Impact Of British Exit From The European Union

European Union is the economic and political partnership to which twenty eight European nations belongs such as Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom. Brexit refers to the attempt by the United Kingdom to withdraw from the European Union (EU). Britain held a referendum on 23^rd June, 2016 where the citizens were expected to vote on whether the nation should leave or continue staying in the European Union. 52 percent of the population voted in favor of leaving the European Union which obviously led to a great impact on the political and economic sector both in the United Kingdom and globally. (Blanchard, 2004). The reasons as to why British leaders wanted the nation to exit the European Union were as follows; they felt that the success of the United Kingdom was being held back by the union. This is because the union imposed several rules on various businesses and charged a lot of fees for membership. They also felt that Britain needed to have control over its borders. They were uncomfortable with the free movement across the border which was a policy of the European Union. They therefore wanted to reduce the number of people moving in their country to either live or work, or both. (Glencross, 2015). 

Summary of the Article, the Guardian Summary

The main message of the article is about what would happen suppose Britain left the European Union. Eurosceptic view illustrates that leaving the European Union would bring a change on immigration, save the taxpayers and set Britain free from an economic weight. Europhiles however argue that there would be economic uncertainty both in Britain and worldwide and would cost many people their jobs. Various writers of The Guardian assess the effect of the exit of Britain on jobs, growth, trade, immigration and the country’s position in the world. Some authors argue that the British economy will diminish if they exit the European Union (Petrongolo, 2014). Other authors argue that terminating their European Union membership would make the country more prosperous. An analysis estimates that Brexit would bring a loss in the economy of the UK because the exit would reduce the Gross Domestic Product of United Kingdom by 2.25 percent due to lower foreign direct investment. (Lane, 2006). The Centre for European Reform reports that, as much as Britain is a net contributor in the European Union, their exit would force them to replace the Union’s regional funding and agricultural subsidies with the country’s Gross Domestic Income. It is estimated that there would be income falls ofbetween 6.3 percent and 9.5 percent in the GrossDomestic Product if Britain exited from the European Union, a fall similar to that of the 2008-2009 financial crisis.It is argued by anti-exit leaders like Nick Clegg that three million citizens of Britain depend on European Union’s jobs. This is because European Union provides a market of 500million consumers to British and Britain’s membership in the union also attracts foreign firms. Withdrawal from EU would therefore mean that the 500 million consumers will be lost and the foreign firms dependent on UK’s membership will be lost as well. International companies like Hyundai, Ford and Goldman Sachs Bank of the US have contemplated withdrawing their companies from Britain in case of the Brexit. As a result, leaving the European Union would impact negatively on the economic growth and job situation in Britain. If Britain withdraws from the union, it will free itself from the union’s rules and regulations and will therefore be an independent nation in the trade sector and will therefore tend to associate with faster growing markets such as Brazil and India (Majeed et al., 2016).Those who are anti-exit on the other hand, argue that the exit of Britain would keep Britain away from its important market, the European Union, and from other countries which have trade pacts with the European Union.

The top exporting partners of Britain are nations like United States, Germany, France, Netherlands and China. This shows that the UK acts as the largest export market of the European Union. As a result, Britain might not be greatly affected after the exit because there will be an increased chance of Britain securing a free trade agreement. However, if the nation does not receive the free trade agreement, then it will be a call for disaster. It is also argued that if Britain does not adopt different trade strategies after the exit, the country will face an economic downfall (Tosun, Wetzel & Zapryanova, 2014). The Centre for European Reform argues that the trade costs were likely to rise for Britain after Brexit. Besides, the United Kingdom would have less bargaining power for trade agreement, as compared to the bargaining power it had as a member of EU. Britain leaving the European Union would also impact on immigration. UKIP argues that by leaving the union, Britain would regain control of its borders. As a result, there would be strict passport checkpoints and customs controls in the borders. However, this is not necessarily true because survey shows that the majority of the immigrants come from outside the European Union and they therefore undergo the strict border checks that are applicable for non EU members. The only difference is immigrants from countries that are EU members willstarts undergoing the strict border checks just like other immigrants because the free movement of people will have been uplifted. The immigrants from European Union nations would be denied tuition fees which they earlier enjoyed. Those with low job securities will also be disadvantaged because they will have nothing to offer when asked for proof of employment at border points (Armstrong, Lisenkova & Lloyd, 2016). The British people in other European Union countries would also face a challenge because they would have to apply for visas when traveling across the border, they may also be required to speak the languages of those countries and it would take a longer period gaining residency in those countries. While considering the status of Britain in Europe, the exit from the union would impact on it. Britain exiting from European Union would reduce the country’s dominance and influence.Some people argue that the exit would make Britain a weak country especially when negotiating bilateral free trade deals. Exit from the union would also affect the position of Britain in the world. It would affect the country’s influence worldwide negatively. This is because Britain as a world political and trading power is only viewed as proportionate to the role it plays in the European Union. If Britain left the EU, it would affect Britain negatively than it will affect the European Union (Bell & Machin, 2013).

