The Brexit's Impact on the World
On January 1st, 1973 the United Kingdom joined the European Union in order to avoid its rapid economical decline. Nowadays, the European Union is comprised of 28 countries, although it was not always so large. The United Kingdom, however, consists of four countries: England, Scotland, Wales, and Northern Ireland. This past June 2016 the UK was changed forever when they were the first nation to ever leave the European Union. This has divided their nation immensely, and has brought, and will continue to bring a sizeable change to all countries involved.
So What Is Happening?
In June 2016 Britain voted in what is called a referendum to remove itself from the European Union. The vote was extremely close, 51.8% for and 48% against. (Ricketts, R.). Most people did not know what to do following the vote to Brexit because it was predicted to be highly unlikely to pass through. However, Britain’s relationship with the European Union has always been a back and forth between a love and hate affair (Ricketts, R.). Now the United Kingdom is more divided than ever. Political parties are at war, and families and friends are split over their opinions of the Brexit. The UK had toyed with the idea of a second vote, but many officials argued that the people had already made their decision, and that it should be respected.
The previous Prime Minister, David Cameron, had led the UK for a short period of time before the referendum. After the vote he resigned, and handed his position over to the new British Prime Minister, Theresa May. May has since triggered Article 50 that allows two years for both the European Union and Britain to outline the agreements of their separation, unless all remaining 27 members agree collectively to allow a longer period (Milmo, S., & Sean Milmo.). May has since stated that, “she’s ready to move to a ‘hard Brexit’ in which she would prioritize controlling immigration over access to the EU’s single market” (Monga, V.). With Article 50 enabled the United Kingdom should be officially separated by March of 2019, until then they are considered full members.
First Time For Everything
This is the first time any nation has left the European Union, and many aspects continue to be uncertain. For example, “It is unclear, for example, whether a departing country can start negotiating, before withdrawal, its own free-trade deals not only with the EU itself, but also with non-EU countries” (Milmo, S., & Sean Milmo.). Although the Brexit resulted in an immediate shock to the UK’s economy, they have since gotten over the original shock. As of right now nothing will change until after negotiations are finished, and officially approved by the EU council. This is especially important to many of the large corporations that are apart of the large financial hub that is London (Monga, V.). Many are predicting that the Brexit could be a considerable risk to corporations and international banks. This could result in a large gain for U.S. banks because many businesses within in the UK would transfer their funds into bank that they know will have a more stable monetary unit.
Economies Around the World
In addition to the United States, many other countries may see a boost within their economy at the expense of the United Kingdom’s declining economy. A large portion of their declining economy is a result of the worth of the pound dropping significantly, and without the European Union; Britain has since lost its AAA credit rating. The future of the Britain’s economy is uncertain, but not looking bright. They will no longer be in relation with the 27 other countries that can boost their economy, and lend them money whenever it is needed. As of now, the UK will most likely try to negotiate an agreement that allows them access to the European Union’s single market without tariff barriers. They call this the Norway option because it is the same deal that Norway has with the Union, even though they were never apart of it. This would be an important point in negotiation because the European Unions single market is, “one of the world’s most advanced free-trade areas with tariffs not only being eliminated, but also non-tariff barriers through the harmonization of national health, safety, and environmental regulations and standards” (Milmo, S., & Sean Milmo.). If the United Kingdom can negotiate themselves access to the European Union’s single market there would be less disruption, and it would cost them much less to exit the Union. This would hopefully allow them to maintain a stable economy.
What Is To Be Expected?
In conclusion, there is no way to know that the Brexit is going to have a positive or negative impact on the United Kingdom as of right now. The long-term affects have yet to be seen, but there are already some indications on how this may go for the UK as well as many other countries. As of right now, the United States may see a large boost in our economy with UK businesses looking to move their money overseas. The United Kingdom will continue to be apart of the European Union until possibly March of 2019 with negotiations not beginning until 2017. Until then, it is probable that nothing will change. However, one thing is certain, the United Kingdom will not be the only country impacted economically by this decision.
Do you think that Britain made the right choice by separating from the UK? Post reasons why in the comment section.
Samantha Ferraro is a junior at West Chester University studying accounting.