Economics Digest 18.12.18

By Rishi Shah and Neel Shah

Meng Wanzhou

Meng Wanzhou


The Chinese telecom firm, Huawei, has risen to become the focus of international cybersecurity. The developed nations have become wary of China’s growing influence and with the arrest of Huawei’s chief financial officer Meng Wanzhou in Canada, tensions have risen. She is being held on fraud charges relating to the alleged breaking of US sanctions on Iran.

This however isn’t the only reason that Huawei has been hitting the headlines. Many nations fear China is using the firm as a cover in order to spy on rival nations and “steal” intellectual property, something they have been repeatedly accused of by foreign firms of committing domestically. Although Huawei have stated that they are a private enterprise and they have no hidden ties with the Chinese government, fear is still at large. Huawei’s largest critics state that the Chinese government may be ordering the firm to modify its devices, including 5G infrastructure, phones, laptops and other technology to help hack attacks, eavesdrop on international conversations or even gain high-level access to sensitive networks. This cyber security fear has led to action by many nations around the world. Huawei is becoming embedded in many infrastructures around the world, and they are second to Samsung in terms of smart-phone manufacturing.

Which countries have taken action?

  • New Zealand banned Huawei from supplying a local mobile network with 5G equipment

  • The US and Australia have prevented Huawei's involvement in their next-generation mobile networks

  • Canada is carrying out a security review of Huawei's products

  • UK service provider BT is removing Huawei kit from the core of its 5G network

  • The EU's technology commissioner, Andrus Ansip said countries "have to be worried" about Chinese manufacturers

  • Japan's government will stop buying equipment from Huawei, and rival Chinese manufacturer ZTE.

On the contrary,

  • Germany says it opposes banning any suppliers from its 5G networks

  • The UK has not enacted a ban on the use of Huawei equipment. However, the firm's products are regularly subjected to security testing by the UK's GCHQ intelligence agency.

Recently, Huawei has reassured most countries that they will increase the security on their networks to prove their innocence.


With the possibility of a no-deal ‘disorderly’ Brexit becoming a potential reality, Parliament hell-bent on rejecting any deal brought forward by May, it is crucial to understand what a ‘no-deal’ Brexit would mean. 45 years of arrangement with the EU would be brought to dust, our previously seamless international trade would encounter great friction, embodied through tariffs and quotas. We would be frantically trying to forge new trade deals, some of which won’t be beneficial. Also, the £39bn that we owe the EU, but wouldn’t repay would mean that we would no longer be a credible nation. Reneging on debt is bad for the international reputation of the UK. If the UK government responded by abolishing all tariffs, the current protected sectors such as agriculture, where the high EU tariffs prevent British agriculture from a sad demise, would suffer greatly. They wouldn’t be able to compete on an international scale.

There would adelso be turmoil in the aviation sector. Flights wouldn’t be able to enter UK aerospace until an agreement was reached, albeit this would form before a no-deal in all likelihood. The motorways would be jammed as British trade borders would suddenly have to check all goods entering and exiting the UK. There could be food shortages and essentials running out, stranded travellers, gridlocked motorways and this could easily undermine the government and bring them down. The status of EU citizens residing in the UK, and UK citizens in the EU would be unstable, as well as the electricity interconnectedness we currently benefit from. 

Turmoil… probably the best word to describe the state of the UK in the event of an unplanned no deal.

This testifies to the great relationship and the interconnected nature of our relationship with the EU. For the greatest chance of success outside of the single market and customs union, we desperately need to agree on a deal.


Whether we leave the EU with a deal or not, British citizens will face a €7 fee every three years to travel to the EU from 2021. Although we will not require visas, we will require an ETIAS (European Travel Information and Authorisation System), expected to come into force from 2021 for several non-EU nations, including US citizens and Australians. Nations from 61 countries can use these documents visa-free to travel within the EU for up to 90 days.

The ETIAS came into fruition among rising security controls, and is an electronic form based on the ESTA in the US. However, the EU Commission has been quick to point out it is much cheaper. It will be offered to the UK after the transition period ends in 2020, provided the UK offers visa-free travel to the EU for short-stays. The form is applicable to citizens between the age of 18 and 70 and will include questions regarding criminal records to health.

Is this a major concern? Not necessarily, since UK citizens will be able to travel to the EU without visas. However, it is important to note that there has been an insurgence in demand for Irish passports by British citizens.

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The uncertainty in the UK economy, and low disposable income, has led to fewer potential buyers in the economy. This means that there is less demand for homes and the prices aren’t rising. The subdued demand is depressing prices in the housing market to a six-year low. Quantitively, the latest report from the Royal Institution of Chartered Surveyors (RICS) predicts that the number of homes being sold - and their prices - will fall over the next three months. Due to the uncertainty that is associated with Brexit and the plethora of possible outcomes, fewer people are interested in moving, and fewer want to sell. This can be seen whereby each home is already taking an average of four months to sell, the longest period since records began in 2016. Mark Carney has predicted that in the event of a no deal house prices could fall by as much as 30%.