The Global Effects of Brexit
The Global Effects of Brexit
By: Paloma Perez
Significant technological advancements, including increased communication and transportation, have made globalization and its effects inevitable. As Kofi Annan, declares “It has been said that arguing against globalization is like arguing against the laws of gravity” (The Globalist). Worldwide integration and development affects societies and communities all over the world. Globalization embodies the interaction and the integration of the global impacts among individuals, organizations, and governments internationally More specifically, this issue affects environments, politics, economic development and stability (Globalization 101).
A recent example of a globalization issue, which has created economic concern and instability, is Brexit. On June 23, 2016, the United Kingdom voted to leave the European Union. The movement has been titled “Brexit,” in substitution of “British Exit.” Voting to leave the EU means the beginning of a two-year negotiation for the UK over the terms of leaving the European Union. The European Union (EU) which consists of 27 member countries, is unified in trade and monetary policies (Amadeo). The continuous purpose of the EU is the expansion of trade. To accomplish its purpose, it has focused on eliminating restrictive economic practices and border restrictions. By eliminating such restrictions, the EU hopes to encourage the free movement of capital and labor, while nurturing a closer union among member countries (European Union). In other words, the EU’s main focus is to strengthen its’ competitive position in the global marketplace, while fairly representing all 27 member countries.
However, the United Kingdom considered the EU to have its defects. The UK expressed concerns about immigration and border security. In addition, the UK disapproved of the budgetary constraints and regulations imposed by the EU (Amadeo). The majority of individuals within the United Kingdom felt as though the UK could prosper and gain more security independently from the EU. Brexit resulted from a referendum, in other words, “a public vote of nearly all citizens of voting age; consisting of more than 30 million individuals” (Watters). After the referendum Brexit is expected to experience stricter immigration restrictions along with new economic budgetary regulations, than those applicable to the members of the EU.
Change does not go without consequences. Leaving the EU has raised concerns about financial instability, fear of recession, and lack of investment security within the UK. Brexit will affect the United States of America (U.S.), in many ways. America has manifested its economic and political will in Europe through Britain. Since Britain has left the EU it is predicted that it will be harder for America to uphold any U.S. trade agendas, digital privacy and global tax reform within Europe (Foroohar). U.S. companies, such as JP Morgan, have also grown concerned about their investments overseas (Criss). Like Goldman Sachs, many U.S. Companies such as Citigroup and JPMorgan Chase, may consider moving a significant amount of jobs from London to financial centers within the European Union (Goodman). Since Brexit, the pound has decreased in value causing a decline in consumer spending. This year for example, Brexit has experienced a significant decline in automobile sales. It is expected that the UK will continue to experience economic instability within its market due to Brexit.
Janet Yellen, current chair of the Federal Reserve Board, expressed her belief that a Brexit would have a negative impact on the U.S. economy; she predicts significant financial market turmoil (Dorfman). Chief economist Daver Berson, agrees with Yellen that there will be some financial turmoil; yet, he also believes that the effects of Brexit on the U.S. will be small and possibly even be positive (Dorfman).
While Brexit has occurred overseas, it will have a global effect. Countries such as the U.S., will be affected by the UK’s decision to leave the EU. Like companies from the U.S., other countries have invested within the UK, in order to reach the Europe market. However, due to change and uncertainty, many U.S. companies are considering leaving or have officially left the UK by moving jobs to other countries that remain within the EU. Undoubtedly, companies moving their jobs elsewhere will have an effect on the UK economy, whether it is big or small. Overall, the UK will be affected in several ways including but not limited to changes within their economy, as well as the adoption of new trade regulations and immigrations policies. While many predictions have credible basis, the effects that Brexit will have globally are unpredictable and create uncertainty. However, after two years of negotiation, the outcomes of the Brexit decision are soon approaching and will become globally.
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