Brexit: threats and opportunities for international development

We must ensure the UK’s departure from the EU doesn’t leave the people facing poverty across the world worse off.

The continuous uncertainty surrounding the Brexit negotiations is already beginning to damage the UK development sector, with UK civil society organisations (CSO) still facing the continued threat of a no-deal Brexit.

This uncertainty is also exacerbated by a lack of public debate or direction on the UK’s future relationship with the EU on development cooperation.

Here I outline some detrimental implications of the current Brexit situation on the sector. I also provide some key principles to get the best outcome from the negotiations for people who suffer most from poverty, inequality, climate change and environmental breakdown.

Uncertainty and financial risks

With the prospect of the Brexit departure date being extended to 31 October 2019, the possibility of a no deal continues to loom over us.

UK-based CSOs have been dealing with the fallout created by the undefined withdrawal arrangements on ongoing and future EU-funded programmes for months. Even with the UK’s commitment to underwrite all EU-funded contracts in the event of a no deal, the options for UK CSOs seeking EU funds are unclear.

Organisations are already diversifying their funding sources or shifting their EU fundraising operations out of the UK or establishing new operations in EU countries. UK organisations have traditionally played leading roles in established international partnerships and networks on programming, policy and advocacy, but they now face losing their influence and position, as well as the other benefits of working with partners in the EU and beyond.

The precariousness of the pound sterling is potentially a greater concern. Currency volatility affects predictability, long-term planning and CSOs’ sustainability. A weaker pound means that there will be less money to deliver programmes and support the most vulnerable. Sterling’s decreasing value also means higher import costs from poorer countries and reduces the value of UK aid spending, investment and remittances.

As well as increased costs of trading with the UK, poorer countries could face reduced demand for their exports and increased bureaucracy.

The UK’s position on future EU partnership

The UK government has made several statements on how it hopes to engage with the EU in a post-Brexit world. The UK says it wants to continue to work with the EU where it can on development cooperation, although this is subject to negotiation. The UK speculates that this engagement is likely to be under an agreed framework for partnership and may involve co-funded initiatives on a case-by-case basis.

This conjecture is all quite vague, as the EU has refrained from commenting on a future UK-EU partnership in development. The UK has said it must have appropriate levels of decision-making and oversight for resources it contributes to and that UK-based organisations have fair access to any co-funded initiatives. The UK has also stated that any aid to which it contributes will have the dual objectives of delivering for the UK’s national interest and reducing poverty.

It’s likely the UK will prioritise future cooperation with the EU in areas like security, migration, and humanitarian response, which is consistent with the UK’s proposed security partnership with the EU.

Bond’s key principles to get the best Brexit deal for the world’s poorest people from Brexit

1. Make Brexit work for the world’s poorest

   Any future UK trade, agricultural, tax, investment and aid policies should leave the world’s poorest and most marginalised better off than at present or, at a minimum, no worse off than under current arrangements.

2. Ensure low-income countries aren’t disadvantaged by new trade arrangements

   Any tariff changes – if the UK leaves the customs union – must not undermine interests of lower income countries, while hastily agreed free-trade agreements should be avoided to reduce the risk of them undermining development efforts.

   Negotiations towards future trade agreements with developing countries should be transparent and accountable to parliament. UK trade and investment policies must align with international commitments on the environment, climate change, human rights and the Sustainable Development Goals.

3. Give UK civil society a voice on Brexit negotiations and beyond

   UK civil society includes some of the most experienced and innovative development and humanitarian organisations in the world. These organisations have a long tradition of being an effective force for positive change in the EU. If their voices aren’t listened to, the UK can’t fully understand the potentially detrimental implications on the marginalised communities we work with when negotiating a future partnership agreement.

   UK civil society’s invaluable expertise in programmes, advocacy and campaigning should inform policy making in the UK, EU and in developing countries during and beyond withdrawal negotiations.

4. Maintain close links to continue UK’s influence in Europe

   The UK should continue to work in a coherent, strategic partnership with the EU and other multilateral institutions to deliver Agenda 2030 and the SDGs. Through collaboration, the UK should champion a rules-based international system where aid and development prioritises the needs of those who are unfairly excluded from economic opportunity and democratic process.

Updates on EU processes at the EU level

Final agreement on the new European Budget for 2021-27 currently rests with EU member states (including the UK until we leave the EU). Bond is continuing to collaborate as an active member of CONCORD Europe on the part of the budget focused on international cooperation and development.

Civil society organisations are calling on the EU to ensure these funds focus on sustainable development, fighting against inequalities, and eradicating poverty. The new budget, with its proposal for greater flexibility in spending, needs checks to ensure it doesn’t just fulfil EU short-term self-interest objectives. The budget needs ambitious targets that steer investments towards critical areas such as climate and environment, human development and gender equality, balancing flexibility with accountability.

The budget negotiations will also have a significant impact on the UK’s ability as a non-EU member to contribute, influence and participate in the EU’s development and humanitarian work.

The European Fund for Sustainable Development plus (EFSD+) – the EU’s private investment leveraging vehicle – also needs to include strong and clear social and environmental safeguards to benefit local markets, sustainable production and local SMEs.