Though much of the Prime Minister’s proposed deal does not address our primary concerns as indicated in our previous cost/benefit analysis of Brexit, we believe that exiting the European Union without a deal would be the worst outcome for the charity sector.
Therefore, if the opportunity arises, on the 13 March, MPs should vote against a no-deal Brexit.
As the Office for Budgetary Responsibility has rightly pointed out in their October 2018 Economic and Fiscal outlook concerning Brexit “A disorderly exit could have severe short- term implications for the economy, the exchange rate, asset prices and the public finances. The scale would be very hard to predict, given the lack of precedent.”
The OECD has predicted that a Brexit which led to the imposition of tariffs under WTO rules would reduce UK output by roughly 2 percent, compared to a smooth exit.
The Bank of England have made similarly negative predictions stating that a no-deal could see the UK sink into a recession.
Not only would a downturn in the economy reduce charity income, as has occurred during previous recessions, it would also have the effect of increasing the number of beneficiaries which charities would need to service placing a greater strain on their finances. While we appreciate that economic forecasts are by no means certain, the potential downside poses too great a risk for our sector and should be avoided.
The government has indicated that there will be a United Kingdom Shared Prosperity Fund to replace EU Structural and Investment funds (ESIF), with its stated goal to reduce inequalities between communities and help improve local growth by improving productivity. As of yet there has been insufficient detail on the UKSPF for civil society to have confidence that it will satisfy the concerns ourselves and others in the sector have outlined.
As the Secretary of State for Communities and Local Government has indicated, the content of the UKSPF will depend greatly on the Spending Review which will occur later this year. A disorderly Brexit could mean the overall spending envelope is reduced meaning less money would be available as part of the fund. Charities and their beneficiaries could lose out compared to the funds they receive through existing EU funds.
As CFG’s polling has indicated, the sector is ill-prepared for a no-deal Brexit. More than a third of charities we surveyed stated that they had made no preparations, and less than 10% are fully aware of the impact it will have on their charity and have made adequate preparations.
When we further asked what the biggest concern from a no-deal Brexit consisted of, most respondents pointed to a lack of certainty, with one prominent charity responding “There is complete uncertainty - knowing what will happen and what actions we need to take.”
This has been compounded by a government public information campaign on EU Exit which has prioritised business, which has meant many charities have felt sidelined in the negotiations and in the Brexit preparations.
Lack of certainty
As has been evidenced by the impact to the economy, the uncertainty of EU funding and the lack of reliable information on how to make the necessary preparations for no-deal, charities will lose out if the UK exits the European Union without a deal.
It is for this reason that no-deal poses too great a risk for our sector and should be voted against by MPs.
For more information on this briefing please contact Richard Sagar, Policy Manager, on 020 7871 5484 or firstname.lastname@example.org
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