Justi?cation for the Creation of European Union.

The authors in the guardian demonstrate that through their assessment, Britain leaving the EU would impose substantial costs on the UK economy and would be a risky gamble. They support their illustration as follows; some people argue that the UK economy would suffer permanent losses because of weaker trade and investment. They further support this by saying that leaving the EU would cost UK permanently because the Gross Domestic Product would reduce by 2.25%. The reason for this is that exit from EU would lower foreign direct investment. Economists also estimate that the exit would lead to income falls in the United Kingdom which would be similar to the 2008-2009 global financial crisis (Curtice, 2016).

Currently, the immigrants to the United Kingdom through the EU are boosting the workforce by 0.5% annually. As a result, the economy grows with no inflation effects. If the United Kingdom exits the European Union, it will have more control on the immigration process. As a result, the low skilled laborers, who are mostly immigrants, will reduce in number, leading to a drop in the sectors, such as agriculture, that require manual labor. Britain benefits greatly from the European Union because it takes almost half of the country’s export goods. Britain also trades freely without restriction with several countries because of the agreement the European Union has with these countries. If Britain happens to exit the Union, it will be faced with tariffs in the trading process (Chadha, 2016). The country would also face additional costs while exporting. As a result, there will be a reduction in sales. Britain will face a lot of uncertainty after their exit from European Union. Banks will be hesitant to lend during this period of uncertainty thus limiting the rate at which banks benefit from the interest rates charged on consumers. Individuals will also fear borrowing due to this uncertainty. Britain will also experience an economic slowdown. The Brexit would also affect Britain politically. Cameron resigned and Theresa May was elected as the new Prime Minister after the referendum. The European Union was created with an aim to maintain peace and unity after the Second World War. It was also created to maintain a single market where there is freedom in transportation of goods, services and people between member countries (Harries, 2016).

Do you think that Britain, as a non-member of EU, will co-operate with the EU?

The article argues that the general rule is, if countries like Britain was to cherry-pick and discriminate against individual EU member states, the EU would at least threaten to retaliate. This means that if Britain would do something negative to other EU member states, the EU would pay back with something negative. Britain as a non-member of the European Union will co-operate with the union. This is because Britain promises that even after their exit, they will not abandon their roles and participation in the union (Smith, 2016). After the Brexit, there will be co-operation between European Union and Britain in various fields such as arts, sciences and education. EU citizens in Britain will also have their rights still protected just like the rights of those British citizens in the EU. The British will still be able to go to European Union states, work there, travel freely, live without any restrictions, study normally and settle down easily just like it was in the past when Britain was a member of the European Union. Besides, there will still be free trade and access to Britain’s single market. The United Kingdom is part and parcel of the international community and will always remain so even after they exit the European Union. The country will therefore continue co-operating with the European Union states.

Does Brexit have any Impact on Australian Economy?

Britain exiting the European Union would greatly impact on the Australian economy negatively because they are closely linked and Britain is an offshore market of Australia. In case of uncertainty, the Australian economy usually suffers a great deal especially when the investors develop a risk off mentality. The stock markets and the Australian dollar also tend to reduce. In the case of Britain exiting the union, Australia would suffer because the Brexit would lead to some sort of uncertainty in Britain. As a result, the offshore market of Australia will pass this uncertainty over to the Australian economy (Sinclair, Stagnell & Shah, 2016). Besides, Australia and Britain have been preparing for negotiations concerning a free trade agreement between the two countries. If Britain exited the European Union, the negotiation would be left pending because Britain would be forced to negotiate with other large EU member states such as the United States of America, making Australia be sidelined from the whole negotiation process. Some Australian companies also use Britain as an access point to the European Union (Koehl, 2016). If Britain exited the union, Australian companies will have their plans greatly disrupted, thus cutting off the link between Australia and the European Union. Britain is the main export zone for Australian wines. According to economists, Britain exiting the union would impact on the wine exporting industries. This is because the existing tariffs on wine exportation from Australia would be lifted hence making the Australian wine cheaper, making Australia incur losses because of the cheap prices (Wadsworth et al., 2016). Besides, Britain could impose new rules and regulations on the imported wine, leading to Australia incurring extra costs. Another argument is that if Britain left the European Union, the Australian dollar would go down. The exit could also benefit Australia positively because the exit would make Britain have control on the immigration process, making it easier for Australians to study and work in the United Kingdom. As a result, the low skilled laborers will be employed in Britain and they will also be able to study at the same time (McSmith, 2016).

Do you think that the Global Economy Might Slow Down Because of Brexit?

