An abbreviation of British exit, in the same vein as the long feared yet unfulfilled Grexit, the Brexit refers to the prospect of Britain seceding from the European Union. To date, there has been much speculation regarding the implications of a British exit from the EU, but few concrete conclusions have been drawn. However, as a possible date for a referendum draws closer, companies, organizations and governments around the world are becoming increasingly uneasy as to how this major shift in European affairs may affect domestic, regional and international economies.
The Brexit Referendum in 2017
It is generally accepted that rising anti-European sentiment in the UK preceding, and in the wake of, the economic crisis has pushed the current government to propose an in/out Brexit referendum in 2017. Further details of when the Brexit poll will take place are yet to be finalised, however, opinions regarding its subsequent ramifications are already firmly entrenched in the minds of both the British parliament and the general public. With so much riding on the outcome of this crucial referendum, the GED team aims to analyse all possible outcomes and calculate the economic consequences for the UK, Europe and the rest of the world.
Breaking Down a Brexit
Supporters of a Brexit claim that British independence from the EU will bring the country a number of benefits. These include greater autonomy in its domestic affairs, including the option of tightening its borders in the face of a growing refugee crisis – a contentious approach to immigration that is, however, supported by many British politicians and large factions of the British public. EU mandated regulations and restrictions would also no longer apply to the UK, allowing the UK to exert absolute control over its politico-economic affairs and lift a perceived “suffocation” of business. Trade agreements and investment also fall under this umbrella, and the UK would have the agency to negotiate its own unique trade deals with the rest of the world – including the EU. Finally, Britain would no longer be obliged to pay the billions of euros required for participation in the EU.
However, each of these supposed benefits are tempered by alternative viewpoints that aim to highlight the disadvantages of a British exit from the EU. Isolating itself with greater border controls would also mean decreasing the free movement of EU citizens, making it more difficult for students, workers, and businesses to cross over from the continent and operate freely in the UK. This would also apply to UK citizens working and travelling in Europe, and Britain’s current attractiveness for foreign direct investment (FDI) would suffer. Additionally, Britain’s free agency to negotiate trade deals may mean less lucrative outcomes and more restrictions in lieu of support from the larger EEC and its regulatory bodies – particularly its two main trade partners, the EU and the USA.
After the Brexit Referendum
Among the issues still to be decided, despite the impending Brexit referendum, is exactly how a Brexit may be implemented in real terms – particularly in relation to existing trade agreements. In fact, while the vote proposed will be for an in/out decision, no one knows whether this will take the form of a Soft Exit, a Deep Cut, or complete Isolation – with each of these scenarios bringing varying caveats for both camps.
A Soft Exit is likely to bring minimum disruption and only minor increases in non-tariff barriers to trade. This would also ensure that trade between the EU and the UK would remain tariff-free. However, the fact remains that while the UK would no longer be contributing billions to the EU, both trade and movement of citizens would cost significantly more, potentially outweighing the savings made.
A Deep Cut would engender more serious implications, with expected bilateral trade negotiated between the UK and USA. However, this approach is likely to require the UK to renegotiate its trade agreements with the EU. This is with the assumption that both tariff and non-tariff barriers will remain, and the projected losses in trade will impact the entire EU and stifle potential growth for the EU single market.
Finally, complete Isolation is easily the most drastic outcome of a Brexit, with the UK losing all privileges associated with the existing 38 trade agreements that the EU has with other countries. This may present itself as the most expensive for all parties involved with a predicted reduction of between 0.6 and 3% in British GDP.
GED Investigates the Brexit and its Long-Term Implications
It has been suggested that the long-term implications of a Brexit will have an even greater impact on both domestic and world economies. Put simply, less trade equates to less competition, suppressing the need for innovation in a range of industries; less freedom of movement means it is more difficult to attract the best talent; and less European integration leads to a severe undermining of one of the world’s largest economies. In fact, it’s entirely possible that the Brexit is a lose-lose proposition for all involved.
Here at the GED Project, we work to shed light on the latest global economic issues and discussions with our informative infographics and data visualisation tools. We help make complex economic dynamics transparent – illuminating pressing issues such as the Brexit. All our research and findings are made available to the general public, including media representatives. Whatever the outcome of the quickly approaching Brexit poll, GED will be on-hand to examine, collect, collate and comment upon all of the available data and present you with our informed thoughts and opinions for your consideration.