The forgotten losers of Brexit might be the World’s poor

It’s clogging every airway, dominating parliamentary time that should be spent addressing things like the housing crisis and soaring child poverty, and is the plat du jour at dinner tables up and down the country. But among all the arguments and noise, have we overlooked an important constituency in the Brexit saga: the global poor?

There are countless ways that Brexit could play out, but one thing seems to be certain. Any move away from the European Union by the UK will have widespread and mostly unintended implications for developing countries. As I argued at a JustShare gathering last night, this will be felt both through the immediate impacts on aid spending by both the UK and the EU, and through the broader impact on key development vectors, such as trade and migration.

With regards to aid, the UK currently contributes around £1.5bn to the EU’s annual aid budget, or just over 10% of the UK’s total aid spend. That’s a £10bn hole for the EU to fill over the next seven-year multiannual financial framework, which is currently under negotiation. How EU members choose to address this gap will be critical. It’s possible that the resultant rejig will see some of the calling cards of the UK’s aid agenda – such as women and girls, fragile and conflict-affected states – fall lower down the EU’s priority list. Or even that these areas are tactically defunded as a way to lure the UK back in as a third-party funder. And EU states are facing similar anti-aid drives domestically to those we’ve seen in the UK, meaning the EU’s solid reputation for aid effectiveness could easily fall victim to greater risk-aversion or self-interest, as already seems to be happening. The loss of the DFID’s enlightened policy leadership here will be sorely felt.

The overall value of British aid will likely reduce in the event of further sterling devaluation and/or any Brexit-induced recession, meaning our aid budget – linked by statute to our national income –simply buys less stuff overseas. The British government will then have a choice to make about what it does with the aid it no longer puts through the EU. As hinted at in the non-paper published in 2018, the government may still choose to pay into EU aid instruments, but it is unlikely to do so without demanding a seat at the table, something which the EU’s own Brexit Guidelines seem to rule out. Or it could opt for a looser arrangement of alignment and cooperation with EU programmes, or to use the money for something else entirely. The first of these options is an onerous way to achieve the status quo. The second will raise the risk of precisely the kind of fragmentation and transaction costs that the pooled EU aid budget has sought to eliminate. The final option carries all sorts of risks associated with the general direction of travel of UK aid under the current government. Assuming DFID will not have the capacity to programme the additional funds directly, more money could be funnelled into the CDC, into controversial and underperforming cross-government funds, or any number of other multilateral vehicles (the least worst option). In most scenarios, the quality of aid for which the EU is a standard-bearer is jeopardised.

Then we have all the other ways in which Brexit has the potential to undermine broader development in low-income countries. 49 developing countries currently have preferential and duty-free access to UK markets under Everything But Arms treaties with the EU. An orderly Brexit will hopefully see these rolled over into bilateral arrangements with the UK. A disorderly Brexit that disrupts trade access, a currency dip or a massive post-Brexit recession might see significant trade losses inflicted on countries like Bangladesh, which  currently sends 9% of its exports to the UK. Levels of remittances could also fall. How an independent UK would choose to interact with the EU on other critical areas such as arms sales, international tax reform and climate change mitigation remains to be seen, but the political direction of travel does not bode well here either.

Of course, there is every opportunity that a progressive, internationalist Global Britain rises like a phoenix from the Brexit ashes, and seeks to go even further than the EU has done on policies that support the global South. Early signs are not encouraging, but there is still everything to play for. The times they are a-changing, and organisations like Save the Children will be fighting to ensure that the people who suffer most from the fallout aren’t those who can least afford it.

 

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