Brexit – a word that can strike fear in residents of Britain and comes attached to the biggest political drama since Donald Trump. It’s not a bold statement to say that Brexit is a complete and utter mess at this point, and it’s clear to see that a lot of things aren’t going as planned. As someone ‘across the pond’, though, how big a deal is Brexit to us? While I was raised in the UK and have loved ones there, I feel rather detached from it all and don’t exactly feel like I’m part of the mayhem. So, seeing as I feel like I’m not being dramatic on behalf of my friends and family, and Brexit’s meant to be slightly bad for the economy, let’s have a stab at seeing how well Britain will do if Brexit passes. It’ll be fine, right guys?
The short answer is no. As it turns out, leaving the EU isn’t exactly like ditching that kind-of-close friend’s 21st birthday party you committed to a month ago and forgot about – it has strings attached. Ever since Brexit was conceived there was great worry and concern from the financial institutions and business world, largely agreeing that the implications were not great for Britain’s financial future.
The Economist has been incredibly rigorous in its coverage of Brexit and has been very to the point with how brutal the effects of Brexit could be. In a recent article, they state that many executives put Brexit in their top 3 sources of uncertainty in their business investments. This has slowed productivity for obvious reasons and has worsened recently with Boris Johnson gallivanting about, as a ‘no-deal’ Brexit has increased in likelihood.
So maybe on the microeconomic scale things are a bit bleak, but that’s not so bad right? Well, numbers for the macroeconomy don’t exactly instil optimism either. OECD predicted the GDP changes based on a Brexit passing, compared to the baseline of not leaving the EU. The outlook: by 2020 GDP would be down a relative 3.3%, and by 2030 the margin grows further to a 5.1% decrease taking a neutral prediction.
GDP isn’t a fortune teller, and predictions like this can’t tell us how a 3.3% loss affects a Brit’s everyday life when it happens, but, like a fortune teller, it appears Brexit going to cost them a lot up front for very little gain. But what is the gain from Brexit? Surely the referendum wasn’t passed just so the British were even more miserable.
A significant part of the Brexit movement was motivated by immigration. Some British were tired of the EU’s immigration rulings being too relaxed for their tastes and wanted their own. Fair enough – many countries have their own immigration policies that reflect the peoples’ love for their borders, so it’s not unreasonable. What is unreasonable however, is the lack of forethought when cultivating this immigration movement.
The data aforementioned has been available since 2016 – the initial events of Brexit. So, did the public get caught up in securing their borders, or were they misinformed as well? I won’t attempt to answer that here, but certainly a testament to modern mainstream media if it’s the latter.
Back to the economy then- let’s talk trade deals. And no, not the ones that Trump is trying to force down China’s throat, but they are just as sad to talk about. Britain exports 45% of its goods and 38% of its services to the EU currently, and as such EU and Britain have very complicated and well-rooted trade deals to enable this.
Upon leaving the EU, Britain must re-negotiate these trade deals if it wants to keep as much of its GDP and wealth as possible – time consuming, and not cheap. Brexit would also cut out the UK from the Single Market, the area of the EU that enables trading without regulation and internal borders i.e. customs. In fact, Ireland and the UK are both attempting to plan ahead of the initial customs surge on the main international highways for when said Single Market is no longer inclusive of Britain.
So, who’s effected? Clearly there’s huge economic impacts on the EU and the UK, but who ultimately pays the price? The people of the UK of course, and by extension the EU’s population. The University of Belgium released a study a few months ago stating that the UK would lose over 520,000 jobs in the case of a no-deal Brexit – which is looking very likely at this time. The current approximation for unemployment in Britain is currently 2.5 million people, so a no-deal Brexit would be an increase of unemployment of 20%. For a resident of Britain, a statistic like that is harrowing.
This same unemployment crisis would also affect the countries remaining in the EU too, with the total job loss predicted at 1.2 million people across the entire current EU. Countries like Germany face job losses also in the hundreds of thousands, with no country escaping a no-deal Brexit.
There is a (relatively minor at this point) upside to this thankfully, the UK will be able to have more control over its policies, mainly its trade and immigration ones. While the people of Britain clearly endorsed the latter, it begs the question of cost. At what cost do the British want control of their borders independent of the EU, and at what cost is the government willing to incur on its people to ensure a Brexit passes?
It’s clear that even if Brexit was a smooth sailing ride that there would be huge costs involved, and seeing as we don’t live in the English parliament’s ideal world, things haven’t gone smoothly at all. Brexit has been shockingly poorly executed, and on October 31st it appears that the future of the UK changes from uncertain to just plain bleak – but hey, only for a decade, right?