British Prime Minister Theresa May stated unequivocally that leaving the European Union, the United Kingdom would also leave the single market of the block. Thus, the British refused “soft Brexit” and preferred “hard Brexit” scenario.
After summer referendum, the UK proved that its economy was relatively stable due to a massive service sector and private consumption. However, the announcement of forthcoming market divorce with the continent will lead to a higher inflation of 2.5% and reduction in GDP growth –up to about 1 percent.
Volumes of investments will decline at least until such time when final outcome of negotiations on Brexit will be clear. Construction and machine-building can become influenced by high prices of imported materials. At the same time, the exporting sector in the short term may even benefit from inevitable reduction in pound value.
If economic difficulties from Brexit are known to London and therefore can be overcome, the political situation is harder predictable.
Immediately after speech of Theresa May who submitted to the Parliament a bill on the country’s withdrawal from the European Union, Scotland’s First Minister Nicola Sturgeon said that a new voting on independence was now becoming “almost inevitable”. In the past year, 68% of Scotland electors stood for staying in the EU, and decision of May to withdraw from the single market brings Scotland to the second referendum on secession from the United Kingdom.
Speech of the Prime Minister made more clear the objectives set out by the British government. However, the final result will depend on how far the EU and each of therein remaining 27 member states, including Latvia, will be ready to step back at negotiations with London.
Current position of Latvia is that Latvia does not have a coherent position. The situation was brilliantly outlined the Minister of Foreign Affairs Edgars Rinkevichs: the process of UK negotiations on withdrawal from the European Union recalls the story of Winnie the Pooh and his friends: “Christopher Robin was going away. Nobody knew why he was going; nobody knew where he was going (..). But everybody in the Forest felt that it was happening at last”.
Meanwhile Riga has only managed to formulate a respect for the decision of the British people. And predict that further negotiations on the model of economic relations will be complicated.
Important issue at meetings with European separatists will be the decision on further destiny of Latvians in the United Kingdom and the attempts to maintain cooperation in economy, security and defense. Will it be possible?
