Brexit disrupts travel plans for UK students
The Brexit transition period is now four months behind us, with the Brexit saga no longer being a primary driver for British pound (GBP). However, the effects of Brexit are still very much making their mark across the UK. The latest disruption concerns UK students, with Brexit red tape delaying travel plans to study abroad.
UK universities stated that they received very little guidance from the Foreign Office on the build-up to Brexit regarding UK students studying in the EU and the arduous post-Brexit requirements from EU countries. There appears to be a significant amount of confusion as UK students have found travel advice has differed between consulates and local embassies. As a result, many UK students have been left waiting to receive further information and clarification on the next steps.
Nigel Harkness, pro-vice-chancellor at Newcastle University stated “most EU countries weren’t in a position to confirm what their own arrangements were because we hadn’t confirmed them on our side, so this has created extra bureaucracy.”
There are around 7,000 language students in the UK, where a year abroad is a compulsory part of their degree and essential for improving their fluency.
Furthermore, the University of Portsmouth has reported that applications from EU students for the academic year 2021/22 have fallen by more than a half. As a result of Brexit, EU students are no longer able to access student loans for UK courses.
Similarly, UK students looking to study in the EU are no longer covered by the Erasmus programme. Whilst Erasmus has been replaced by the Turing Scheme, many are concerned by the lack of clarity around how long the scheme will last.
Whilst Brexit red tape continues to be a burden to many industries, the British pound (GBP) has continued to be supported by the UK’s successful vaccination programme and now the reopening of non-essential businesses on the 12th April.
UK economic outlook optimistic as businesses reopen
The UK economy is set to see a sharp recovery from this week as non-essential businesses reopen. Prime Minister, Boris Johnson, outlined a roadmap of how the UK will gradually exit out of its third national coronavirus lockdown back in February. The plan included four stages, each containing a five-week gap. The second stage will be the most prominent as businesses such as pubs, restaurants, shops and salons will open their doors once again across the UK.
Thousands of UK businesses were forced to shut their doors when the third national lockdown was introduced at the start of January. The closure of the UK high street has had a significant impact on the UK economy, with UK retail sales decreasing by 8% in January. The Bank of England (BoE) also predicted that gross domestic product (GDP) for Q1 would contract by 4% as a result of lockdown and it was predicted that GDP for January would see a 9% contraction.
With businesses reopening this week, the BoE have predicted that Q2 could see a sharp economic recovery in the UK, with services such as hairdressers, salons, gyms and outdoor hospitality permitted to reopen.
Many were concerned that Boris Johnson’s announcement would be overly cautious, undoing previous gains made by the British pound (GBP) as a result of rapid coronavirus vaccinations.
British Pound to recover losses as restrictions ease
The British pound (GBP) has fallen sharply against major currencies over recent weeks as a result of loss of momentum in the UK’s vaccination programme. However, businesses reopening this week is hoped to provide further support for Sterling.
The British pound (GBP) slipped against the US dollar (USD) and euro (EUR), though is up slightly during this afternoon’s trading session. The British pound to US dollar (GBP/USD) exchange rate is 0.31% higher at USD 1.3782 whilst the British pound to euro (GBP/EUR) exchange rate is 0.26% higher at EUR 1.1507.
Despite Sterling’s losses, economists are confident of a swift recovery for the UK currency. Petr Krpata, chief EMEA strategist at ING stated “GBP felt the perfect storm of the vaccination concerns and the heavy one-way positioning. We expect sterling to recover fairly soon, with the EU Recovery Fund stuck in a German courtroom, the EUR re-rating story may have to wait.”
The UK Prime Minister’s gradual approach to ending the third coronavirus lockdown is thought to help the UK’s economy reach pre-pandemic levels by Q1 of 2022. Some critics of Mr Johnson’s roadmap are concerned that the lockdown exit plan is too cautious and could have a damaging effect on the economy.
Andrew Sentance, Senior Adviser to Cambridge Econometrics, “non-essential retail, hairdressers, etc will not be reopening until April/May. Closure of these activities has been the most economically damaging aspect of the lockdown, so not good news for business and the economy”.
That being said, many UK businesses appear to have welcomed the news of the April reopening and having a date to aim for and begin their preparations to reopen.
With daily coronavirus cases in the UK continuing to fall, it’s hoped that the remainder of the Prime Minister’s roadmap strategy will continue as planned, with a full lifting of restrictions on 21st June.
There were 5,490 new daily coronavirus infections back in 22nd April 2020 and as of 12th April 2021, there were 1,730 newly recorded cases. It is positive that daily coronavirus infections are now significantly below that experienced during the first wave, helping pave the way for a return to normality.