With Theresa May having now officially announced Britain’s intention to leave the European Union, both the UK and countries on the continent are braced for the potential fall-out. This is understandable, of course, as the UK’s exit will have an immediate impact on its European partners and fellow EU-member nations.
Beyond this, however, the UK must also redefine global relationships and carve out a new place within a constantly changing world order. This means that the UK’s relationships with other countries across the globe may also be impacted over time, with Singapore offering a relevant case in point.
Exploring the long-term impact of Brexit on the UK’s relationship with Singapore
At first glance, Brexit will have little impact on Singapore and the nations trade relationship with the UK. After all, the UK is only 22nd on the overall list of Singapore’s trading partners, while the economic ripples caused by Britain’s departure from the EU will barely resonate outside of the continent. So aside from causing currency fluctuations and the sustained devaluation of the pound, which according to brokers continues to trade currency within a narrow range, Brexit will have limited impact around the world during the coming months.
This is confirmed by the import and export figures relating to the two nations, with non-oil domestic exports from Singapore to the UK accounting for less than 1 per cent of total shipments. Similarly, imports from Britain constitute for around 2 per cent of Singapore’s total, while the value of trade between these two countries equated to S$4.94 billion (US$3.52 billion) during the first five months of 2016. Altogether, this means that any negative impact from Brexit would be negligible for Singapore and other nations in the Asia-Pacific region.
Also read: Brexit: Will London remain a fintech hub?
Beyond these headline numbers, however, there are concerns that Brexit may have a far greater impact on Singapore and its relation with the UK (and, to a lesser extent, Europe). Economists believe that Singapore’s economy would suffer if UK companies scaled back their investments in manufacturing, which could well happen if Brexit takes its toll on the British economy. A continually weak pound will also exacerbate this issue, particularly if it continues to struggle against the Singapore dollar.
The bottom line: Will Singapore suffer from the potential break-up of the EU?
Not only this, but Singapore would also incur significant losses if Brexit were to trigger a mini-exodus and the eventual break-up of the EU. After all, the EU remains Singapore’s second-largest trading partner after China, and there are two major elections scheduled in France and Germany later this year (both nations have right-wing, anti-Europe parties challenging in the polls). With Europe gripped by populism and engulfed by nationalist politics, Brexit could trigger the break-up of the union and strike a blow to the heart of the Singapore economy.
This amounts to mere speculation for now, of course, but there is no doubt that Brexit could have significant consequences for Singapore (while impacting on the nation’s trade relationship with the UK). This is certainly something to watch for as the negotiations between the UK and the EU begin to take shape, as the true impact of Brexit on the global economy begins to play out on the world stage.
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