The Britons have made their decision. On June 23rd 2016, the UK voted to formally exit the European Union. Over the next 24 months the British government will have time to organize their departure and negotiate their new standing with in Europe. What exactly that standing will be, at this point, no one can tell. Still, many more general consequences such as the economic effects this decision will bear in the future, are better predictable and experts agree: They do not look pretty!
Over the past year we at the GED Team have written extensively about the possibility of an impending Brexit. Here you can see all our analyses and findings in one place.
What are the economic consequences of a Brexit for the UK?
In our first study from May 2015 we looked at the economic costs the Brits would have to shoulder in case of a Brexit going up to the 2030. We based our calculations on two possible Brexit scenarios; a “soft exit” in which the UK would leave the EU but keep a special trading relationship with the EU similar to that of Switzerland or Norway and an “isolation” scenario in which the EU would regard the UK as a strict third party country after their departure from the Union.
Even with the soft scenario we found that the costs of a Brexit would outweigh the potential savings in EU fees for the UK. Depending on the scenario, the UK would loose between 0.6% and 3% of their GDP annually up to 2030 through static trade losses alone. If dynamic effects like loss in innovation and foreign investment are taken into account the decreases in GDP could scyrocket to up to -14%.
Furthermore, you can visit our YouTube chanel and find all results of our study in this animated video here!
How bad could the economic effects be for Europe?
While the Britons themselves will likely face the most dire economic consequences, the rest of Europe will feel the results of their decision, too. While today the stock and exchange markets already reacted with a wilde dive across all sectors, most larger economic consequences are long term and still to come. They will manifest through reduced trade, a decline in the sharing of knowledge and expertise, lowered innovation and a decrease in investments. We calculated such “dynamic effects” for all current (still) 28 EU member states and found that after Britain, Ireland, Malta and Belgium will most likely be the biggest losers in Europe, with Ireland holding an especially unfavourable position with their close connection both to the UK and EU.
What does the business community think?
We were interested in what representatives of British and German Businesses thought about the Brexit. In January 2016 we asked a total of 782 high-level representatives to share their views. The results were telling. A whole four out of five respondents were clearly in favour of the UK remaining part of the EU. Around a third of businesses announced to either cut jobs in the UK or move capacities outside of the UK in case of a Brexit. The predictions for employment, revenues and investments in the UK after a Brexit were overly negative across all sectors represented in our survey.
You can read our blogpost featuring the survey’s main findings here, look through the complete study here, or find the main results visualized in this GED Infographic here!
Furthermore, you can visit our YouTube chanel and find all results of our survey in this animated video here!
What do the experts say?
Finally, we also held a GED Webinar, where our own GED experts, along with some outside expert voices, discussed the important topic of a Brexit with you, the GED followers.
The webinar has been recorded and you can find the full Video of that session here!