Brexit disrupts travel plans for UK students
The Brexit transition period is almost three 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.
Whilst Brexit red tape continues to be a burden to many industries, the British pound (GBP) continues to thrive on the UK’s successful vaccination programme and looks towards April and the reopening of non-essential businesses.
UK non-essential business set to reopen in April
Last night UK Prime Minister, Boris Johnson, outlined a roadmap of how the UK will gradually exit out of its third national coronavirus lockdown. The plan includes four stages, each containing a five-week gap. The second stage has been the most notable as it will see the reopening of non-essential businesses 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. It’s predicted that GDP for January will see a 9% contraction.
With businesses set to reopen on 12th April, 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. Economists have forecast that March’s GDP could rise by up to 3% as schools reopen and larger outdoor gatherings are permitted.
Many were concerned that Boris Johnson’s announcement would be overly cautious, undoing recent gains made by the British pound (GBP) as a result of rapid coronavirus vaccinations.
British Pound boosted by lockdown exit roadmap
The British pound (GBP) has been soaring against some of its major currency rivals during recent weeks as a result of the UK’s rapid vaccination programme. The hope that most of the UK economy could reopen from 12th April has provided further support for Sterling.
Last week saw the British pound (GBP) reach notable highs against both the US dollar (USD) and euro (EUR), with the gains continuing into the new trading week. The British pound to US dollar (GBP/USD) exchange rate has broken above the USD 1.40 resistance level today, reaching USD 1.41. The British pound to euro (GBP/EUR) exchange rate remains steady at EUR 1.16.
Samuel Tombs, Chief UK Economist at Pantheon Macroeconomics said “the economy will rebound a little later than we had assumed previously, following the cautious plan for relaxing restrictions unveiled by the Prime Minister. But the government’s caution also increases the likelihood that a major fourth wave of the virus will be avoided, and that the recovery will be sustained”.
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 an April opening as they now have a date to aim for and begin their preparations to reopen.
The Prime Minister confirmed that whilst coronavirus cases are falling, the virus remains a substantial threat, with new infections still significantly higher than when the pandemic began almost a year ago.
There were 5,490 new daily coronavirus infections back in 22nd April 2020 and as of 22nd February 2021, there were 10,641 newly recorded cases. Whilst COVID-19 remains a concern, it is positive that cases are falling and that the vaccines appear to be reducing hospital admissions.