The Impact of Brexit on the Transport Industry

Abstract

By referendum on 23 June 2016, voters in the United Kingdom of Great Britain and Northern Ireland voted narrowly to leave the EU. The vote was called for party political reasons, as the ruling Conservative party was divided on the issue of continued EU membership, and the Government expected that a national pro-EU popular vote would silence those who wanted to leave. When the result turned out to be the opposite of what the Government expected, the Prime Minister resigned, despite an earlier pledge that he would abide by and implement the result. The new Prime Minister – who had voted to remain in the EU – repeated the pledge, even though the referendum had been an advisory, not a binding, one. The subsequent period has been spent in trying to achieve an agreement that minimises the adverse socio-economic consequences, to both sides, of a UK departure from the EU, prior to the declared leaving date of 29 March 2019. This paper examines likely effects of Brexit on the transport industry. It starts by explaining the meaning of Brexit, the timetable for UK exit, and some of the possible reasons why the referendum vote turned out as it did. (There has been a surprising lack of research into this subject, and none was undertaken by the UK Government in the aftermath of the vote.) The paper then considers the possible trade and commercial alternatives that the UK has to EU membership. ‘Norway’ or ‘Canada’ (or Canada Plus) arrangements were part of the internal discussion in the UK in the period after the referendum (which had not included a question on alternatives). A UK Government insistence (‘red line’) that the UK would no longer be subject to the jurisdiction of the European Court of Justice, which interprets EU law, limited the options available to the UK. The possible consequences to the UK, if it leaves the EU without a mutually acceptable withdrawal agreement, are then considered. Having set the background to this possible event, the paper then looks at how it may affect the transport industry. All modes of transport, other than inland waterway transport which has no direct connection between the UK and other EU countries, are examined. In each case new agreements will be needed to avoid serious disruption in the event of a ‘no-deal’ Brexit that removes the UK from the single market and customs union, with the UK then being regarded as a third country for trade and transport links. The final part of the paper examines the likely effect of Brexit on the economies of the UK and the remainder of the EU (and hence transport demand). It finds that Ireland may be the most affected EU country, but that the economy of the remaining EU-27 as a whole will suffer as a result of Brexit. After Ireland, the UK economy will be hit hardest, and we may never know if that is a result that the ‘leave’ voters in 2016 expected or not.