In into ‘Hard’ and ‘Soft’ based on policies


In June 23, 2016
17.4 million people (51.9%) of UK voted to leave the European Union (EU). We
are calling this movement as ‘Brexit’. According to researchers and economists,
we are categorizing this movement into ‘Hard’ and ‘Soft’ based on policies
around trades and immigration. ‘Soft Brexit’ thinks that UK should keep things
as they are now with the continued free movement of goods and people. On the
other hand, ‘Hard Brexit’ would result in import taxes on goods and services in
both directions and restrict the migration from EU to UK.

I am writing
this report as a Policy officer at the Confederation of British Industry (CBI).
As I write this, I am speaking for 190,000 businesses, 1,500 direct and 188,500
indirect members who employ around 7 million people in UK (

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1. The
four macroeconomic objectives that will be affected by a ‘Hard Brexit’ policy

According to
Financial Times (2016), after joining the EU, UK gained increased amount of
trade, increased trend on business productivity and competitiveness, attracted
foreign investments, and created an attractive environment that EU citizens
work and pay taxes in the UK (Financial Times, 2016). As we know, macroeconomics
studies the issues, objectives and policies that affect the entire economy of a
nation or a region. We refer this analysis as aggregates. Let me try to explain
‘Hard Brexit’ consequences to our members in four macroeconomic objectives,

Full employment – Since ‘Hard Brexit’
restricts migration, number of immigrants coming to UK, the consequence is
affecting to our workforce skills and qualifications. The employment prospects
and wages of current UK residents will be revised gradually and naturally based
on income, education, sector and region. Moreover, we might lose our skilled
employees to abroad and the government will not be able to collect their taxes
in the region. We also not able to easily receive cheap and skilled workforce
from EU and other countries. Consequently, we, UK businesses and industrial
organizations will lose our competitiveness, productivity and agility which
will negatively affect to our social living standards and national income per

Price stability. We see that the stable
trade from agriculture to education and research bolsters stable balance of
payments on the current account. Misbalance in trades will result price
fluctuation due to supply and demand mismatch. For example, ‘Business Insider’ (Brinded, 2016) talks about high
demand on property and lack of supply from construction, where we mostly hire
low rate employee (mostly immigrants), will result a price jump in the real
estate business. Therefore, the situation is creating a domino effect on
corresponding interest rate increase at banking sectors. The UK is already seen
drops in housing purchases which slow healthy economic cycle in the society.

A high, but sustainable, rate of economic growth. Evidently, the sustainability is not happening after ‘Hard Brexit’.
According to ‘Independent’ (Featherstone, 2017), the UK will compensate £400 billion by
2030 for its no trade deal. CBI views that the current condition of UK innovation,
competition, knowledge and human capital could result long lasting severe
impact for its economic growth.

Keeping the balance of payments in equilibrium. In 2016, UK lost 44
percent of its exports planned to go to EU. This translates into 30 percent
decrease in UK export (Featherstone, 2017). Increased governance and procedure on
customs forms and guarded procedures are affecting timing and cost of export
and import for CBI members.

2. Monetary
and fiscal policies to achieve economic objectives on ‘Hard Brexit’ path

trade and migration policy will increase overall output for UK; however, the
government will have difficulty of controlling and monitoring unequal
distribution. In order to retain the same outcome as we used to have as a
member of EU, the Confederation of British Industry, we want to establish the
following environment and supporting policies around macroeconomic objectives.

Full employment – As we face difficulty
in finding low rate and skilled workforce from the current workforce market, we
want the government to produce immigration policy and selection criteria for
immigrant workforce. CBI members are ready to provide voice of customer on
selection criteria and employment practices. Therefore, we can avoid
uncontrolled movement to UK at the same time embrace fresh view and perspective
to keep us agile and competitive. While we supply our near future demand, we
also need to invest into education quality where we currently lacking.

Price stability. The government needs to provide us net effective changes to both the
supply and demand for public services considering the impacts on tax revenue,
benefit payments, service demands, and public sector workforce. For our
employee well-being, we want to receive supply for affordable housing and
discounted payment policies by removing our purchasing obstacles.

A high, but sustainable, rate of economic growth. With increased
productivity and competitiveness, CBI can keep and lower the cost of our
products. The government needs to announce our strategic development sectors
for research and development and industrial and regional policy. Those
identified businesses (products and services) could benefit from tax exempt
policies for predefined period while we develop and sustain our internal
capability within UK. By announcing low tax industrial region, the government
can support sustainable economic development and new growth sectors. Within the
region, CBI members want to receive subsidy for high risk businesses such as
research and development on cutting-edge technology or agricultural businesses
which could become a benchmark in the world.

Keeping the balance of payments in equilibrium. CBI members want to retain and expand the trade with EU while we
receive and supply goods and services for our supply chain. Therefore, the
government should provide us trade protocol while seeking new trades channel
for collaboration with third world and developing countries. Since, London is
known for financial and legal center, the government should re-market the
advantage and provide

favorable policy for investors
and business sectors.