The global economy might slow down after the British exit from the United Kingdom because of great uncertainty worldwide. First, the Brexit would impact on the US dollar by making it go up by 25 percent (Kierzenkowski et al., 2016) United Kingdom’s exit from the European Union is something that was least expected and will therefore have a shocking impact on various nations globally. Besides, it is argued that after the Britain exit, the nations will be forced to adopt other macroeconomic and geopolitical strategies because of the uncertainty (Baker et al., 2016). Secondly, the effects of Britain exiting the European Union will directly affect financial markets globally. Most foreign investors will tend to withdraw their investments from Britain. This is because after the country withdraws from the union, they will be more focused on personal development, making them lose connection with the foreign investments in their country. (Mendez-Parra, Papadavid & te Velde, 2016). The foreign investors will start experiencing losses, hence withdrawing their investments from Britain. Thirdly, Brexit will impact on global nations like India because India will be forced to find another nation that can act as their through pass to the European Union to replace Britain which originally acted as the same (ECONOMIC, 2016).

Conclusion

There were two parties in the United Kingdom, one party was advocating for the nation to remain in the European Union, while the other party was advocating for the nation to leave the union. Leaders like David Cameron advocated for Britain to remain in the European Union, especially after a negotiation with the union’s leaders to change the terms of Britain’s membership if they voted that the nation remains. This would ensure that Britain was given a unique position to correct some aspects that the nation said they did not like, especially the issue of immigration. They wanted the nation to remain in the union because they argued that it got a boost from its membership. United Kingdom enjoyed easy and free sale and export of their goods to other countries. Besides, the immigrants who were coming into the country were offering great labor services hence increasing the economic growth of the United Kingdom. They further argued that if Britain left the European Union, the country’s status would be negatively affected. Big business enterprises were also interested in Britain maintaining their membership in the European Union because it was easier for them to transport their products, people and even exchange money across different borders. Boris Johnson was among the leaders who advocated for Britain leaving the union. This is because they wanted the nation to regain its control over its borders and control the whole immigration process. They felt that the country gained little, as compared to the high membership fees being charged by the European Union.

References

Armstrong, A., Lisenkova, K., & Lloyd, S. P. (2016). THE EU REFERENDUM AND FISCAL IMPACT ON LOW INCOME HOUSEHOLDS.

Baker, J., Carreras, O., Kirby, S., Meaning, J., & Piggott, R. (2016). Modelling events: the short-term economic impact of leaving the EU. Economic Modelling, 58, 339-350.

Bell, B., & Machin, S. (2013). Brexit and wage inequality. Brexit Beckons: Thinking ahead by leading economists, 111.

Blanchard, O. (2004). The economic future of Europe. The Journal of Economic Perspectives, 18(4), 3-26.

Chadha, J. S. (2016). The Referendum Blues: Shocking the System. National Institute Economic Review, 237(1), F4-F8.

Curtice, J. (2016). A Question of Culture or Economics? Public Attitudes to the European Union in Britain. The Political Quarterly, 87(2), 209-218.

ECONOMIC, O. (2016). THE ECONOMIC CONSEQUENCES OF BREXIT: A TAXING DECISION. POLICY, (16).

Glencross, A. (2015). Why a British referendum on EU membership will not solve the Europe question. International Affairs, 91(2), 303-317.

Harries, M. (2016). Brexit and Political Malpractice. Survival, 58(3), 31-40.

Kierzenkowski, R., Pain, N., Rusticelli, E., & Zwart, S. (2016). The Economic Consequences of Brexit. 

Koehl, A. (2016). Brexit and Short-Selling Disclosures. Available at SSRN 2808498.

Lane, P. R. (2006). The real effects of European monetary union. The Journal of Economic Perspectives, 20(4), 47-66.

Majeed, A., Hansell, A., Saxena, S., Millett, C., Ward, H., Harris, M., ... & Perneczky, R. (2016). How would a decision to leave the European Union affect medical research and health in the United Kingdom?. Journal of the Royal Society of Medicine, 0141076816652027.

McSmith, A. (2016). Issue: Brexit Brexit.

Mendez-Parra, M., Papadavid, P., & te Velde, D. W. (2016). Brexit and development.

Petrongolo, B. (2014). Brexit and the UK labour market. Brexit Beckons: Thinking ahead by leading economists, 115.

Sinclair, E., Stagnell, S., & Shah, S. (2016). Brexit and dentistry. British dental journal, 220(10), 509-512.

Smith, J. (2016). David Cameron’s EU renegotiation and referendum pledge: A case of déjà vu?. British Politics.

Tosun, J., Wetzel, A., & Zapryanova, G. (2014). The EU in crisis: advancing the debate. Journal of European Integration, 36(3), 195-211.

Wadsworth, J., Dhingra, S., Ottaviano, G., & Van Reenen, J. (2016). Brexit and the Impact of Immigration on the UK.