus hit.
Some of this decline has been blamed on the Brexit self. There is speculation that a worldwide Trade War could be on the horizon. There is already friction between the United States and China. These two economies control a third of all world trade.
Any friction between these two will impact the world. And there is talk of US tariffs on EU Goods. In response, the EU said that it would implement tariffs on its own goods, in return, which would also affect Britain by default.
We all keep hearing about deep-freezes in UK-EU talks regarding post Brexit relations. With any major change in hierarchical relationship dynamics, some amount of posturing and negotiating is inevitable.
The main thing to draw from Johnson's solidification of the transition period into full independence, is that the devastating damage of uncertainty on Britain's economy will begin to draw to an end.
By the first of January 2021, they will be an established agreement of how the UK and the EU will relate to each other economically and politically.
But, we are still in a period of deep freeze as the ins-and-outs are agreed on.
We expect many more news headlines with Boris Johnson declaring he will walk away from post Brexit EU-UK talks if the right trade-offs are not made, and the EU continuing to remind the UK that it is making the wrong decision and should play to its terms.
Travel and Permits
If you are an EU National or EU citizen, you are automatically allowed to travel into another membership state. For example, a German EU citizen has the right to travel into Poland without requiring a visa.
This isn’t quite the same as being a citizen of the world. But, after living continuously in that country for 5 years or more, with a few other requirements, any EU National can apply for permanent residence in another EU country.
There are no extra extraneous conditions, and you are not required to have a job, health insurance, or other resources typical with gaining permanent residences for a foreign country.
One impact in political and economic relations, due to Brexit, is plans for the UK to start a ‘points-based immigration system’ that gives Immigration preference to migrants who are deemed skilled.
In other words, work and travel permits will slow and reduce. Overall, there will be a great reduction in the amount of legal migration into the United Kingdom by non-British workers and visitors. This would also reduce the number of people who successfully gain permanent residence from other countries.
Is Brexit a Good Move for Business and e-Commerce? 💳
This question is a matter of time (or being a time-traveler, in a way of thinking). We do not yet know precisely how it will take form, and how Brexit will impact already established businesses or the flight of new online business ideas.
A very popular mantra that Boris Johnson used to win his reelection in December 2019, was “Get Brexit Done,” a very no-nonsense take on things.
It’s support also suggests the public wants this to just be over with. Furthermore, Boris has made it very clear that his government intends to recover full economic and political Independence. This was specifically said by his cabinet office minister, Michael Gove.
The associated document - linked to that statement - determined the UK is not prepared to agree to any deal that will put it in a position where it is obliged to synchronize its laws with the EU.
Currently, we are in the phase of hard negotiation. There are many controversial talking points: from immigration, fishing, the Irish border and the future of current EU citizens - those who are living in the UK, and those abroad.
Again, the bottom-line is that the UK should have some increased degree of autonomy. We have to weigh this up against potential penal consequences, such as a EU tariff, how the British pound sterling holds up, and ongoing economic deep-freeze frictions from EU membership states.
Let's have a look at the “upper and lower” possibilities of Brexit 2021…
The most extreme deal.
The deal has different meanings to different people. The most extreme version would be a “no deal” Brexit.
In that case, there would be lots of confusion in terms of traveling. Whereas, with a hard Brexit, Britain would get its blue passports back, but still not need visas or fees when traveling to other EU countries.
British tourists are a large source of income for some EU countries, so no surprise. Still, a hard Brexit may mean new limits, checks and taxes on trades. While a no deal Brexit may lose the UK many of its current trade agreements that it has with non-EU countries that have agreements with the EU.
There could be new tarrifs regarding crossing UK borders and it could be more expensive to obtain foreign goods, with delays in transportation of goods. Reputable email hosting providers may be forced to revoke addresses with .eu extensions.
Either way, the UK does not owe the EU money. But investors may pull away from Britain, viewing it a poor bet. In this uncertainty, it's quite probable that investments will dry up for a time, while people see what effects changes have. The most amount of haggling will be needed in this scenario.
A middle-ish ground...
Brexit would arguably be at the middle-ground solution, giving those who did not want Brexit some leeway in how the actual deal takes place, while giving those who wanted it something to show for winning a majority vote.
The EU, likewise, will save face by giving the UK a deal that doesn’t make Britain’s life better and freer than if it was inside the EU. That might discourage other member states from also leaving. The opposite could quickly collapse the EU.
For this reason, a vigorous amount of negotiation is taking place. They are also citizens from other non-UK countries who are living, working and visiting the UK. A soft Brexit would make their life easier, too.
There is also the fact that the EU has less to lose than the UK does, at least according to the IMF. This puts them in a better position during negotiations.
Effect on IT and Tech Industries
Leading up to this transition period, Britain experienced months and months of grueling damage to its economy.
For example, Britain's manufacturing sector experienced successive amounts of decreasing new orders. This was as a direct result of uncertainty surrounding Brexit, and is one of the reasons why coming to a quick deal became very popular.
So, in a way of thinking, things were already bad and - now - there was potential that they will improve.
This lingering uncertainty may not reduce for a time. But the faster that politicians come to a deal, which will be December 31st at the latest, the faster investors will have the information they need to make investment decisions.
The transition period will protect deals between EU financial firms and bank trading agreements. It’s yet to be seen how the sterling will be affected post-transition.
There were a few specific impacts for IT and Technology…
Data Centres Risk
London has been called the financial center of the EU. Much business occurs in the busy capital, including operations of a large number of providers with London data centers (Siteground review makes for an example. GoDaddy is another). Many EU countries have ties to these data centres.
Non-UK companies could rapidly move data out of UK servers, which could impact the business of UK and London hosting providers.
We are a little bit skeptical on this point, as every hosting provider is legally obliged to keep information private. Some of the bigger institutions may pull out to make a point about their disapproval of Brexit.
Data Protection for Citizens & European Cloud Initiative
Another reason for the data centre risk - described above - is that EU laws extend to shared data protection rules. There could be legal conflicts of interest post-Brexit and hurt UK companies’ efforts to serve EU clients, from servers to even the best website builders.
For example, we will leave the European Cloud Initiative and Digital Single Market. One example of their initiatives was to create a continent-wide standard for devices.
This refers to the responsibilities that UK website owners have for regulating comments on their websites. The UK's regulations will take precedence post-Brexit, regarding legal actions that happen to bloggers and so on, for communications that are deemed hateful or illegal.
There are also wide-ranging implications regarding potential restrictions of UK businesses with accessing EU personal data. This could put UK businesses at a competitive disadvantage.
The hundreds of thousands of the .eu domains currently registered to UK businesses may be revoked. This isn’t currently a talking-point, but post-Brexit that might be the case. Especially if the EU wants to make a public point.
May need to talk to your domain registrar.
This is a matter of time ⌛
In terms of effects on IT/web hosting, these could happen, there could be conflicts of interest for data stored on UK servers. And restrictions of EU, personal data e.g. GDPR that the UK loses the right to.
Investments may also dry up during the transition. Still... there may be increased ability for Britain to regulate its own laws, politics and economy. A boon that could boost the British sterling pound.
One thing is for sure: 2021 will be a post-Brexit year. Get ready for it! Expect lots of business adjustments. (A trustworthy VPN may save early headaches, by hiding geolocations.)