There was a historic vote that took place in Great Britain on Thursday and resulted in the British people choosing to leave the European Union. This decision had a tremendous effect on the stock market and completely shook up the political world of Europe and Britain itself. The ramifications of this decision are yet to come. No country has ever left the EU. The process by which a country leaves the EU has never been done. According to different reports, it will take about 2 years to negotiate an exit as per the Treaty of Lisbon that holds the EU together. There is very little known about the process except that it will involve renegotiating trade agreements and a lot of other legalaities invovling immigration and visas. I have in the past few days been following it rather closely to learn more about why Brits would want to make an exit.
I want to establish from the outset that I am no expert in British politics or in the legal workings of the EU, however, I have some opinions about the reaction and what it could mean for the future. I can use my political and historical knowledge to possibly predict a few different outcomes. I want to start by breaking it down in two catgories so its easier to explain. I want to explain the political view of the Brexit and how international politics will change as well as the domestic policies within Britain. I also want to touch on economic outcomes that could occur. You have to realize that everything about this decision is pretty much unknown. In the end, I hope to achieve a loose prediction on how it might politically play out and how the British and world economies will react.
Let’s start with the resignation of Prime Minister David Cameron. This to me was the most surprising result of the exit. Cameron was on the side of staying with the EU. My guess is that he was so politically tied to keeping Britain in the EU that if they voted to leave there was no way for him to stay in office. I think it could also be a point of pride for him because he was trying his best to keep Britain in the EU and failed. The failure almost definitely forced him out. In the long run, it will be easier if the British install a Prime MInister who’s views more closely mirror those that voted to leave.
The political fallout doesn’t end with David Cameron and his resignation. The rest of European Union is left in shock. The shock may wear off over time but for now they are stunned. The Brexit has left some other EU members pondering whether to make an exit themselves. However, I don’t think any other country will exit until we see what happens to the British. I think that politically there is two or three scenarios that could play out. The first scenario is that the EU never forgives Britain and shuns them. This means that tensions between the British and the EU would run high. In this scenario, the British would have to find new trading partners. One possibly would be the United States, which already trades alot with Britian. If the EU shuns them, the United States might be able to help Britain by negoitating an lucrative and exclusive trade agreement. This would make the US and British even closer allies. The second scenario is probably what the British would like to happen. The EU remains friendly with Britain. The trade agreements could be renegotiated to have Britain trade with the EU like the US does. Essentially, the EU is the equivalent size economy to the US economy. It is likely that Britain would prosper under this set up. I’ll explain more later.
The last scenario is essisentally an isolation of the British. The EU and US both ignore the British and let them suffer both economically and politically. The desired effect would be to force the British to re-join the EU. I have mentioned trade agreements in each scenario and these are one of things that will need to be addressed during the exit process. Currently as I understand it, the British hold free trade agreements with all the EU members allowing goods and services to flow freely. The British also have a trade agreement with the US. The reason that the stock market dropped more than 600 points yesterday is because of the uncertainty of the trade agreements which could sink or float the British economy. Depending on the nature of the agreements it could hurt or help the British economy. The problem is that nobody knows what will happen. However, the best and worst case scenarios remain as follows: A friendly EU to Britain is good for the economy because of how big the EU’s economy is. A tenous EU relationship with Britain will mean a sinking and struggling economy unless the US is able to help.
I saw a quite a few reports that surfaced, saying that Brits didn’t know what they were voting for. I even saw one that said google recorded an uptick in searches like “What is the EU?” This is obviously not a good sign. However, after watching some interviews and different new segements I learned something very interesting. The EU members have an agreement that allows workers from any EU country to go work in another EU country without a visa. So this basically means that the EU is an open immigration area for workers. The British who voted to leave, didn’t vote because of economic reasons but for immigration and domestic reasons. Appearently the Brits resent the poorer foreign workers who come to Britain to work. Britain is a relatively wealthy nation in the EU. It sounds very similar to what is happening here in the United States. Donald Trump has brought out a similar sentiment in the US. I believe that this is probably the main reason for the British leaving EU.
I think I will end my post here, because I need to do more research and also see what happens in the next few weeks. The intial reaction makes it seem very negative and bad when in reality it will be at least two years til the actual exit is complete. I know that I will be watching very close how the US responds to this Breixt. President Obama already came out and said he was in support the British staying in the EU. Once the negotiations start I will try to follow them very closely because I think its so interesting. So you can definitely look forward to another Brexit post in the future. Thank you for reading!